In response to the exposé published on Saturday 7.29.2023 about Manufactured Housing Institute (MHI) CEO Lesli Gooch’s recent and stunning remarks, an outraged and frustrated Manufactured Housing Executives Council (MHEC) member contacted MHProNews. “You [MHProNews] should crucify Gooch,” for saying, said that MHEC member. “To my knowledge, the GSEs have never used the may vs shall argument…MHI [i.e.: the Manufactured Housing Institute] hasn’t until now.” A MHEC source that MHProNews’ spoke with asserted that “the industry” “made a mistake” when the Duty to Serve (DTS) language was being drafted, claiming that chattel lending was “overlooked” until well into the process. Note that in MHI circles, the words “the industry” are often a kind of shorthand or alternative phrase that means “MHI” or the “Manufactured Housing Institute.” “The industry” as an expression meaning MHI was used, for example, by Kevin Clayton when he spoke about “the industry” doing a national marketing campaign. But those remarks by a MHEC insider also begs questions. If so, how is it possible that MHI “overlooked” chattel lending as the language for the Housing and Economic Recovery Act (HERA) of 2008 was well underway? More on that further below.
MHProNews contacted both MHI and the Manufactured Housing Association for Regulatory Reform (MHARR) for their reaction to the exposé on Gooch’s DTS remarks.
Part I
No industry representative should be “commending” Fannie Mae and Freddie Mac for their implementation of DTS [the Duty to Serve manufactured housing federal mandate], when the vast bulk of the manufactured housing finance market remains completely unserved after 15 years. Rather than validating excuses for this utter failure (i.e., “may” versus “shall” language in the DTS statute), MHI [Manufactured Housing Institute] should be seeking full compliance with DTS in BOTH the MH [manufactured home] real estate and chattel markets, as well as a legislative remedy that would deprive Fannie and Freddie of this convenient, bad faith excuse.”
Mark Weiss, J.D., President and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR).
A fair question that ought to be asked and answered by every manufactured housing publisher, trade association, and pundit is this. How is it possible that MHI’s CEO, a Ph.D. in political science, made such a glaring goof during her recent listening session address remarks to the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac? Was “Dr. Gooch” handing Fannie, Freddie, and the FHFA an excuse to sabotage efforts by other nonprofits to get DTS chattel lending from what was once a norm in manufactured home lending some 20 plus years ago?
| from: | L. A. “Tony” Kovach for MHProNews.com |
| to: | Lesli Gooch CEO @mfghome.org |
| cc: | Leo Poggione – MHI Chairman, Cavco-owned Craftsman Homes. William “Bill” Boor – President and CEO of Cavco Industries (CVCO), MHI’s Vice Chair and self-proclaimed MHI’s next Chairman. Patrick Waite – COO Equity LifeStyle Properties – MHI Executive Committee Secretary Tom Hodges – General Counsel at Clayton Homes, past Chairman at MHI David Goch @wc-b.com lawfirm – MHI outside attorney |
| date: | Aug 2, 2023, 11:58 AM |
| subject: | Lesli, Leo, Bill and MHI leaders, media request for response to MHEC member concern |
Lesli, Leo, Bill and MHI Leaders,
As you should know, MHI CEO Gooch’s Listening Session remarks were recently published on MHProNews. It arguably made the point in the analysis segment that Gooch’s remarks on the “may” vs. “shall” issue was an inexplicable stance to take if MHI is sincerely interested in getting chattel lending robustly implemented by Fannie Mae and Freddie Mac.
MHProNews has heard from a MHEC member that said that Gooch’s remarks were a “cardinal sin” and may represent the first time that anyone in the DTS mix has publicly made that point with respect to chattel lending. If Fannie and Freddie haven’t made that argument publicly, why did MHI do so?
MHProNews plans a follow up.
- MHARR has been asked for a remark, which they provided immediately.
- We are hereby requesting a formal explanation from MHI as to why Gooch said what she did during the listening session if MHI sincerely desires DTS to be fully implemented on chattel as well as land-home lending?
Given this apparent fumble (again, see the report linked below), is MHI going to ask Senator Tim Scott to formally amend his ROAD to housing bill to amend HERA 2008 to change that DTS language from ‘may’ to ‘shall’ in order to fix what MHI’s CEO goofed?
