[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTATION OF THE MANUFACTURED
HOUSING IMPROVEMENT ACT OF 2000
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
INSURANCE, HOUSING AND
COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
FEBRUARY 1, 2012
__________
Printed for the use of the Committee on Financial Services
Serial No. 112-96
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HOUSE COMMITTEE ON FINANCIAL SERVICES
SPENCER BACHUS, Alabama, Chairman
JEB HENSARLING, Texas, Vice BARNEY FRANK, Massachusetts,
Chairman Ranking Member
PETER T. KING, New York MAXINE WATERS, California
EDWARD R. ROYCE, California CAROLYN B. MALONEY, New York
FRANK D. LUCAS, Oklahoma LUIS V. GUTIERREZ, Illinois
RON PAUL, Texas NYDIA M. VELAZQUEZ, New York
DONALD A. MANZULLO, Illinois MELVIN L. WATT, North Carolina
WALTER B. JONES, North Carolina GARY L. ACKERMAN, New York
JUDY BIGGERT, Illinois BRAD SHERMAN, California
GARY G. MILLER, California GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina CAROLYN McCARTHY, New York
JOHN CAMPBELL, California JOE BACA, California
MICHELE BACHMANN, Minnesota STEPHEN F. LYNCH, Massachusetts
THADDEUS G. McCOTTER, Michigan BRAD MILLER, North Carolina
KEVIN McCARTHY, California DAVID SCOTT, Georgia
STEVAN PEARCE, New Mexico AL GREEN, Texas
BILL POSEY, Florida EMANUEL CLEAVER, Missouri
MICHAEL G. FITZPATRICK, GWEN MOORE, Wisconsin
Pennsylvania KEITH ELLISON, Minnesota
LYNN A. WESTMORELAND, Georgia ED PERLMUTTER, Colorado
BLAINE LUETKEMEYER, Missouri JOE DONNELLY, Indiana
BILL HUIZENGA, Michigan ANDRE CARSON, Indiana
SEAN P. DUFFY, Wisconsin JAMES A. HIMES, Connecticut
NAN A. S. HAYWORTH, New York GARY C. PETERS, Michigan
JAMES B. RENACCI, Ohio JOHN C. CARNEY, Jr., Delaware
ROBERT HURT, Virginia
ROBERT J. DOLD, Illinois
DAVID SCHWEIKERT, Arizona
MICHAEL G. GRIMM, New York
FRANCISCO ``QUICO'' CANSECO, Texas
STEVE STIVERS, Ohio
STEPHEN LEE FINCHER, Tennessee
James H. Clinger, Staff Director and Chief Counsel
Subcommittee on Insurance, Housing and Community Opportunity
JUDY BIGGERT, Illinois, Chairman
ROBERT HURT, Virginia, Vice LUIS V. GUTIERREZ, Illinois,
Chairman Ranking Member
GARY G. MILLER, California MAXINE WATERS, California
SHELLEY MOORE CAPITO, West Virginia NYDIA M. VELAZQUEZ, New York
SCOTT GARRETT, New Jersey EMANUEL CLEAVER, Missouri
PATRICK T. McHENRY, North Carolina WM. LACY CLAY, Missouri
LYNN A. WESTMORELAND, Georgia MELVIN L. WATT, North Carolina
SEAN P. DUFFY, Wisconsin BRAD SHERMAN, California
ROBERT J. DOLD, Illinois MICHAEL E. CAPUANO, Massachusetts
STEVE STIVERS, Ohio
C O N T E N T S
----------
Page
Hearing held on:
February 1, 2012............................................. 1
Appendix:
February 1, 2012............................................. 35
WITNESSES
Wednesday, February 1, 2012
Bostick, John, Chairman, Manufactured Housing Association for
Regulatory Reform (MHARR)...................................... 8
Czauski, Henry S., Acting Deputy Administrator, Office of
Manufactured Housing Programs, U.S. Department of Housing and
Urban Development (HUD)........................................ 6
Dickens, Ishbel, Executive Director, Manufactured Home Owners
Association of America (MHOAA)................................. 9
Hussey, Edward, Immediate Past Chairman, Manufactured Housing
Association for Regulatory Reform (MHARR)...................... 12
Roberts, Dana, Past Chairman, The Manufactured Housing Consensus
Committee (MHCC)............................................... 14
Santana, Manuel, Director of Engineering, Cavco Industries, on
behalf of the Manufactured Housing Institute (MHI)............. 16
APPENDIX
Prepared statements:
Bostick, John (MHARR statement).............................. 36
Czauski, Henry S............................................. 58
Dickens, Ishbel.............................................. 63
Hussey, Edward (MHARR statement)............................. 36
Roberts, Dana................................................ 71
Santana, Manuel.............................................. 81
Additional Material Submitted for the Record
Biggert, Hon. Judy:
Written responses to questions submitted to Manuel Santana... 88
Letter from Chairman Bachus and Chairwoman Biggert to Hon.
Gene Dodaro, Comptroller General, GAO, dated November 29,
2011....................................................... 92
Letter to Representative Duffy from the Wisconsin
Manufactured Home Owners Association (WIMHOA).............. 94
Biggert, Hon. Judy, and Gutierrez, Hon. Luis:
Letter from the Corporation for Enterprise Development (CFED) 96
Letter to Representative Garrett from the Manufactured Home
Owners Association of New Jersey........................... 110
Letter from the Mobile Homeowners Association of Illinois
(MHOAI).................................................... 113
Letter from Tim Sheahan, Immediate Past President, Golden
State Manufactured-home Owners League (GSMOL).............. 115
Miller, Hon. Gary:
Text of H.R. 3849............................................ 123
Dickens, Ishbel:
Written response to a question posed by Representative
Sherman during the hearing................................. 128
Written response to a question posed by Representative Dold
during the hearing......................................... 129
IMPLEMENTATION OF THE MANUFACTURED
HOUSING IMPROVEMENT ACT OF 2000
----------
Wednesday, February 1, 2012
U.S. House of Representatives,
Subcommittee on Insurance, Housing
and Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
room 2128, Rayburn House Office Building, Hon. Judy Biggert
[chairwoman of the subcommittee] presiding.
Members present: Representatives Biggert, Hurt, Miller of
California, Duffy, Dold, Stivers; Gutierrez, Velazquez, and
Sherman.
Also present: Representative Green.
Chairwoman Biggert. This hearing of the Subcommittee on
Insurance, Housing and Community Opportunity entitled,
``Implementation of the Manufactured Housing Improvement Act of
2000,'' will come to order. We will begin with opening
statements, and I will yield myself 5 minutes.
Good morning everyone, and I would like to welcome our
panel of witnesses. The manufacturing housing sector has long
been an important supplier of affordable housing as well as
American jobs. This hearing will provide valuable insight into
the forces that have weakened the manufacturing housing market,
as well as the effectiveness of HUD's response and its
implementation of the Manufacturing Housing Improvement Act of
2000.
We will examine issues including building codes, safety and
installation standards, and Federal preemption.
With that, I would like to insert into the record a
November 29, 2011, letter that Chairman Baucus and I sent to
GAO requesting that they examine various aspects of HUD's
regulation of the manufacturing housing industry. We hope to
have this report from GAO at some point this year. And without
objection, I would like to submit the letter.
I would also like to submit the following inserts for
today's hearing record. I ask unanimous consent to do so: a
January 31, 2011, letter from the Corporation for Enterprise
Development; a February 1, 2011, letter from the Manufactured
Home Owners Association of America; a January 31, 2011, letter
from the Mobile Homeowners Association of Illinois; a January
29, 2000, letter from the Manufactured Home Owners Association
of New Jersey; and a January 31, 2011, letter from the
Wisconsin Manufactured Home Owners Association.
Finally, as a member of the House Democracy Partnership
Commission, I am honored to recognize 10 members of the
Democracy Committee of Parliament from the Central Asian nation
of Kyrgyzstan. If you wouldn't mind standing so people can see
who you are?
Thank you very much. This week, they are visiting
Washington, and particularly Congress, to observe and study our
operations and identify practices that they could adopt for
their parliament as they continue to transition to a
parliamentary democracy, so welcome, welcome to all of you.
And with that, I recognize the ranking member of the
subcommittee, Mr. Gutierrez.
Mr. Gutierrez. Thank you, Madam Chairwoman, and thank you
to all of the witnesses for joining us this morning to discuss
the ongoing implementation of the Manufactured Housing
Improvement Act of 2000. This has a profound effect on housing
equality and affordability for millions of families across the
country. I think it is important that we hear different
perspectives on these issues, so I am glad to see witnesses
representing HUD, the manufactured housing industry, and
homeowners here today. Although, I have to admit that the
industry seems to have gotten more representatives than anyone
else. But that is okay.
We need to hear from them. From what I understand, industry
groups are concerned about the Manufactured Housing Consensus
Committee, which was created by the 2000 Act. They say it isn't
functioning the way that Congress intended it to function. They
believe that HUD is ignoring the committee's proposal in
marginalizing it. They point to their recommendations per
national standards and other reforms and wonder what is taking
HUD so long.
Consumer advocates might agree with some of these, but they
seemed to see things from a different perspective. To them, the
Consensus Committee is one of the few places where homeowners
and the consumers have an equal voice, where the industry
doesn't always dominate.
Consumer advocates also point out that some of the
committee's dysfunction is the industry's own doing. Important
safety and accessibility standards have language in the
committee for a decade before coming up for a vote. Industry
representatives constantly fall back on affordability as the
reason to oppose more stringent standards, even when the
benefits to consumers far outweigh the potential cost.
I agree that HUD has important questions to answer today. I
believe that HUD could do more to implement the reforms laid
out in the 2000 Act. But as long as we are being honest, I
think the industry also needs to take some responsibility. It
isn't serving its customers as well as it should. It offers a
product that doesn't work for many people as advertised. It
seems to resist innovations and improvements in customer
service if they don't obviously improve as the bottom line.
Personally, I am interested in reforms that the industry
and consumer advocates agree on, things like access to good
financing, better laws protecting manufactured homeowners who
rent their land, better implementation of installation
standards and dispute resolution, and more efficient HUD
management. These are things that matter, and which as a
homeowner can improve the quality of your life. These are
things that we can start figuring out how to fix.
I want to thank you once again, Madam Chairwoman, for
calling this hearing. Before I yield back the balance of my
time, I would like to ask unanimous consent to have four
letters representing concerns of consumers entered into the
record.
Chairwoman Biggert. Without objection, it is so ordered.
Mr. Gutierrez. Thank you, Madam Chairwoman.
Chairwoman Biggert. We will now go to the vice chair of the
subcommittee. The gentleman from Virginia, Mr. Hurt, is
recognized for 2 minutes .
