In a blistering, detailed statement, the Manufactured Housing Association for Regulatory Reform (MHARR) rebuked the Federal Housing Finance Agency (FHFA) and the Government Sponsored Enterprises (GSEs) on their proposed rule for manufactured home lending.
MHARR states that the December 2016 final Duty to Serve (DTS) rule is unacceptable, because it fails to provide meaningful securitization and secondary market support for personal property (so-called 'home only' or chattel loans), which comprise more than 80 percent of the manufactured home finance market.
A Free Market, Unsubsidized Solution
The affordable housing crisis is growing, as conventional housing prices continue to rise, as do rents. A free market, unsubsidized solution to the problem is available from the U.S. based manufactured housing industry.
The industry produces federally regulated homes engineered to perform in a dynamically equivalent or superior fashion to conventional housing in construction, energy-efficiency, and safety. Because of economies of scale, per the U.S. Census Bureau, modern manufactured homes are about half the cost of new, on-site construction.
Manufactured homes enjoy the lowest monthly cost among permanent housing options, per a Government Accountability Office (GAO) report issued in 2014. That's true even though interest rates on personal property “chattel loans” are higher than conventional housing loans securitized by the GSEs.
DTS is a Fair, Common Sense Law
MHARR stresses that given more competition in lending - and with the lower rates that the GSEs can and should be making available to manufactured home buyers - even more Americans could achieve the goal of quality, affordable home ownership.
What MHARR is asking for is what the law requires.
Following the law would give consumers more competitive lending options, which buyers of conventional housing now have.
MHARR notes that private lenders are profitable in the manufactured home market, so, the GSEs can be successful too. Having had some 9 years to gather facts, MHARR is concerned that talk by the GSEs of needing “more data” or doing “a pilot program” are just code-words for more delays in doing what the Congress directed.
Facts Support what MHARR Seeks
Owning a home provides a strong sense of stability and security. Per a Census Bureau report, home ownership continues dropping, falling from 63.5 percent in the first quarter of 2016 to 62.9 percent in the second quarter. Homeownership is at its lowest point since 1965.
Fannie Mae and Freddie Mac, known as the Government Sponsored Enterprises, “GSEs” or the “Enterprises,” are at the top of the home mortgage sector. They own or insure $4.6 trillion in residential mortgages or 45.9% of the market up - from 41.9% in 2009 - per ValueWalk in a 2016 report. The roughly $5.3 billion new manufactured home market in 2016 would be tiny compared to the Enterprises capabilities. All of manufactured housing annual production would only be 0.0001152 percent of the GSEs’ current mortgage pool.
The FHFA website explains that as of “September 6, 2008, FHFA used its authorities to place Fannie Mae and Freddie Mac into conservatorship.” So, these institutions have the power to do what Congress sought through DTS.
The obstinate refusal by FHFA and the GSEs is a slap in the face of Congress, which acted on behalf of Americans nearly a decade ago in passing the Duty to Serve. The delays thwart the aspirations of those who want to own their own home. That traps millions in rentals that build their occupants no equity.
The lack of mandatory chattel DTS also indirectly results in more people living in subsidized rental housing. That costs taxpayers billions annually.
A Failure Harmful to Millions
“If Congress had meant the “duty to serve” to be optional, it would not have called it a “duty,” said M. Mark Weiss, JD, President and CEO of MHARR. “The dictionary definition of a “duty” has — at its core — a mandatory responsibility,” said Weiss in an op-ed published on MHProNews, at this link here
Not having DTS in place as directed by Congress, harms home owners, home buyers, and thus manufactured home producers and other industry businesses too, explains MHARR’s top executive. That lost production also means lost jobs.
The manufactured housing industry’s only Washington D.C. based trade association detailed written and verbal statements were made by MHARR at a “listening session” conducted by the FHFA in Chicago on January 25, 2017.
“While the FHFA final rule and related “evaluation guidance” proposal issued on January 13, 2017, has been lauded by some as bringing consumers and the industry 'closer” to the realization of a manufactured housing chattel loan securitization,” said Weiss, the rule as proposed actually mandates nothing.
“The rule would thus continue to exclude the vast majority of potential manufactured housing purchasers from the market — and from the American Dream of homeownership altogether,” Weiss said. The full MHARR statement is found at this link here
MHARR is a Washington D.C.-based national trade association representing the views and interests of producers of manufactured housing regulated by the U.S. Department of Housing and Urban Development (HUD).
(Photo caption and credits: The MHARR, FHFA, Fannie and Freddie logos shown are the property of their respective organization, and are shown here under fair use guidelines. Capitol building photo credit, Wikipedia. Photo of M. Mark Weiss, president, and CEO of the Manufactured Housing Association for Regulatory Reform, credit, MHProNews.).
Mark Weiss, President & CEO
Manufactured Housing Association for Regulatory Reform (MHARR)
Address: 1331 Pennsylvania Ave. N.W., Suite 512, Washington, D.C. 20004
Email: [email protected]