You know the drill. We’ve copied various officials, industry members, etc. to document this outreach. Please email your response by close of business today. Thank you.
Tony
[L.A. “Tony” Kovach for MHProNews]
As of 8.3.2023 at 9.29 AM, there has been no response to MHProNews from MHI staff or board leaders, nor from their outside attorney. The BCC’s documented the outreach.
Part II
Time and again, ‘mistakes’ have been made by MHI during much of the 21st century that magically manage to benefit the industry’s consolidators, who also routinely happen to be MHI members. Amazing, isn’t it?
In hindsight, isn’t it obvious that the DTS “oversight” alleged by that MHEC member was yet another convenient oversight that benefited Berkshire Hathaway owned Clayton Homes, 21st Mortgage Corporation, and Vanderbilt Mortgage and Finance (VMF)?
Those “oversights” caused financial pains for untold numbers of stockholders, independent businesses, sellers, consumers, investors, taxpayers, and others.
Early on in Gooch’s remarks, she said that the: “Duty to Serve took a long time to stand up but is now beginning to kick in and I commend the teams at FHFA, Fannie Mae and Freddie Mac for their efforts.
So far, there are some bright spots, but overall Enterprise performance with respect to DTS in the manufactured home space is at best mixed.”
After praising Fannie and Freddie for their support for MHI’s obviously failed CrossMod’s scheme, which she referred to as: “MH Advantage and Choice home programs for Cross Mod homes.” Can MHI be so sloppy as to have typos for all three of those brand names, including their own? Apparently so. See the full context which used the MHI document of her remarks obtained from an MHI email at this link here.
Gooch said under the topical subheading of “Personal Property Loans” the following.
“The one area that there is universal agreement on that Fannie and Freddie have failed in Manufactured Housing Duty to Serve is personal property – sometimes referred to as chattel – loans.” That’s true enough. But then comes the outrageous part that the MHEC member said ‘You should crucify Gooch for saying.’ Given that these were prepared remarks, how can their be any excuse for a Ph.D. in political science to say the following?
“The Duty to Serve statute does not require Fannie and Freddie to purchase personal property loans – but does say explicitly that they QUOTE – “may consider” such loans.” Since when is it Dr. Gooch’s job to give Fannie and Freddie – or FHFA for that matter – with an excuse?
As if the tragic comedy of errors wasn’t bad enough, Gooch then said (all per MHI’s copy of her prepared remarks) “Fannie and Freddie cannot be considered to be fulfilling their Duty to Serve Manufactured Housing statutory responsibility without purchasing such loans since personal property loans constitute the vast majority of all new manufactured homes.” That’s fine. But it is essentially nullified by her previous remark. It is mind numbingly bad judgment to have said the prior and then followed it up with the former. Her remarks: “The Duty to Serve statute does not require Fannie and Freddie to purchase personal property loans – but does say explicitly that they QUOTE – “may consider” such loans” added nothing to the discussion, UNLESS MHI is giving Fannie, Freddie, and FHFA a pass on implementation of DTS for chattel lending.
That’s precisely what Doug Ryan for CFED (later rebranded and now known as Prosperity Now) claimed was MHI’s (unstated) plan. “This is likely why it and the Manufactured Housing Institute – the industry’s trade association – have been unwilling to criticize the rule, even though including such loans could bolster manufactured home sales by attracting new lenders.” Ryan also said: “Those dominating the industry [i.e.: Berkshire owned Clayton Homes and their affiliated lending] likely fear incursions into their vertically integrated market.”
Ryan was arguably described Clayton’s and their lending’s moat.
Warren Buffett may have been posturing and paltering, but nevertheless he himself said that Fannie and Freddie implementing chattel loans would be good for the manufactured housing industry. Buffett said the following during a Berkshire Hathaway annual meeting.
Per the YouTube generated transcript, Warren Buffett at:
1:10
“…expand we already we already solved I
1:12
don’t know whether it’s 10 million a
1:14
month of loans or something like that to
1:17
Freddie and Fannie but it would be very
1:19
good for America in my view if Freddie
1:24
and Fannie did more in that area.”