Mr. Hurt. Thank you for yielding, Madam Chairwoman. I
appreciate your leadership and focus on the subject of
manufactured housing, which is of great importance to my
constituents, the citizens of Virginia's Fifth District.
Also, I want to thank you, Chairwoman Biggert, for allowing
this subcommittee to conduct a field hearing in Danville,
Virginia, last November on the state of the manufactured
housing industry, which is not only a producer of affordable
housing for thousands of central and south side Virginians but
is also a critical source of jobs in manufacturing, retail, and
related services in my district and throughout the country.
I would like welcome Administrator Czauski and thank him
for his appearance before our subcommittee today. Mr. Czauski
was gracious enough to come to Danville for the subcommittee's
field hearing on manufactured housing policy. I appreciate the
perspective you shared on the state of the industry at our
previous hearing, and I look forward to continuing that
dialogue today. Thank you for being here.
As we learned in Danville at the field hearing, the
manufactured housing industry's ability to respond to the
changing economic conditions is being hindered by the lack of
financing available to those who wish to purchase these homes.
We also have found that the one-size-fits-all provisions of
the Dodd-Frank Act failed to account for the unique method of
financing for manufactured homes, creating troubling,
unintended consequences, namely decreased access to affordable
housing choices for consumers and fewer jobs in the
manufactured housing industry.
Today's hearing will focus on other aspects of the
regulation of manufactured housing industry, the manner in
which HUD administers the Manufactured Housing Improvement Act
of 2000, and how these issues are impacting the industry and
the consumers it serves.
Again, I would like to thank the chairwoman for holding
this important hearing today, and I look forward to hearing
from our witnesses. I yield back the balance of my time.
Chairwoman Biggert. Thank you, Mr. Hurt, and I thank you
for having the field hearing earlier in Virginia.
With that, I would like to recognize the gentleman from
Texas, Mr. Green, for 2 minutes.
Mr. Green. Thank you, Madam Chairwoman. I thank you and the
ranking member for hosting the hearing also. I also thank you
for allowing me to be a part of the hearing, since I am on the
Financial Services Committee but not on this subcommittee. So,
I thank you.
Chairwoman Biggert. But you have the best attendance.
[laughter]
Mr. Green. Well, thank you very much.
I am honored to have the opportunity to hear the witnesses
today, and I am interested in some of the things that happened
when Hurricane Katrina hit the Gulf Coast. We have a lot of
concerns with manufactured housing. After Katrina, we have the
concerns with the formaldehyde and some of the safety issues
associated with manufactured housing.
Someone is going to give us a little bit of an update on
how we have improved some of those standards such that persons,
consumers can purchase a home and be assured that the home is
going to provide shelter without a fear of some sort of harm
from some of the things that may be contained within the actual
product itself.
With this, I thank you, and I yield back the balance of my
time.
Chairwoman Biggert. The gentleman yields back.
The gentleman from California, Mr. Miller, is recognized
for 2 minutes.
Mr. Miller of California. Thank you, Madam Chairwoman.
The manufactured housing industry has faced significant
hurdles over the past decade. New manufactured home
construction has fallen roughly 80 percent over the past decade
which has accounted for more than 160 plant closures, more than
7,500 home center closures, and the loss of 200,000-plus jobs.
In addition to current economic conditions, Federal
regulations are contributing significantly to the decline and
demand for manufactured housing. It is not that manufactured
housing is less desirable for consumers but rather that Federal
regulation has made it difficult for consumers to buy
manufactured homes, for example, a significant decrease in
finance availability for homebuyers, overly strict rules
interpretations regarding loan origination, and the outdated
HUD code. This is unacceptable.
Congress must address the problem the Federal Government
has caused that impedes the ability of consumers to obtain
mortgage financing for manufactured homes. In conjunction with
the Manufactured Housing Institute, my colleagues
Representative Fincher and Donnelly and I have developed a
bipartisan bill to address some of these concerns.
Yesterday, Representatives Fincher, Donnelly, and I
introduced the Preserving Access to Manufactured Housing Act,
H.R. 3849.
Chairwoman Biggert, I ask unanimous consent to introduce
this into the record.
Chairwoman Biggert. Without objection, it is so ordered.
Mr. Miller of California. The bill addresses two main
issues facing the industry. This bill will make sure qualified
homebuyers have access to financing for manufactured homes.
Specifically, this provision would amend the definition of
high-cost loans or recognize that small balance loans are
fundamentally different than large balance loans and treat them
accordingly.
The bill reduces unnecessary regulatory compliance and
training costs by appropriately defining the loan origination
process. Specifically, the bill would clarify that manufactured
housing employees are not required to register and train as
loan originators under the SAFE Act so long as they don't
engage in the business of loan origination.
It is important to note that the actual loan originators
would still be subject to the SAFE Act. I think it is something
we need to do for the industry. We need to turn the process
around and give the industry a chance to recoup after this
downturn they faced.
I yield back the balance of my time.
Chairwoman Biggert. The gentleman yields back.
The gentleman from Wisconsin, Mr. Duffy, is recognized for
2 minutes.
Mr. Duffy. Thank you, Madam Chairwoman. I want to thank the
panel for coming in today. Specifically, I want to thank Mr.
Hussey for coming in. He is involved with Liberty Homes that
manufactures housing not only around the country, but in my
district, where Liberty Homes employs 80 people in Dorchester,
Wisconsin.
We are well aware that they are a great job creator but
they also provide affordable, safe, low-cost housing to people
in my district. That is a dual benefit that we have from
Liberty Homes in Wisconsin's Seventh Congressional District.
I am well aware of the December 2000 law that passed
Congress, the Manufactured Housing and Improvement Act of 2000.
Its intent was to streamline the regulatory burdens and open up
financing for homeowners. I am well aware that quite a few
folks on this panel don't believe that the intent of the law
has come to pass, and I look forward to hearing the testimony
of the panel about some of the issues that you face, and to
pass on some of the solutions that we may address to resolve
the problem.
I yield back.
Chairwoman Biggert. The gentleman yields back.
The gentleman from Illinois, Mr. Dold, is recognized for 5
minutes.
Mr. Dold. Thank you, Madam Chairwoman and--
Chairwoman Biggert. Sorry, 2 minutes.
Mr. Dold. Oh, she has already cut the time. Okay. I will
take 2 minutes, maybe even less.
Certainly, Madam Chairwoman, thank you very much for
holding this hearing, and I want to thank our panelists for
being here today. I certainly look forward to your testimony.
As you know, Congress has an ongoing obligation to review
and monitor the laws that it passes to ensure that these very
laws make sense in the real world, that they are having the
intended effect, and that they have not caused unintended
negative consequences as well.
A very significant part of this ongoing congressional
obligation includes oversight responsibility for the various
Executive Branch agencies to ensure that they are correctly
implementing and executing the laws passed by this body.
In this case, it has been over a decade since Congress
passed the Manufactured Housing Improvement Act of 2000. That
2000 law was designed to reform the entire regulatory framework
of the manufactured housing industry and was passed on a
bipartisan basis after many years of study, negotiation, and
compromise.
However, in the 12 years since the 2000 law was enacted,
many have alleged that HUD throughout both the Bush and Obama
Administrations has systematically undermined and effectively
invalidated the 2000 Manufactured Housing Law and wasted
taxpayer dollars while doing so.
Today, as part of our ongoing oversight responsibilities,
we consider whether HUD has properly and responsibly
implemented the 2000 Manufactured Housing Improvement Law and
if not, why not. What are the resulting consequences and what
should Congress do about it?
The manufactured housing industry has struggled with so
many job losses and plant closings over the past 12 years while
customers have found financing options extremely limited,
unavailable or unaffordable.
I look forward to hearing from our witnesses today to what
extent HUD's interpretation and implementation of the 2000
Manufactured Housing Law has contributed to these significant
industry challenges.
And with that, I yield back.
Chairwoman Biggert. The gentleman yields back. Without
objection, all Member's opening statements will be made a part
of the record.
I will now introduce our panel of witnesses: Henry Czauski,
Acting Deputy Administrator for the Office of Manufactured
Housing Programs, U.S. Department of Housing and Urban
Development; John Bostick, chairman, Manufactured Housing
Association for Regulatory Reform; Ishbel Dickens, executive
director, Manufactured Home Owners Association of America;
Edward Hussey, immediate past chairman, Manufactured Housing
Association for Regulatory Reform; Dana Roberts, past chairman,
the Manufactured Housing Consensus Committee; and Manuel
Santana, director of engineering for Cavco Industries, on
behalf of the Manufactured Housing Institute.
And with that, each panel witness will be recognized for 5
minutes for a summary of your testimony.
We will start with Mr. Czauski. You are recognized for 5
minutes.
STATEMENT OF HENRY S. CZAUSKI, ACTING DEPUTY ADMINISTRATOR,
OFFICE OF MANUFACTURED HOUSING PROGRAMS, U.S. DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT (HUD)
Mr. Czauski. Chairwoman Biggert, Ranking Member Gutierrez,
and members of the subcommittee, thank you for the opportunity
to testify today.
My name is Henry Czauski, and I am the Acting Deputy
Administrator for the Office of Manufactured Housing Programs
at HUD.
My remarks today will highlight key aspects of the
Manufactured Housing Improvement Act of 2000 and will outline
the actions undertaken by HUD since this legislation was
enacted to demonstrate how it has and continues to implement
the Act.
In 1974, Congress enacted the National Manufactured Housing
Construction and Safety Standards Act, which was amended by the
2000 Act. HUD was charged with administering this legislation.
The key aspects of the 2000 Act included the creation of a
Consensus Committee and an organizational infrastructure to
support it, a process for revision of the construction and
safety standards, enhanced preemption, establishment of
installation standards, and a dispute resolution program and a
label fee.
A Consensus Committee known as the ``Manufactured Housing
Consensus Committee,'' the MHCC, was created as a Federal
Advisory Committee to provide recommendations to HUD to adopt
and revise Federal manufactured housing construction and safety
standards, as well as procedural and enforcement regulations.
To assist the MHCC, the Act provided for HUD a contract
with an administering organization. In 2001, HUD contracted
with the organization and has continuously maintained a
contract to this date. The makeup of the MHCC is determined by
the 2000 Act, which provides for 21 voting members appointed by
the Secretary that includes 7 producers, 7 users representing
consumer interests, and 7 persons representing public officials
and the general interest.
HUD announced the initial 21 members of the committee in
August 2002 and has continued this process for appointment of
members to the committee to the current time. Since the
creation of the committee, approximately 35 meetings have been
held, an average of 3 meetings per year.
The Federal standards are the subject of ongoing review and
updating. Over the years, numerous standards were reviewed by
the committee and submitted to the Secretary, including
recommendations on ventilation, fire protection, carbon
monoxide detection, anti-scald protection, and energy
efficiency.
