[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



[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



                    U.S. GOVERNMENT PRINTING OFFICE
75-068 PDF              WASHINGTON : 2012
____________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected]  





                 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
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]