1:27
“Obviously we would sell some more homes
1:30
but we would lose financing and we might
1:33
come out behind we might come out ahead
1:35
but I think is that I think it would be
1:39
a good thing to do, Charlie. …”
Buffett said it. Clayton Homes may ‘come out behind or ahead’ because they could lose financing profits but may gain that back in the profits generated by more manufactured home sales. “It would be a very good thing, in my view, if Freddie and Fannie did more [lending] in that [manufactured home] area.”
Gooch was quite right in pointing out that such loans are profitable. MHI has several lenders that are making those chattel loans profitably.
What caused the GSEs to exit the support previously given in the 1990s and early 2000s to manufactured home chattel lending were the widespread problems caused by ‘liar loans.’ But as 21st’s President and CEO, Tim Williams and Marty Lavin, J.D., both of whom have run manufactured home lending operations for years said in their own words, the problems with fraudulent manufactured home lending was wrung from the system through a painful process that began some 2 decades ago. The argument can be made that by the time DTS was enacted, safeguards had been built into the systems used by the industry’s remaining lenders. As Lavin expressed it, ‘Losses in the late 1990s and early 2000s caused most lenders to exit manufactured housing. The remaining lenders implemented strict controls to prevent fraud.’
Kevin Clayton made a similar argument in his remarks to Congress.
But the point here is that Gooch handed the GSEs a giftwrapped excuse.
William “Bill” Boor, who said he will be MHI’s next chairman and is Cavco Industries president and CEO, in his remarks to Congress that: “The manufactured housing industry is at a critical crossroads due to regulatory barriers and market forces.”
After explaining that HUD has had jurisdiction over manufactured housing construction and safety standards for decades, Boor said: “However, the jurisdictional lines were blurred in 2007 when a rider was attached to the Energy Independence and Security Act of 2007 (EISA). In that rider, the DOE was directed to “establish standards for energy efficiency in manufactured housing.” 4 This language had not been subject to congressional hearings and the House Financial Services Committee, which has jurisdiction over HUD and therefore the manufactured housing construction code, was not aware of this provision. The language contained in the EISA rider was poorly crafted and these flaws were exacerbated by the DOE’s fundamental lack of understanding about the realities of factory-built home construction.”
Let’s repeat part of that Congressional testimony. “The language contained in the EISA rider was poorly crafted,” said Boor, “and these flaws were exacerbated by the DOEs fundamental lack of understanding of the realities of factory-built home construction.” Boor previously explained that his firm, Cavco, was “founded in 1965.” He said that the HUD Code has operated for some 48 years. All during that time, MHI or its predecessor has been in operation, per MHI’s own history. Quoting from Part II of that article: “Mobile Homes Manufacturers Association (MHMA) formed in August, 1936, as the Trailer Coach Manufacturers Association…”
MHI, Cavco, and their other major brands are not mere observers in manufactured housing. Or at least they are not supposed to be mere observers.
MHI’s leaders pose as being seemingly oblivious to the implications of some of their own prior remarks! If the “EISA rider” in the 2007 legislation was “poorly crafted,” where was MHI then? Where was Cavco, Clayton Homes, and the Arlington, VA based trade association’s other dominating brands?
If that MHEC member was correct in saying that “the industry” (i.e.: MHI) was late in recognizing that chattel lending was included in the HERA 2008 legislation that yielded DTS, isn’t MHI largely responsible for that error?
And if Gooch and her predecessors realized that “may” vs. “shall” do chattel lending in DTS was an issue, then why didn’t MHI seek to amend it immediately? Why have MHI ‘leaders’ waited from 2008 to 2023 to hand that giftwrapped excuse publicly to FHFA, Fannie Mae, and Freddie Mac? Whose side is Gooch on?
This question was posed to Bing’s AI chat on 8.3.2023 at about 7:20 AM ET. “Has Fannie Mae ever said that they are not required to make chattel loans under DTS, because HERA 2008 said “may” do chattel loans not “shall” do chattel loans.”
Here is Bing’s AI reply.