In addition, HUD established installation standards and a
dispute resolution program by regulation in 2007. Federal
preemption is the key concept and provides that no State or
political subdivision has authority to establish any standard
which is not identical to the Federal standards.
The 2000 Act provided preemption to be broadly and
liberally construed to ensure that disparate State and local
requirements or standards do not affect the uniformity and
comprehensiveness of the Federal standards. HUD has been and
continues to implement preemption. Jurisdictions attempting to
enforce local standards have been notified that local laws are
subject to Federal pre-emption.
The 2000 Act also reaffirmed the authority of the Secretary
to establish and collect the reasonable label fee to offset the
expense of carrying out the Act. The label fee was set at $39
in 2002. Revenues generated from this fee are used in
accordance with the 2000 Act for conducting inspections and
monitoring; providing funding to the States with approved
plans; administering MHCC; and the administration of the
enforcement of installation standards and a dispute resolution
program.
Although a fee increase of $60 was considered, that fee has
not been increased, and the Department intends to consider the
impact of an increase on the industry before implementing any
change. HUD also insures loans for the purchase of manufactured
homes and Title I and Title II of the National Housing Act.
These FHA loans are eligible for inclusion in mortgage-
backed securities issued by the Government National Mortgage
Corporation, Ginnie Mae. In June 2010, Ginnie Mae launched a
new manufactured housing securitization program, and in 2011,
securities from Ginnie Mae guaranteed nearly $100 million in
mortgage-backed securities for manufactured housing loans.
Together, FHA and Ginnie Mae have provided guarantee mechanisms
which facilitate the availability of capital for manufactured
housing.
In closing, the Department has acted diligently to fully
implement the 2000 Act, has a history of actively engaging with
all the stakeholders, and will continue to do so. I want to
thank you for the opportunity to provide testimony before the
subcommittee today, and I would be pleased to answer any
questions.
[The prepared statement of Mr. Czauski can be found on page
58 of the appendix.]
Chairwoman Biggert. Thank you very much.
Mr. Bostick, you are recognized for 5 minutes.
STATEMENT OF JOHN BOSTICK, CHAIRMAN, MANUFACTURED HOUSING
ASSOCIATION FOR REGULATORY REFORM (MHARR)
Mr. Bostick. Good morning. My name is John Bostick. I am
the chairman of the Manufactured Housing Association for
Regulatory Reform (MHARR). I am also president of Sunshine
Homes headquartered in Red Bay, Alabama, and I also live in a
Sunshine manufactured home.
Sunshine Homes is a producer of manufactured homes built in
accordance with the Federal construction and safety standards
enforced by the U.S. Department of Housing and Urban
Development.
MHARR is a national trade association founded in 1985 and
based here in Washington, D.C., which represents the views and
interests of mostly smaller independent producers of federally-
regulated manufactured housing including Sunshine Homes.
With me here today is Ed Hussey, my predecessor as the
chairman of MHARR, who was chosen by Congress to serve on the
National Commission on Manufactured Housing.
Historically, manufactured homes have accounted for about
20 to 25 percent of the new single-family homes sold in the
United States. In 1998, our industry manufactured 373,000
homes. Since then, however, the industry has experienced a
decline that is unprecedented in severity and length and has
seen production and sales decline by nearly 90 percent. In 2010
and 2011, total industry production was approximately 50,000.
The decade-plus decline of the industry is a result of
entrenched discrimination against both the product and the
market segment that it primarily serves, discrimination that
has grown in recent years due to the intentional policy
decisions by Federal regulators and as an unintended
consequence of other decisions within the Federal buracracy;
this discrimination was supposed to have been a thing of the
past.
More than a decade ago, Congress enacted the Manufactured
Housing Improvement Act of 2000. That landmark Act, which
amended the original National Manufactured Housing Act of 1974,
was designed based on 12 years of congressional study and the
findings of a National Commission on Manufactured Housing to
complete the transition of manufactured homes from the trailers
of yesteryear to legitimate housing at full parity with other
types of homes.
Congress in that law not only acknowledged the importance
of the affordability of manufactured homes, making the
maintenance of that affordability an express purpose of the
Act, but also enacted specific reforms to the HUD Manufactured
Housing Programs designed to end past abuses and transform the
program into a housing program that would ensure equal
treatment in the role of manufactured housing for all purposes
within HUD and elsewhere.
The reality has been much different, as is detailed in
MHARR's comprehensive written testimony. HUD has failed to
fully and properly implement the vast majority of the key
programs that Congress deemed necessary in the 2000 law. After
12 years, Congress needs to send HUD a clear and unmistakable
message that the 2000 law means what it says and that HUD must
change course and implement the law in accordance with the
expressed terms in its full intent and purpose. The 2000 law is
not in need of change. It is HUD's implementation of that law
which has to change.
Chairwoman Biggert and Ranking Member Gutierrez, I thank
you for holding this hearing, and for the opportunity to appear
here today and address the subcommittee.
MHARR has already submitted comprehensive and detailed
written testimony addressing all of these issues, and we would
ask that it be included in the record for this hearing.
We also look forward to answering any questions that you or
your colleagues may have. Thank you.
[The prepared statement of MHARR can be found on page 36 of
the appendix.]
Chairwoman Biggert. Thank you, and that material is
included with your testimony which is included in the record.
So, thank you.
Ms. Dickens, you are recognized for 5 minutes.
STATEMENT OF ISHBEL DICKENS, EXECUTIVE DIRECTOR, MANUFACTURED
HOME OWNERS ASSOCIATION OF AMERICA (MHOAA)
Ms. Dickens. Good morning Chairwoman Biggert, Ranking
Member Gutierrez, and members of the subcommittee. Thank you
for the opportunity to share the Manufactured Home Owners
Association's perspective with you.
My name is Ishbel Dickens, and I am the executive director
of the Manufactured Home Owners Association of America. I have
been working with manufactured home owners for more than 20
years. I started out as a volunteer, collecting signatures to
prevent a manufactured housing community in the vicinity of my
church from being closed. I then became a community organizer
and then went to law school specifically to get my law degree
to advocate for people who own their homes and but not the land
under them. In 2010, I completed Harvard University's Kennedy
School Achieving Excellence Program, and I have been the
executive director of MHOAA since November of 2010.
MHOAA is a national association of manufactured homeowners
and represents the interests of 17 million people who live in
manufactured homes. In fact, there are approximately 3,400,000
manufactured homeowners represented in the 12 States on this
subcommittee.
There are more than 50,000 manufactured housing communities
throughout the United States, and they provide rental spaces
for 2.9 million households upon which to place their homes.
There are a number of reasons why people choose to live in
manufactured homes, including the fact that the homes tend to
be less expensive and can often be purchased without a
downpayment. They are often seen as attractive options for
seniors and for young families just starting out on the
homeownership ladder.
Many people choose to live in manufactured housing
communities because the preference is for the gated
communities; safe places to live. However, manufactured
homeowners, especially those living in land lease communities,
soon begin to realize that their American dream of
homeownership is turning into a nightmare as landlords impose
higher and higher rents without any corresponding improvement
in the community and most especially when landlords sell the
land under their homes without compensating them for the result
and displacement in the loss of their homes.
Other negative aspects related to manufactured home living
relate to the cost of buying a manufactured home. Most
purchasers are steered towards chattel rather than real estate
loans. This means they have to pay a higher interest rate over
a shorter period of time resulting in double monthly payments.
Besides the ever-increasing rent and the constant looming
threats of the land under the home being sold, homeowners are
also very worried about lack of security of tenure. Landlords
provide only one-year rental agreements that may or may not be
renewed and certainly don't provide the homeowner with security
of tenure. Why would they spend their life savings and take
cash in an expensive chattel loan to purchase a manufactured
home if they have no security of tenure. Thus, the current
state of manufactured housing in this country is fraught with
anxiety, inequality, and lack of predictability.
I wanted to address some of the MHCC issues that have come
up. I think the Manufactured Housing Consensus Committee plays
a vital role for both consumers and the industry. The makeup of
the Committee--seven members representing consumers, seven
representing the industry and seven representing the general
public--is the only place where manufactured homeowners will
have an equal voice.
When manufactured housing community landlords have the
power to close the communities and displace all the homeowners,
when they have the power to raise the rent to such an extent
they cause economic eviction, and when the enforced rules which
basically have absolved them of all the responsibility then the
playing field is so uneven that manufactured homeowners begin
to feel like prisoners in their own homes.
At least on the MHCC, manufactured homeowners have an equal
voice. They have a forum where their voice matters. They
exercise that voice, and they make sure that the homes that are
built are durable and long-lasting. The MHCC is there to advise
the Department on a range of issues related to construction and
safety of manufactured homeowners. This quality oversight is
vital for consumers.
The MHCC is required to meet not less than once every 2
years. I have been to two in-person meetings in 2011 and an
additional orientation meeting as a new member of the
committee.
The MHCC bylaws allow for public participation in both the
general and all subcommittee meetings; therefore, the two main
industry players, MHI and MHARR, are very well represented. In
fact, I think the record will show that the public comment
session is dominated by the industry.
There are four subcommittees on the MHCC, and we meet by
telephone between in-person meetings to discuss a variety of
issue that are brought before us. A majority vote on the
subcommittee is enough to bring those issues to the full
committee, and a two-thirds vote on the full committee is what
takes the issue forward to the Department. It is a laborious
process, but it works because it gives everyone a voice, and it
is really worthwhile in the time it takes to get us to
consensus.
I think there are some solutions, and I think there are
ways that the industry and the homeowners can work together,
and I would like to address just a few of them. Both the
homeowners and the producers want a quality product at an
affordable price that will last, allowing homeowners to age in
place.
Manufactured homeowners also want to know that when they
take out a loan, it is on a product where the financing will be
affordable, and that the land upon which they place that home
will be there for the long term. More homes would be sold if
the industry worked with manufactured homeowners to guarantee
long-term leases to ensure people were not displaced due to
economic eviction and where manufactured home communities had
security of tenure either through purchase of the land wherein
the landlord wants to sell it or through zoning laws to
preserve manufactured housing communities long term.
The industry could also encourage more manufactured home
sales if they supported a titling and had manufactured homes
provided with the same financing tools that are available for
site-built homes.
I think the government also has a role to play, and I would
like to point out that there are some 14 States where there are
no protections for manufactured home owners. It would be great
if the Federal Government could require HOME States to have
manufactured housing protection laws in place before they were
given HOME dollars for instance, or where the Federal
Government could provide tax incentives to encourage community
owners to sell to homeowners' associations or to housing
authorities.
Also, I think before this community next week, there will
be a hearing on the Affordable Housing Self-Sufficiency
Improvement Act. It would be great if homeowners could use
those vouchers not only to pay for the rental on the land but
also to pay for the mortgage or the insurance on those homes.
I appreciate the opportunity to come here this morning, and
I hope that MHOAA will continue to have conversations with both
the industry and the government as together we ensure the long-
term viability of the manufactured home industry and realize
the potential for manufactured homes to play a large role in
addressing the affordable housing crisis in this country today.
Thank you for the opportunity, and I look forward to
further dialogue on this important topic.
[The prepared statement of Ms. Dickens can be found on page
63 of the appendix.]
Chairwoman Biggert. Thank you.
Mr. Hussey, you are recognized for 5 minutes.
STATEMENT OF EDWARD HUSSEY, IMMEDIATE PAST CHAIRMAN,
MANUFACTURED HOUSING ASSOCIATION FOR REGULATORY REFORM (MHARR)
Mr. Hussey. My name is Edward Hussey. I am appearing today
in my capacity as immediate past chairman of the Manufactured
Housing Association for Regulatory Reform. I am also vice
president of Liberty Homes Inc., headquartered in Goshen,
Indiana, a manufacturer of manufactured and modular homes.
Over the course of more than 35 years, I have been involved
in nearly every aspect of the production and marketing of
manufactured homes and the Federal regulation of manufactured
home construction and safety. I have had the privilege of
testifying before Congress previously about the benefits and
advantages that manufactured homes provide to families seeking
the American dream, and I was honored to serve as a House of
Representatives appointee to the National Commission on
Manufactured Housing in the 1990s which developed a conceptual
blueprint for reforms to the Federal Manufactured Housing
Program at the U.S. Department of Housing and Urban Development
that were ultimately enacted by Congress as part of the
Manufactured Housing Improvement Act of 2000. The enactment of
the 2000 law was a major watershed event for the manufactured
housing industry. From humble origins nearly 80 years ago as a
type of quasi vehicle, mobile homes in the 1960s and 1970s
experienced a period of rapid growth of evolution that pointed
to the need for Federal regulation to ensure quality and
protect homeowners while ensuring the affordability and
acceptance of manufactured homes nationwide.
As a result, Congress adopted the Manufactured Housing
Construction and Safety Standards Act of 1974, which
established the current HUD Regulatory Program based on three
interrelated principles: first, uniform performance-based
Federal construction and safety standards to allow innovation
and to take advantage of the efficiencies of factory built
construction; second, robust Federal preemption to avoid a
multitude of nonconforming State and local standards that would
unnecessarily increase cost; and third, uniform, federally-
based enforcement of the standards.
While the original 1974 law fostered major technological
advances that saw the trailers of the post-World War II era
become legitimate housing that in almost all instances remained
at the original home site once installed, the HUD program
established by that law was effectively a program for trailers
complete with recall provisions.
As the industry progressed, it became evident by the 1990s
that both the Federal Manufactured Housing Law and the Federal
program needed to change in order to keep pace with the
industry, allow manufactured housing to reach its full
potential, and remedy HUD program deficiencies that had become
evident since the inception of the Federal regulation in 1976.
Following 12 years of study and analysis including the
recommendations of the National Commission, Congress enacted
the 2000 law making what were supposed to be major changes to
the HUD Manufactured Housing Program. Those changes were
designed in part to ensure the continuing affordability of
manufactured housing and more importantly to complete the final
transition of manufactured homes from the trailers of
yesteryear to legitimate housing at parity with all other types
of homes.
Among the centerpiece reforms of the 2000 law were: one,
the creation of a strong independent Consensus Committee
similar to those used to develop other American building codes,
to consider new and revised standards, enforcement regulations,
interpretations, and changes to enforcement policies and
practices; and two, an appointed noncareeer administrator for
the HUD program to finally bring manufactured housing into the
mainstream of HUD programs, policies, and initiatives.
Unfortunately, it has not worked out the way that Congress
had intended. Instead of fully implementing the 2000 law as
Congress and the National Commission intended, HUD has done
everything in its power to maintain the old status quo of pre-
2000 and either ignore or materially alter the changes that
Congress sought to bring about.
The result is that manufactured housing, as far as HUD and
other governmental and quasi governmental agencies are
concerned, stands essentially where it did when Congress
convened the National Commission in 1993, a semi-vehicular
``trailer'' in need of ``improvement'' through constantly
expanding regulation and enforcement. This outdated and
indefensible orientation has had a domino effect on the entire
industry and its consumers, subjecting both to ever worsening
discrimination that among other things has virtually eliminated
public and private consumer financing for manufactured home
purchases and has negatively impacted the placement and
acceptance of manufactured housing.
As detailed in our MHARR written statement, manufactured
housing production since the enactment of the 2000 law has
declined more than 86 percent from 374,000 homes in 1998 to
50,000 homes in the last 2 years. Over the same period, nearly
75 percent of the industry's production facilities have closed
and more than 7,500 retail centers have closed.
This represents a devastating loss of affordable housing
opportunities for lower- and moderate-income American families,
and hundreds of thousands of jobs throughout the manufactured
housing industry have simply disappeared.
And this has occurred in no small part due to HUD's refusal
to embrace manufactured housing and the clear directives that
Congress set out in the 2000 law. Manufactured housing can and
should be a private sector solution in conjunction with other
programs to meet the housing needs of Americans on all rungs of
the economic ladder without the need for subsidies that
needlessly burden taxpayers and increase the Federal deficit
and Federal debt. Manufactured housing can fulfill this role
and provide the American dream--
Chairwoman Biggert. Mr. Hussey, if you could wrap up
please?
Mr. Hussey. I am. Just to be clear, Madam Chairwoman, there
is nothing wrong with the 2000 law. It does not need to be
altered or amended. The issue is its implementation by HUD.
Chairwoman Biggert, Ranking Member Gutierrez, we thank you
for holding his hearing and for the opportunity to address the
subcommittee.
[The prepared statement of MHARR can be found on page 36 of
the appendix.]
Chairwoman Biggert. Thank you.
Mr. Roberts, you are recognized for 5 minutes.
STATEMENT OF DANA ROBERTS, PAST CHAIRMAN, THE MANUFACTURED
HOUSING CONSENSUS COMMITTEE (MHCC)
Mr. Roberts. Thank you, Chairwoman Biggert and Ranking
Member Gutierrez. My name is Dana Roberts. I am here today
because I was a member for over 6 years of the Manufactured
Housing Consensus Committee, and its first chairman until my
resignation from the committee in July of 2008. Until my
retirement from the State of Oregon, I served as Oregon's
operation's manager for the manufactured housing program.
Among my responsibilities were Oregon's implant
inspections, Oregon's Consumer Assistance Program that includes
investigating concerns by homeowners involving dealers,
retailers, manufacturers, and sellers and reaching resolution
of those concerns under either Federal or State law. I also
administered Oregon's manufactured installation set-up standard
and was the chairman of the committee that created that
standard.
Based upon my years of experience managing Oregon's
Manufactured Housing Program, I am of the opinion that the
manufactured housing industry produces quality homes in the
plant that are equal to site-built homes for the money. The
number one problem facing the industry before the 2000 Act is
not using the right type of foundation for the home's use. The
law allows the industry to use two different types of
foundations: one, for houses that retain the ability to move
from one piece of land to another; and two, one for houses that
would be permanently attached to piece of land and considered
just like any other site-built housing.
Upon the passage of the Act and my experience as member and
chairman of the Consensus Committee where we interpreted the
Act and had to reach a two-thirds consensus before we made any
recommendations to HUD--the opinion, the Act, legislation gives
the Department all the tools needed to administer a National
Manufactured Housing Program.
The number one problem facing the industry today is HUD's
administration and interpretation of the Act. I would note that
writing more statutory language, so HUD can misinterpret the
language, doesn't fix the problem.
HUD has declared major portions of work to build the house
as not part of the home's construction. They have declared
building any part of the foundation, completing the end walls
including siding, sealing around the windows, exterior
painting, completing the joining of sections together,
connecting to utility service, completing the roof between
sections, installing any shipped loose items such as plumbing,
electrical, appliances, laying down of the carpet, completing
tape and texture is not part of the home's construction.
This interpretation has allowed HUD to make additional
interpretations that deviate from the purposes of the Act.
Utilizing this interpretation, HUD has interpreted the Act to
not utilize the Consensus Committee to solicit consensus-based
recommendations and program actions such as rules, regulations,
policies, and interpretations. They are not considered
construction standards according to HUD's definition.
As a result of that, the MHC has no responsibility to
provide periodic recommendations regarding the installation
standards for updating because they don't view installation
standards as construction standards. HUD has also rejected from
the Consensus Committee's recommendation for a national
installation standard the distinguishment between the two types
of foundations that I mentioned previously.
We also tried to put in place a process according to the
Act to update the standards on a regular basis like other
construction standards do or site built for modular housing. We
did get HUD to, in 2007, solicit public information on how to
update the standards but they have done nothing with it.
HUD viewed any recommendation on standard changes from the
committee as not been formally in front of them until we put it
in a rule format where they could file it in the Federal
Register. The Consensus Committee does not have the expertise
to complete a rule format as required by the Department for
submittal in the Federal Register. We can show how to change a
rule or we can't add all but the departmental caveats that go
to the Federal Register.
In conclusion, the Act does not need to be changed. What
needs to be changed is HUD's interpretation of the Act and a
need to clarify what type of installation and foundation is
needed to permanently attach a home into a piece of land so
that lenders and homeowners can have reliance that a
manufactured home is just like other conventional housing and
is equal to or as equal to site built or modular housing.
You will find further information about these issues in my
written testimony. I am asking you today to direct HUD to
change their interpretations in keeping with your intent in the
Act and to do three things. Consider installation as
construction. The Congress intends to use the Consensus
Committee to receive input from the industry and consumers
before they take action, and Congress intends to use a
consensus-based process for updating of the standards.
Thank you for giving me the opportunity to appear.
[The prepared statement of Mr. Roberts can be found on page
71 of the appendix.]
Chairwoman Biggert. Thank you, Mr. Roberts.
Mr. Santana, you are recognized for 5 minutes.
STATEMENT OF MANUEL SANTANA, DIRECTOR OF ENGINEERING, CAVCO
INDUSTRIES, ON BEHALF OF THE MANUFACTURED HOUSING INSTITUTE
(MHI)
Mr. Santana. Thank you, Chairwoman Biggert, Ranking Member
Gutierrez, and members of the subcommittee for the opportunity
to testify this morning.
My name is Manuel Santana, and I am the director of
engineering for Cavco Industries. I am appearing today on
behalf of the Manufactured Housing Institute. I also serve on
the HUD Manufactured Housing Consensus Committee.
Today, I will focus on a few key aspects regarding HUD's
implementation of the Improvement Act of 2000. There is no
question that an efficient streamlined system of building
regulations is important to ensure a robust economy, the
availability of financing, and enhanced acceptance from
homebuyers and communities across the Nation. In spite of a
number of regulatory challenges facing our industry, there is
no shortage of consumers who want to purchase manufactured
homes. The most significant impediment faced by manufactured
housing and its 19 million residents remains the availability
of an access to financing.