I’m not sure if Fannie Mae has ever said that they are not required to make chattel loans under DTS because HERA 2008 said “may” do chattel loans not “shall” do chattel loans. However, the Duty to Serve requirements imposed on the Enterprises by the Housing and Economic Recovery Act of 2008 (HERA – HERA Section 1129) represent a key element of the Enterprises role in the market to facilitate a broad, liquid, and stable national housing market accessible to all credit-worthy borrowers1.
Under the Final Rule, FHFA provides opportunities for the Enterprises to support the manufactured housing and chattel lending market with standardized loan products. MBA supports FHFA’s decision to include Enterprise support for chattel loan pilots as Regulatory Activities under the Final Rule as well as its expansion of extra credit activities under §1282.36©(3) to manufactured housing community activities such as a chattel loan pilot program1.
I hope this helps. Let me know if you have any other questions.”
To “Learn more,” Bing referenced MHARR, not MHI, along with FHFA and Fannie Mae.
Implausible
Gooch, Boor, and other MHI leaders can’t have it both ways.
They can’t claim that they are working to expand the industry’s production and sales when they keep making unforced errors.
They can’t play the role of mere observer in discussing past events when prior MHI, Cavco, Clayton or other leaders were in the picture then as now.
Time and again, the industry is given a rolling series of excuses which when carefully examined in the light of factual realities and evidence simply fall apart.
If a ‘crucifixion’ – the Roman Empire’s most painful form of death penalty made infamous by the execution of Jesus Christ – is what a MHEC member said Gooch merits, then surely others involved in MHI merit the same thing, don’t they?
And what are Cavco or other industry shareholders and stakeholders supposed to make of this now tread worn pattern of behavior by MHI? Oh! A new excuse! Meanwhile, consolidation of the industry continues.
That others in manufactured housing trade media and advocacy haven’t beat this same drum early, consistently, and often only reveals that they are openly and/or coyly in the camp of MHI’s consolidators.
In contrast, MHARR has been pointing out these issues for well over a decade. They are a producer’s trade organization, not a post-production trade or umbrella group, as MHI claims to be. Restated, MHARR are going over and above their stated role by showing all segments of the industry, public officials, and other affordable housing advocates where the problems in MHVille are lurking. It isn’t just regulators who are failing to do their stated roles. It is also MHI that is failing manufactured housing.
When outside researchers are routinely pointing out that manufactured housing is underperforming due to financing and zoning/placement barriers, it should lead to the inescapable logical conclusion that MHI is not doing its job of working for all segments of manufactured housing. Who benefits from this vexing pattern? Consolidators of a shrinking manufactured home industry! Where are those consolidators found? They are routinely MHI members and are often on the MHI board! This is the troubling truth hiding in plain sight.
Additional Closing Quotes
“Similarly, you might be perplexed when a pundit or intellectual you respect suddenly espouses surprisingly pigheaded views. Don’t be. You probably need to look no further than the fact that incentives have changed.”
“Many intellectuals are paid not to understand.”
This is not to say that everyone is equally affected by pecuniary incentives. Some people, though rare, respond to a higher set of incentives. Their reward comes from doing what is right – even though that may cost them greatly in financial terms. These are the folks whose opinions I personally give the greatest part of my attention.
Look out for those who refuse to take high-paying positions if their fundamental principles are in discord with the work on offer. Look out for those who refuse high-paying assignments from clients whose morals are in doubt. Look out for those who resign if their values are offended. Look out for those who tell you not to buy from them, because you will do better elsewhere.
You won’t find many such people. When you do, take note. You will find that they dance to a higher-order music. Their sense of achievement and meaning is not confined to the cage of personal payoffs. They are here to play bigger, even if fortunes are forsaken in the process. Perhaps you can find such a person in the mirror someday.” (Sunday Nation, 16 June 2019).
That’s what manufactured housing needs more of, those who are willing to do the right thing regardless of short-term financial incentives. But what some may be surprised by, there are far greater profits possible. Who says?
Summary and Conclusion
Perhaps ironically, Buffett himself pointed out in the video posted above that the manufactured housing industry – and his firm – could be earning more by doing the right thing on DTS. Something similar applies on enhanced preemption and the DOE energy rule, both of which Bill Boor explored in his remarks to Congress. But this is how “moat” thinking works.