MHI was pleased to testify last November during a hearing
before this subcommittee on this important issue and we
continue to work on a bipartisan basis to educate Members of
Congress about the unique financing challenges present within
our industry. We are grateful for the consideration and
leadership the committee has provided in this area.
The Improvement Act has made a number of important changes
to streamline an update to HUD code and increase the
availability of affordable housing. Of significance, it allowed
for the creation of minimum Federal installation standards.
While HUD's implementation of this important component of
building code regulation is not yet complete, it has gone a
long way to enhance consumer satisfaction and improve the
quality and durability of manufactured housing.
There are other aspects of the Improvement Act that
remained incomplete. MHI is committed to partnering with the
professional and dedicated workforce at HUD to help achieve the
goals of the Improvement Act. We look forward to addressing the
challenges that remain. First, the efficiency of the rulemaking
process. The Improvement Act requires HUD to take action and
approve or reject proposed standards within 12 months after
submittal by the Consensus Committee.
Since its inception, the Consensus Committee has met
numerous times and has recommended numerous revisions and
updates to the HUD Code. Unfortunately, the vast majority of
these recommendations have not reached completion. As a result,
the HUD Code has not been able to keep pace with changing
construction practices, standards, and new technologies. It has
hindered industry's ability to keep pace with consumer demand
and expectation. More importantly, an outdated HUD Code has led
to the development of additional regulations by a second
Federal agency.
MHI is seriously concerned about new energy standards to be
imposed by the Department of Energy. A lack of action by HUD to
update energy standards now means that industry will be
subjected to duplicative Federal building code regulations and
enforcement. This will have the real impact of raising the cost
of manufactured housing.
The Improvement Act requires that changes to policies,
practices or procedures affecting standard regulations and
inspections or other enforcement activities must be submitted
to the Consensus Committee for review. HUD has long hold the
position that only construction and safety standards are
subject to consider this committee purview. This has served to
limit the influence and impact that the Improvement Act
intended not preemption.
The Improvement Act underscored the preeminent status of
the HUD Code over all other State and local building code.
Congress recognized the importance of Federal preemption as a
key element to the production and distribution of manufactured
housing. A single uniform code is essential to manufacture
housing and that it preserves affordability. Unfortunately, HUD
has not followed through our request from MHI and the Consensus
Committee to update its policy and preemption so that it is
more tuned to the Improvement Act.
The Improvement Act specifically calls for the broad and
liberal interpretation of the HUD Code. In practice, HUD's
interpretation has been narrow and conservative. This has led
to an increase in State and local efforts to support the HUD
Code with additional local and State regulations.
Finally, the appointment of a noncareer administrator. Even
though the Improvement Act does not mandate the appointment of
a noncareer administrator, such an individual is key to an
effective manufactured housing program in order to oversee the
timely development of code and standards and to serve as a much
needed advocate for manufactured housing and its consumers in
HUD's overall mission, policies, and programs. And considering
the necessity of a fee increase, it is important to evaluate
the current program and objectively determine if the agency is
meeting program priorities within its existing budget.
Appointing a noncareer administrator is an essential first
step that should be taken prior to implementing any fee
increase. The Improvement Act was intended to facilitate the
availability of affordable manufactured housing and to increase
homeownership to all Americans. MHI believes that the issues we
have outlined today must be resolved in order to achieve these
important goals and will remain committed to working with HUD,
Congress, and other stakeholders.
Chairwoman Biggert and members of the subcommittee, thank
you for the opportunity to testify of this important issue. I
welcome any questions.
[The prepared statement of Mr. Santana can be found on page
81 of the appendix.]
Chairwoman Biggert. Thank you, Mr. Santana.
We will now move to the questions from the members and I
will yield myself 5 minutes.
My first question is for Mr. Santana. In your view, how
could the HUD Manufactured Housing Program be improved to
foster more innovation? Can you provide an example of how
outdated building codes have impeded innovation and utilization
of state-of-the-art building products and construction methods?
Mr. Santana. In my view, the best way to improve the
process is to help streamline the acceptance of new products
and materials. Currently, the process is burdensome and it
takes a long time to complete. Because of this, we are unable
to get certain appliances approved in a timely fashion, for
example, tankless water heat heaters which we install in
modular homes. They are installed in residential stick-built
construction and they are also installed in--we have to follow
a lengthy process to get acceptance of this well-established
appliance.
Chairwoman Biggert. Thank you.
Mr. Czauski, how often has the HUD Code been updated since
the passage of the 2000 Act? Has the HUD Code kept up with
building technology, and do you have any suggestions to improve
the process for developing and updating the HUD Code?
Mr. Czauski. Updating the HUD Code has been an ongoing
process since the 2000 Act. There have been a number of changes
and I mentioned some of those in my testimony regarding
ventilation and energy efficiency, and with regard to improving
the process, I certainly applaud the Consensus Committee and
support the efforts of the Consensus Committee in providing
recommendations to the Department with regard to improvements
and improving technology. They are what Congress believes to be
experts and it is a group of manufacturers, users, State
regulators, and others who make the Consensus Committee
effective in what it does in making those recommendations to
the Department.
Chairwoman Biggert. We heard that HUD limits what the
consensus group can take up.
Mr. Czauski. I did hear that comment, but to my knowledge,
and I have been Acting Deputy Administrator since July of last
year, I am not aware of and I certainly have no reason to
believe that HUD would want to limit the input of the Consensus
Committee on matters involving manufactured housing. I think it
is--for the Secretary's benefit, it is a second bite at the
apple, so to speak, when we get input from the Consensus
Committee and then we go out with the Federal Register notice
for public comment. I think it is the best of both worlds.
Chairwoman Biggert. All right. And my third question is for
anyone who would like to answer it.
There are existing organizations that develop codes for
residential housing and commercial buildings, that develop
codes and review and revise these codes. Do you know how long
these groups take to revise it and review and issue a new code?
And is this a method for updating regularly, updating building
codes for your industry that you would prefer over HUD or
consider as an alternative to HUD performing this function?
Mr. Roberts, I thought you might want to take this
question?
Mr. Roberts. Thank you, Madam Chairwoman. Most site-built
and modular construction codes are either on a 2- or 3-year
cycle. The 2000 Act choosing 2 years is in keeping with the
other construction codes, so I don't think you need to change
the timeframe.
The other codes used a consensus-based committee to make
those recommendations. And they go into the code and they tell
you what changes to specific language of the code need to
occur. Once that happens, it goes to the governing bodies, be
it a city or State depending on who adopts the codes or--and
they actually go through their rulemaking process to enforce
that code after it has been adopted.
And I view the Consensus Committee's responsibility for
every 2 years to make those recommendations to the Department
as normal. Within 2 years of our enactment, by 2004, we gave
the Department 185 changes to their construction standards. In
2005, they adopted about 50 of those. The other 135 changes
have sat on their desk since 2005 and now are so outdated
because some of the changes we made were based on codes that
have been further changed. So now, they have to go back through
the process.
Chairwoman Biggert. So you think that there might be a
better way to do that with an alternative?
Mr. Roberts. I think the better way to do that is to remove
HUD's interpretation that they can't act on a Consensus
Committee proposed rule until it is in a format to be filed in
the Federal Register. And until that happens, HUD says, ``We
haven't officially received it.''
Chairwoman Biggert. All right. Thank you. And my time has
expired.
The gentleman from Illinois, the ranking member of the
subcommittee, is recognized for 5 minutes.
Mr. Gutierrez. Thank you very much. Welcome to you all.
So as I hear the testimony today, four of you believe that
HUD is really the problem that the mobile home--modular home
industry has, because that is what I have been hearing. It is
HUD, HUD, HUD, HUD, and nobody else's problem. You are not, any
of you, responsible in your industry for any of the problems
that you might be having. As a matter of fact, if HUD would
just listen to you, all your problems would be resolved. And
maybe that is the case.
But just so that we are clear, I, when I was chairman of
the housing committee in the City of Chicago, I had a
demonstration project of modular pre-manufactured housing in my
district. Six of those buildings have since been demolished.
They are gone. The other two have never appreciated in value as
much as the homes adjacent to them.
I think there is a question of what are these people
purchasing and the quality of the construction that people are
purchasing. And I really enjoyed the scenes with my colleagues
on the other side of the aisle as they continue to insist that
Washington doesn't have the answers, that the answers really
are at the local level, that we should be listening to people
at the local level and not the Washington inside-the-beltway
answers.
I agree with them. I think there are standards for housing,
for codes that are developed across this country and I think
those housing codes should be respected. If people want to come
in and construct in the City of Chicago or in the City of Las
Angeles or in the City of Santa Fe or Seattle or any other
city, they should respect those housing codes that exist there,
because those housing codes are supported by the people and the
localities that exist there by city councils, mayors, and State
legislators who have created those laws. So I agree with my
colleagues on the other side of the--they do know how to do it
better at the local level, and Washington, D.C., doesn't have
all of the answers.
I would like to say that as I look at this, because I heard
testimony that the percentage of manufactured housing compared
to new single family home sales and, let me say in 1990, it was
35 percent of all the sales, in 1995, it went to 51 percent,
that is the majority of sales of homes in the United States
were manufactured. But then it went down and it just seems to
me that it is kind of like the economy, right? People do better
and people did better. In 1997, 1998, 1999, and 2000, people
did better.
And if people did better, they are going up, I believe, for
a more expensive home and one that is built on-site, because
that is the home that does not depreciate in value, because
many mobile homes and many pre-manufactured homes actually do
once you take them out; they are like my car. Once I drive it
off the lot, it is worth a lot less than when I looked at it
all nice and shiny on the lot. And so, people will have a
tendency of doing that.
And the other thing is that we had an incredible bubble
which you participated in. People bought more homes as a
bubble, but if I can buy a--if I can buy a stick-built house or
on-site house and I can get a no-doc mortgage and I can get a
loan, I am going to go there instead of the difficulties that
many of you would have. But I noticed that your percentage is
actually, as the economy improves, it is actually improving
also. So it seems like the bubble hit, and now you are getting
a larger percentage.
I would like to ask Ms. Dickens--your testimony reminds me
of issues that we deal with in public housing in Section 8. We
have laws that ensured that resident advisory boards have
rights, that affordable housing units are preserved when
private owners sold their properties and tenants are given some
degree of choice. But it sounds like manufactured homeowners
faced a unique set of problems in their community. They don't
have protection. Is this something that you hear a lot from
your members, and what do you think we can do about it?
Ms. Dickens. Thank you, Mr. Gutierrez. Yes, the majority of
the MHOAA members are incredibly fearful of economic eviction,
of closure of their communities or the loss of their largest
asset, their homes. And it seems to me that the industry could
really help us there. I kind of feel like the industry wants
both, because the members of MHI and the members of MHARR want
to sell more homes, but there are also members who are raising
the rents in these communities and you can't have it both ways.
If the industry would work with us to encourage community
owners who may be their members to have long-term leases, to
provide security of tenure, to encourage their members when
they sell their communities, to sell to the resident's
associations and there are national models. ROC USA is a
national model of a very well-run and organized program that
helps homeowners form associations and purchase the land under
their homes as cooperatives, none of which have ever foreclosed
on their loans.
There are also housing authorities and other nonprofit
agencies who can step in and have stepped in and purchased
manufactured housing communities to preserve affordable
homeownership opportunities as part of the continuum of
affordable housing.
Manufactured housing is the largest unsubsidized source of
affordable homeownership in this country and I believe we need
to continue to preserve and maintain that opportunity for
seniors, and for young families just starting out on a
homeownership ladder. Indeed, there are things we can do that
would make purchasing a manufactured home actually an
attractive option.
I would like to share with you, I was once in a public
hearing in Washington State where the attorney for the
community owners was asked if he would encourage his mother to
move into a manufactured-home community. His response was,
``Not only would I not encourage my mother to move into a
manufactured-housing community, I would not advise anybody to
move into a manufactured-housing community.'' And this was the
attorney for the landlords. So if they don't want you to move
in, why should the homeowners themselves ever consider it?
Mr. Miller of California [presiding]. Thank you.
Mr. Hurt, you are recognized for 5 minutes.
Mr. Hurt. Thank you, Mr. Chairman.
I thank each of you for appearing today. I had sort of two
subjects that I want to cover and I was hoping to hear from Mr.
Czauski as well as Mr. Bostick and Mr. Hussey in particular.
The first deal is with the label fee. We discussed this in
Danville at our hearing. I have a concern any time that we are
going to impose additional fees, especially at the time when
small businesses and manufacturers are having a hard enough
time surviving, especially as it relates to this sector.
Obviously, those costs will have to be borne by the ultimate
customer and when you look at where we are with housing in this
country and what has happened in the last 4 years since the
crash in 2008, affordable housing is now more important than
ever, and obviously we don't want to be at cross purposes in
making--in putting additional burdens on manufactured housing.
So I understand the proposal to increase the fee from $39
to $60. I would like to hear from Mr. Czauski as well as Mr.
Bostick and Mr. Hussey as to: first, how do you justify that;
and second, how will that impact the manufacturers of
manufactured housing and will that be an unreasonable cost?
And in the second part, it has to do with financing. I
think what we heard in Danville was that the financing was more
and more difficult at a time again where we have, I think as
Mr. Hussey said, ``We have a private sector solution here for
making housing more affordable for Americans,'' and I wonder
what can be done at HUD and what can be done by this committee
as it relates to Dodd-Frank in the lending and appraisal
standards. What can be done to address the lack of financing at
the administrative level that is at the HUD level as well as at
this committee level in terms of legislation and dealing with
Dodd-Frank?
So Mr. Czauski, if you could address both of these issues
briefly and then I would like to hear from Mr. Bostick and Mr.
Hussey on these issues.
Mr. Czauski. Yes, sir. With regard to the first issue of
the fee increase, the fee increase had been raised from $39 to
$60 and that had been a number of years ago when I had entered
into this position, we did review that proposal and tried to
ascertain the justification for raising that fee. And after
receiving feedback internally and from the meeting in Danville,
the Department is currently in the process of evaluating the
justification for raising that fee, the impact that fee would
have on the industry, and any negative consequences. So with
regard to the fee issue, we are reevaluating the decision or
the proposal to raise the fee and to what extent it should be
raised.
With regard to the second question, I did--a representative
from Ginnie Mae did join me today, and with your permission, I
will defer to him and address--
Mr. Hurt. I would like to leave enough time for Mr. Bostick
and Mr. Hussey so if it is very, very briefly--is the person
with you there, is that the idea?
Just if you could state your name and what you are doing
and then if you could just very briefly try to answer the
question.
Mr. Keith. Yes, sir. My name is Gregory Keith and I am the
chief risk officer at Ginnie Mae.
I don't think I am really qualified to speculate on some of
the issues that you are focused on related to Dodd-Frank.
Obviously, our role is to facilitate the securitization of this
product and create liquidity in the market place. So
unfortunately, I don't think I can address your question
related to Dodd-Frank.
Mr. Hurt. All right.
Mr. Bostick?
Mr. Bostick. When you understand the need for or looking at
the label increase, our question would be, what is HUD planning
to do with the money? In my business, during the downturn of
our industry, we downsized, laid off, did everything under the
sun to survive. And my question is, is HUD going to use this
money to get bigger in a time when the industry is getting
smaller? That would be my response on the label fee.
Mr. Hurt. What about financing?
Mr. Bostick. On financing, we have some good examples of
discrimination against our industry. We are 20 percent at least
or a minimum of 20 percent of the housing available in this
country. At Fannie Mae, we are less than 1 percent of their
portfolio, Freddie Mac less than 1 percent of their portfolio.
Mr. Hurt. So just very briefly, we are over time. Briefly,
how we do we address that? What can we do?
Mr. Bostick. They tell us that they don't purchase
manufactured housing loans, but in the turn around, they tell
us that manufactured housing loan performance is way out or
better than site built.
Mr. Hurt. Thank you, Mr. Bostick. And I think maybe if I
get time at the end of the hearing, maybe we will get to you,
Mr. Hussey. I apologize for going over.
Mr. Miller of California. Mr. Green, you are recognized for
5 minutes.
Mr. Green. Thank you, Mr. Chairman.
Again, I thank the witnesses for appearing and I apologize
if this is slightly off topic, but it is something of concern
to me. I represent a district in Houston, Texas, and as you can
well imagine, when Katrina hit as well as Rita, we had some
contact with persons in Louisiana and Mississippi and I want to
harken back if we can to the Katrina trailers issue.
As you know, we passed legislation to deal with
formaldehyde in trailers and I understand as legislation
interested in doing to what extent it has been properly
implemented, because we had a January 1, 2013, deadline for
promulgating the rules and regulations for implementation of
the Formaldehyde Standards for Composite Wood Products Act. So,
I am interested in this.
But before we get to this, I would like to, if I may, ask
about the Katrina trailers. We had over 100,000 of these, as I
understand it. What happened ultimately to these Katrina
trailers, many of which were thought to have levels of
formaldehyde that produce some concerns, irritation of the
throat, the eyes? What happened to these trailers?
The representative from HUD, please?
Mr. Czauski. Thank you for your question. The trailers that
you are referring to, for the mobile homes were sold to FEMA, I
understand. And they were under the jurisdiction of FEMA.
I know that there is an issue with regard to whether or not
some of these homes were--as opposed to manufactured homes, HUD
manufactured homes under the code. I understand that recently
FEMA has issued a policy to the extent that it is their
intention to use HUD manufactured homes with regard to any
emergency housing in the future.
With regard to the formaldehyde issue, HUD didn't have
formaldehyde guidelines with regard to the construction of
manufactured housing. And--
Mr. Green. Could you repeat that? I am sorry. I didn't
quite understand that last sentence.
Mr. Czauski. HUD didn't have guidelines with regard to
formaldehyde under legislation. I understand that EPA is
otherwise overseeing the issue of formaldehyde limits and that
HUD will comply with the rulemaking that EPA issues with regard
to formaldehyde.
Mr. Green. Can the public be assured that, as it related to
HUD, we are doing all that we can to deal with the question
of--the formaldehyde and the wood products that go into these
mobile homes, manufactured homes?
Mr. Czauski. At the current time, I believe that Congress
had delegated authority to the EPA to address the issues of
formaldehyde. HUD did have its own limit with regard to
formaldehyde emissions from wood products. And to the extent
that is now required to comply with the EPA guidelines, we are
deferring to them and the rulemaking process which I assume
will include public comments or just add issue.
Mr. Green. Thank you. I will continue this, I am sure, at
another hearing. But I do appreciate your sharing with me.
Let me ask one additional question. Ms. Dickens, you have
spoken about mobile home security to a limited extent and how
persons buy into what they believe to be secured areas and how
they find themselves being evicted by virtue of increases in
the cost of actually maintaining the property. Is there
something else you would like to add to this, because I know
that in your statement you didn't get quite through it? Would
you like to add anything more?
Ms. Dickens. Thank you, Mr. Green. The main issues are
where manufactured homeowners often feel like prisoners in
their own homes. They really don't have any other options. When
the community owner continually raises the rent beyond what the
homeowners can afford, it continually passes on to the
homeowners costs that used to be absorbed by the community
owner, for instance, the care of the trees on the their lots,
repaving the driveways, and taking care of things that used to
be the landlord's responsibility. And the homeowners are just
completely stuck. They cannot sell their homes, because no one
else would want to move into that situation, and they can't act
like apartment dwellers who simply pack their bags and move on
somewhere else.
They really do feel like they have this millstone around
their necks. And I think that when they do have security of
tenure, when they do have the ownership of the land opportunity
then you get very well maintained, very well organized
communities where the homeowners really do work together to
preserve the property for themselves. Right now, it is like
share cropping. They improve the land for the benefit of the
landlords and they get no return on that investment when the
community closes it and the landlord sells it.
And so, they really are stuck between a rock and a hard
place, and they don't get the same protection as single-family
homeowners, the chattel mortgages are very expensive. You can't
deduct mortgage interest on a chattel loan the way you can in a
real estate loan. So they are buying an expensive product or at
least using expensive money to buy an affordable home, if you
like. But then, there are big problems in situations in
manufactured housing communities that they cannot easily get
out of. When the community closes and they are displaced, they
get no compensation for the loss of their largest asset, their
home. They are just simply left to deal with that themselves.
Mr. Green. Thank you. We have gone beyond my time. I yield
back the time that I do not have.
Mr. Miller of California. Thank you. Now I give myself 5
minutes.
I have been involved in the construction industry since my
early 20s as a builder/developer. And I have been through the
1970s recession, the 1980s recession, the 1990s recession, and
this one is different, but they were all different. I remember
prime in 1981, 1982 going to 21\1/2\ percent and nobody could
get a loan at prime. But financing has impacted every aspect of
the industry today. It seems like a few years ago, if you could
read and sign your name, they would give you loan. Now, even if
you are very qualified, you can't get a loan.
I guess my first question would be to either Mr. Bostick or
Mr. Hussey--legislation that recognizes small business loans
are fundamentally different than large bounce loans and they
should be treated appropriately by the Federal regulators. Our
bill is to distinguish manufactured housing employees from loan
originators. How important are these changes in the industry
and how urgently should it be applied?
Mr. Hussey?