That is the great irony. The manufactured housing industry could be doing far more production and sales if the right thing was being done. More sales should yield higher profits for scores of firms in MHVille. Apparently, MHVille is hungry to understand these patterns, because the hottest topics in manufactured housing are routinely the scandals and questionable legalities with MHI’s leading firms. Millions of pageviews on MHProNews not only dwarf’s MHI’s count, surging readership on MHProNews demonstrates that industry professionals, along with others keen on manufactured housing, are finding satisfying insights consistent with known facts.
Let’s be clear. If DTS magically appeared – say, because FHFA compelled Fannie and Freddie to ‘make it so’ – that doesn’t mean that lending by firms like Berkshire owned 21st and VMF would cease to be. Why? Because there would still be loans of a credit quality that would not meet Fannie and Freddie’s standards which 21st and VMF are making. It would be similar to the fact that there are loans that don’t meet Triad Financial’s higher credit quality standards. There would still be a range of lending and lenders, but by making it more competitive, more consumers would be attracted and could qualify.
- So, untold numbers of manufactured home independents would benefit.
- Consumers would benefit.
- Taxpayers would benefit, because more would become homeowners of affordable housing.
- In yet another ironic twist, it is Cavco that in ‘better late then never’ fashion made the point to investors that MHProNews made years before. The U.S. economy could benefit by some $2 trillion dollars annually in increased GDP.
Someone like Senator Tim Scott (SC-R) who is running to be the GOP presidential nominee could be embraced by MHI’s PAC or in other ways. He could become “the champion” – as Gooch’s doctoral thesis phrased it – for the cause of manufactured housing. Imagine, if Scott’s campaign began to consistently message that fixing DTS, fixing enhanced preemption enforcement, and fixing the DOE energy rule could lead to a new era of American homeownership. Doing so would boost the economy with virtually no federal spending involved. Let free enterprise fuel the American Dream by enforcing existing laws. If those laws need some tweaks, toss them all into the Road to Housing Act, as MHARR’s Weiss suggested above.
MHProNews dared to editorially call for both Lesli Gooch and then MHI president and CEO Richard “Dick” Jennison to be terminated years ago. Had the MHI board listened, this ludicrous unforced error by Lady Gooch would not have occurred.
We said “You can’t make this up” last week in our report and analysis because Gooch’s unforced error is something that a junior high school civics student – whose cheerleading mind wanders to the star quarterback – might have figured out. So, how can we explain that MHI’s board has kept Gooch for so long with so many documented problematic behaviors? Isn’t the answer as obvious as it is corrupt? They find Gooch useful for their well-documented consolidation purposes.
MHI’s board, and MHI’s staff leadership, are under the spotlight. Their ‘heads they win, tails you lose’ methodology has long been exposed here on MHProNews. Others are being incentivized to look the other way, to borrow the Upton Sinclair insight. They won’t answer the reasonable questions like the ones mentioned above. ##
PS: In that photo of MHI CEO Gooch at the top, what is in that drink she is holding? Is that why she looks tipsy?
Even if so, still no excuse for her or the MHI board. ###
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Stay tuned for more of what is 'behind the curtains' as well as what is obvious and in your face reporting that are not found anywhere else in MHVille. It is all here, which may explain why this is the runaway largest and most-read source for authentic manufactured home “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. "Tony" Kovach - for MHProNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He's a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC's and/or the writer's position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Related References:
The text/image boxes below are linked to other reports, which can be accessed by clicking on them.
'Alarming Year-Over-Year Manufactured Home Production Declines Continue' per Manufactured Housing Assoc as Deceptive Trade Practice Concerns about ManufacturedHomes.com, MHInsider, MHI Raised
'Alarming Year-Over-Year Manufactured Home Production Declines Continue', per Manufactured Housing Association for Regulatory Reform, Deceptive Trade Practice Concerns, ManufacturedHomes.com, MHVillage, Equity LifeStyle Properties, ELS, MHInsider, MHI, Lesli Gooch, George Allen, Ben Nelms, Brand Nelms, Patrick Waite, Darren Krolewski, Patrick Revere, Rick Robinson,