Mr. Hussey. I think they are very important to the industry
and they should be applied as quickly as we possibly can. You
talk about the last 2 years being a bust for the housing
industry. Our industry has been in a bust since 1998 and has
been going downhill ever since and has not recovered. And the
main reason for that is the financing for the homes. Congress
recognized that a couple of years ago when it passed in 2008, I
think, a provision in that law which stated that the GSEs had a
duty to serve manufactured housing, as well as other
underserved markets and that provision would have provided
additional funding and additional financing for manufactured
housing if the GSEs had survived.
I think one of the the points that needs to be made
concerning the 2000 Act and your bill is that we still need
that noncareer administrator there at HUD to champion these
causes. Had that noncareer administrator been there from the
year 2000 on, hopefully, we would have been included in a lot
more financing programs, we would have qualified for a better
financing programs for our homes, not only our chattel homes
which comprise about 30 percent or 35 percent of our market,
but also real property loans that comprise 65 to 70 percent of
the market.
If we had that individual there to champion those programs
and the sense of Congress for the duty to serve, I think we
would be in a lot better shape today, and if that individual
was there after your law passes as quickly as possible--
Mr. Miller of California. I have a question. We were--
Mr. Hussey. --we would have championed those--
Mr. Miller of California. --a little confused on the
noncareer versus career that has been brought up repeatedly and
has not really been defined so far. Why do you think there is a
difference there?
Mr. Hussey. I think if an individual is within the
bureaucracy for an extended period of time, it has been our
experience that they tend to lose the focus for the outside of
the industry--they are not responsible to the Administration
directly that appointed them.
Mr. Miller of California. Okay.
Mr. Hussey. I think that--plus I believe we can get someone
to take that position who has a good knowledge of manufactured
housing, who doesn't confuse manufactured housing with RVs and
modular housing, and other forms of factory-built--
Mr. Miller of California. How would a noncareer be to your
benefit then versus--
Mr. Hussey. I think that individual is more responsive to
the Administration that appoints him and would not be directly
involved with the career individuals. Really, the career
individuals at HUD who have run this program have been there
for a long time.
Mr. Miller of California. Yes.
Mr. Hussey. And it is their reluctance to--
Mr. Miller of California. Do you think it is ingrained
within the bureaucracy that you are actually being
discriminated against in that fashion. I know today, there are
adequate funds from multi-family housing, and they are doing
very well; apartments, condos, townhomes, but you are being
discriminated against in your reality or your perspective. Is
that correct?
Mr. Hussey. That is correct.
Mr. Miller of California. Is it because of the difficulty
of convincing people that you are providing quality, readily
available housing versus the nontraditional construction type
house that has been developed?
Mr. Hussey. It is difficult convincing even this panel of
the differences between or the similarities between
conventional housing and our housing, our factory-built housing
and the differences between recreational vehicles.
Mr. Miller of California. I understand the similarities. I
remember when you were--they came on pretty strong in the 1970s
and you were out competing with the stick-and-brick builders
out there, and you are providing very nice housing at a better
price and quicker. I think there is a true benefit out there. I
don't see a major difference at all.
Mr. Hussey. There is a tremendous cost advantage--
Mr. Miller of California. There is a cost advantage.
Mr. Hussey. --to the factory built housing, yes.
Mr. Miller of California. Yes, and time. Time is money. And
you can compete in a way they can't.
Mr. Hussey. Right.
Mr. Miller of California. I guess, Mr. Santana, could you
expand on the effects of vague guidance from HUD and the State
implementation of the SAFE Act on your industry?
Mr. Santana. At its most basic, the SAFE Act has led to
disservice to consumers who are trying to buy a manufactured
home because the sales reps are hesitant to educate or provide
any kind of assistance on the financing process due to a fear
of violating portions of the SAFE Act that are unclear.
And I think that might sum it up right there. If a consumer
goes into a retail store to buy a house, and they select one
and they say, ``Okay, where do I go from here?'' The rep says,
``I can't help you because I am afraid to violate the SAFE
Act.''
I think it is very important to try to expand and explain
what was actually intended by the SAFE Act and who it would
apply to and who it does not.
Mr. Miller of California. I didn't mean to cut you off, Mr.
Hussey, but we are running out of time. You and I could have
gone on for another half-hour, I think.
Mr. Sherman, you are recognized for 5 minutes.
Mr. Sherman. Ms. Dickens asked this question to my staff
about once every 2 years for quite some time, what can we do to
help those who live in manufactured housing? I will ask you--I
have read your testimony. The one thing you suggest is the
voucher program change, so I am aware of that idea. But I have
a more specific question about home financing.
Outside of home financing in this voucher program, is there
anything for the Federal Government to do to help California
mobile home owners?
Ms. Dickens. Thank you, Mr. Sherman. I believe that
supporting the MHCC is one thing that the Federal Government
can do. The MHCC is a really important venue for manufactured
homeowners where we have an equal voice. It is the only place--
Mr. Sherman. I have read your testimony on that. From what
I hear, and correct me if I am wrong, lenders are charging much
higher interest rates on mobile homes and requiring much higher
downpayments; that makes it hard to sell a mobile home,
depresses the value of mobile homes in a particular park, and
apart from that is because the lender is--why is it that the
lenders charge so much interest? Is it because of the liability
they might have if the mobile home isn't up to spec?
Ms. Dickens. Yes, certainly, for lenders where the home is
placed in a manufactured-housing community, the lender has no
guarantee that the home is going to be there long term and
neither does the homeowner have any guarantee that the home is
going to be there long term. So yes--
Mr. Sherman. So, one--
Ms. Dickens. --it is certainly--
Mr. Sherman. --reason why the interest rate is high is the
mobile home park may cease to exist.
Ms. Dickens. That is part of it. The other part may be that
most likely, it is a chattel loan which has a much higher
interest rate than a regular real estate mortgage loan.
Mr. Sherman. Although the mobile home interest rates seem
to be much higher than automobile interest rates these days.
Ms. Dickens. I have known of people buying manufactured
homes with a personal credit--
Mr. Sherman. Are Fannie and Freddie willing to buy these
loans?
Ms. Dickens. I am sorry?
Mr. Sherman. Will Fannie and Freddie buy mobile home loans,
have they bought any significant number?
Ms. Dickens. I am sorry. I don't know the answer to that,
but I will get back to you on that one.
[Ms. Dickens' response can be found on page 128 of the
appendix.]
Mr. Sherman. Okay. What would you think of an idea that
would say, if you have lived in your home for at least 3 years
and you sell it, the lender does not have any vicarious
liability for whether the home is up to spec at that point?
Ms. Dickens. That might help encourage the lenders to be
more willing to loan on those homes, absolutely.
Mr. Sherman. But as to the rest of the industry, focusing
on somebody who has lived in their home for a few years, who
now wants to sell to somebody who can get financing, what can
we do to help them?
Mr. Hussey. I think if I may respond, Mr. Sherman?
Mr. Sherman. Okay.
Mr. Hussey. I think, providing a reasonable secondary
market for chattel loans, if someone has lived in their home
for a couple of years, now they are going to sell just the
home--
Mr. Sherman. We do have a secondary market for auto loans,
so that is the secondary market for chattel loans. Does that
market accommodate mobile home loans?
Mr. Hussey. As I understand it, there is no secondary
market for chattel manufactured home loans.
Mr. Sherman. Okay. And do you know whether under California
law, these are typically true to this chattel?
Mr. Hussey. In California law, no. In the Indiana law, I
can tell you that if the home is a home-only loan, it is
treated as a chattel loan.
Mr. Sherman. Okay.
Mr. Hussey. If the home is combined with real property, it
can be treated--
Mr. Sherman. No, one advantage homebuyers have is Fannie
and Freddie still exist, and they put in effect a Federal
guarantee on these loans which is why the secondary market is
very happy to buy loans secured by a single-family residences
even at 4 percent interest rates.
Does the industry or anybody here have any proposal for
getting Fannie and Freddie to do for the mobile home buyer what
it is doing for the stick and brick and mortar homebuyer?
Mr. Hussey. I think that the industry has in the past asked
both the GSEs for programs to provide secondary markets for
chattel loans and for manufactured home loans. At one time,
both the GSEs had about a 4 to 5 percent of their portfolio
that consisted of manufactured homes.
Of course, these are traditional mortgage-type loans.
Today, that has less than 1 percent of their--
Mr. Sherman. So, you had a proposal, you weren't able to
convince them at that time, and now they have a very, very
small ownership of mobile home loans?
Mr. Hussey. That is correct.
Mr. Sherman. Okay. Do you want to get those proposals to my
office?
Mr. Hussey. Certainly.
Mr. Sherman. We have a feather duster, and we will dust
them off--
Mr. Hussey. We will be happy to.
Mr. Sherman. And whether we can prod them in the right
direction.
Mr. Miller of California. The gentleman's time has expired.
Mr. Sherman. I think my time has expired.
Mr. Miller of California. You could ask a question before
it expires.
Mr. Dold, you are recognized for 5 minutes.
Mr. Dold. Thank you, Mr. Chairman. I certainly appreciate,
again, our witnesses taking the time to join us this morning.
Mr. Hussey and Mr. Roberts, you both had expressed that the
2000 law did not need to be changed, but instead focus on what
is going on at HUD in terms of how it is being implemented. I
think one of the roles that we have certainly here on this
committee and in this body is to try to make sure again, on the
oversight capacity, that those laws are being followed. And
also trying to make sure that there are no unintended negative
consequences.
And so, I guess my first question to you, to try to make
sure that we are safeguarding the ability to have manufactured
homes and that we have this alternative that oftentimes is at
more of an affordable cost, is what can we be doing? What
should we be doing? And what should HUD be doing differently in
order to make sure that we are moving this process forward?
Mr. Roberts. Yes, Congressman. I believe you need to direct
HUD to change their interpretation of the Act.
Mr. Dold. Okay, specifically, if you can--
Mr. Roberts. Specifically, they have said work done on-
site, like the installation, like the joining of sections, is
not part of the home's construction. They don't view that as
being part of the construction of a home. When they make that
decision, then they can say anything related to that activity
is not part of the Consensus Committee.
They further go on and say the work that is part of the
Consensus Committee, which is how you build the home inside the
plant, we won't consider it until you put it in the form of a
formal rule ready to be filed in the Federal Register, which
means all of those recommendations we did in 2004 sat on the
shelf for 7 or 8 years not brought forth for consideration for
public comment because they weren't put in the form of a formal
rule, which the Consensus Committee lacks the expertise to do.
Mr. Dold. If I can just stop you there for a second,
because I would like HUD to have a chance to talk about that.
We have 180 recommendations that are sitting on the shelf, and
why in the world is HUD not taking a more active role to try to
adopt some of these recommendations or at least bring them to
light?
Mr. Czauski. Let me explain the process just a little bit
to help clarify.
Mr. Dold. Okay.
Mr. Czauski. Under the 2000 Act, an administering
organization was to be under contract to provide assistance to
the Consensus Committee in managing and operating that
committee, which included maintaining a list of any
recommendations that the Consensus Committee would submit to
HUD. The Consensus Committee has not always reached a
consensus, but to the extent that it has, it has forwarded
recommendations to HUD.
HUD has either acted or is in the process of acting on
those, and I can provide you with a list of all of those
recommendations that HUD has acted upon, but I am not aware of
any delay, that HUD is intentionally not acting on any of the
recommendations of the Consensus Committee.
Mr. Dold. Okay. Maybe I am misunderstanding, because what I
am hearing from Mr. Roberts is the fact that the Consensus
Committee has made recommendations as early as 2004 to the tune
of about 180, is that correct Mr. Roberts? And what you are
saying is that there is no delay that you know of. I consider
between 2004 and today to be a pretty significant delay. If you
reviewed them and said, ``We are not going to do them,'' that
is fine. But to say that there are 180 on the shelf, I think
there is a significant problem. I would like to shift if I
could--
Mr. Roberts. Just a point of clarification. Out of the 180
in 2005, they have adopted about 50 of them. What has been on
the shelf is the remaining 135.
Mr. Dold. Okay. That is certainly helpful. Ms. Dickens, you
had made some opening comments with regard to some of the
concerns that are out there for those individuals who have
purchased manufactured homes, and I certainly would love to get
your recommendations on how this body, the Federal Government,
and again, I am concerned that we don't want to be having a
heavy hand if the Federal Government comes down to individual
States and municipalities. But what do you think we ought to be
doing to--
Ms. Dickens. Thank you.
Mr. Dold. --better enable homeowners?
Ms. Dickens. Thank you, Mr. Dold. Yes, you are absolutely
right that for the most part, a lot of the relationship between
the community owner and the homeowner rests at the State level.
However, there are 14 States in the Union that do not have any
State protections for manufactured homeowners, and the one
thing that I think the Federal Government might want to
consider so that at least the community, the homeowners in
those 14 States have some fundamental freedom, some protection
to exercise constitutional rights, would be to require those 14
States to have on their books some legislation that determines
the real relationship between the community owners and the
homeowners.
And I know that you can't impose a heavy hand as you say
but perhaps, considering that there are some proposed
regulations around HOME funds right now, that perhaps those
HOME dollars could be withheld from States that do not have
mobile home landlord-tenant acts in place until such time that
they do have them in place.
HOME dollars are to help provide affordable housing. If
those 14 States enacted the legislation to protect manufactured
homeowners, then you wouldn't need those HOME dollars to help
displaced manufactured homeowners. Those HOME dollars could go
and help other people who need assistance with affordable
housing. That is one thing that is current and very pertinent
to the Federal Government.
Another idea would be ways to encourage community owners.
When they choose to sell, again, not requiring them to sell,
but if and when they choose to sell, provide them with some
kind of Federal tax credit that would encourage them to sell to
the resident homeowners association or to a local nonhousing
authority or nonprofit affordable housing entity, in that way,
we continue to boost our manufactured housing as part of the
continuum of affordable housing.
And then the third thing, a bill that will be coming before
this committee next week, the Affordable Housing Improvement
Act, allows manufactured homeowners to use vouchers to help pay
towards the rental of their space. It would be wonderful if
vouchers could also be used by manufactured homeowners to help
pay towards the mortgage and insurance on their home.
So, those are the three very specific things that the
Federal Government could consider. Thank you.
Mr. Dold. Thank you so much. Mr. Chairman, my time has
expired.
Mr. Miller of California. Following up one question with
what Mr. Dold was asking Mr. Czauski and it wasn't responded
to, out of 185 regulations, 50 were implemented, where the heck
are the other 135 and why haven't they have been implements?
That was never responded to.
Mr. Czauski. Oh, I--with regard to the number, I cannot--
Mr. Miller of California. I believe that the 130--
Mr. Czauski. The number is--
Mr. Miller of California. Where are they?
Mr. Czauski. It is my understanding that probably the
number was much higher with regard to the number of
recommendations--
Mr. Miller of California. I would ask you, on behalf of the
committee then to respond back to the committee in writing what
regulations are out there that haven't been implemented, where
they are at, and why are they sitting there? With the consent
of the committee, we ask that you respond back. What is the
reasonable amount of time to do that?
Mr. Czauski. Certainly.
Mr. Miller of California. Thirty days?
Mr. Czauski. Let me check with our administering, within--
Mr. Miller of California. As soon as possible.
Mr. Czauski. As soon as possible.
Mr. Miller of California. We are just not telling you but
that--based on the situation of the industry that seems, from
2004, I believe it is unreasonable. I am a member of the
committee to accept the fact that of 185, let us say only 50
have been implemented and 135 were sitting there.
Anyway, Mr. Stivers, you are recognized for 5 minutes.
Mr. Stivers. Thank you, Mr. Chairman. I appreciate it, and
I appreciate the witnesses' time. I have learned a lot about
manufactured housing. I want to follow up on some questions
asked by other members. It seems to me that the panel has
really talked about some great positives of manufactured
housing, the affordability, the fact that it can be
manufactured for 10 to 35 percent less, but there are clearly
some issues involving more expensive financing and some tenant
issues.
My first question is for Ms. Dickens, because it hasn't
really come up. What percent of folks in manufactured housing
are tenants and rent the ground under their feet versus the
people who actually purchase ground and pour a pad themselves
and do all that?
Ms. Dickens. Thank you, Mr. Stivers. I believe that there
are about 2.9 million households who rent the land under their
homes in about 50,000 to 56,000 manufactured housing
communities across the country, and there are probably--I am
guessing, and maybe the industry can give you a better answer--
3.8 million households who own their homes and a few simple
situations where they also own the land.
Mr. Stivers. Go ahead, sir.
Mr. Santana. According to a census data, it is more like 25
percent.
Mr. Stivers. I am sorry?
Mr. Santana. It is 25 percent.
Mr. Stivers. Twenty-five percent own and 75 percent rent.
Is that what you are saying?
Mr. Santana. No, it is the other way around.
Mr. Stivers. Other way around, 75 percent only.
It does seem to me, and I am new at this, that the issues,
the tenant issues and everything, and I know Mr. Gutierrez has
talked about how home values didn't keep up in some of the
manufactured home communities. Some of that might be based on
the fact of the folks who choose to purchase the home and rent
the ground, and it is maybe a situation that is just not
working.
How many folks inside the industry have worked to try to
change that, and I do want to talk to Mr. Czauski about the HUD
regulation that probably make that more difficult but we talked
about earlier that don't consider foundation work, don't
consider work with windows or siding or ceiling or any of those
things as part of the home loan process or part of the
construction process.
Is there any move away from the mobile home parks toward
real ownership of land? Is that something you are seeing more
of in the industry and in the marketplace? Anybody can answer.
Mr. Hussey. Maybe I can give some guidance. Over the years,
there has been a move away from chattel mortgages and away from
communities. Not very many communities are currently being
developed in the United States. That has been more of a zoning
issue than anything else and the parks that are out there, the
communities that are out there relatively full depending on
which part of the country you are in.
Our industry is building more and more sectional-style
houses that are going on real property, that are being put on
permanent foundations and being treated as real property.
Mr. Stivers. Sure. And like Mr. Sherman asked earlier, we
do want to make sure we look out for the 2.9 million people who
are already in these situations. With that, I do want to ask
Mr. Czauski about this whole idea of site work. If you don't
have a foundation on a house, whether it is bricks and mortar
or whether it is a manufactured home, it is not a sustainable
situation. Why is that not considered part of the manufacturing
process?
Mr. Czauski. Oh, it is part of the manufactured housing
process, sir. In 2007, in accordance with the 2000 Act, HUD did
issue model installation regulations, and there are 33 States
that have--and those are minimum standards for installation.
The Department works with States as--
Mr. Stivers. It is wrong when all these witnesses have said
that any part of the foundation work including putting walls,
stabilizing supports, anchoring it all, that is not considered
part of the house as construction?
They have just said something that is not true?
Mr. Czauski. I can only speak to the existing statute and
the regulations which do provide installation standards that
are published in the Federal Register in the 24 CFR. And in
addition, by statute, it allows States to implement their own
installation requirements. There are 33 States that have
already done that, and we work with State regulators that
review those installations according to the State's standard.
Mr. Stivers. And I am almost out of time so, I know a
couple of people raised their hands, would you like to respond
to that?
Mr. Santana. Yes, I would. I am a little unclear on the
issue here because the way that I understand it, although set
up in foundation and site completion isn't part of the
construction of the home. It is part of the program. There is
an installation standard that is out there that specifies a
need for a way to set a home, a way to peer a home, a way to
complete the home on site.
Mr. Stivers. Would one of the folks, and I am almost out of
time, actually, I am out of time, if the chairman would allow
me. Would one of the folks who brought up that point like to
clarify what the issue is?
Mr. Roberts. Yes, Mr. Chairman. Mr. Santana just said it.
He said that is not part of the construction but there is a
standard. The Federal Government doesn't consider it part of
the construction under the Act, then they don't have to
regulate it under the Act. All they have to do is adopt the
minimum standard and that is it. And they have directed that it
is not preempted then, under the Act.
Further, they have directed that the Consensus Committee
doesn't treat it as a construction standard under the Act and
have periodic updates to that.
Mr. Miller of California. Would anybody like to briefly
answer that?
Mr. Roberts. Excuse me, one point, and to further clarify
that, they put it a separate section in their regulations for
the construction standards so they can keep that clear
distinction between what is the construction standard and what
is an installation.
Mr. Santana. If I may?
Mr. Miller of California. Yes, sir.
Mr. Santana. I think what Mr. Roberts is getting at is that
there are a lot of components to the HUD program. You have a
set of standards, you have a set of regulations, and you have a
set of installation standards. And I think what this comes back
to is HUD's interpretation on what is under the purview of the
Consensus Committee. They have stated that only the standards
are under the purview while the Act says that all the
standards, regulations, and installation standards should be
under or should be available for Consensus Committee review.
Mr. Miller of California. The time has expired, but there
are a significant number of questions that have arisen and have
yet to be answered. One of them would be construction
standards, installation, etc. The most glaring would have to be
the regulations and the lack of understanding and enforcement
of those. I think that is an appropriate hearing in the future
that should be considered by this subcommittee to deal
specifically with those regulations. But I want to to thank the
panel; you have been very informative. I wish we had more time
to delve into your concerns and issues.
The Chair notes that some Members may have additional
questions for the panel which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days for Members to submit written questions to these
witnesses and to place their responses in the record.
This hearing is adjourned.
[Whereupon, at 11:46 a.m., the hearing was adjourned.]
A P P E N D I X
February 1, 2012
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