[Congressional Record Volume 163, Number 200 (Thursday, December 7, 2017)]
[Extensions of Remarks]
[Pages E1671-E1673]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PRESERVING ACCESS TO MANUFACTURED HOUSING ACT OF 2017
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speech of
HON. KEITH ELLISON
of minnesota
in the house of representatives
Friday, December 1, 2017
Mr. ELLISON. Mr. Speaker. I oppose this bill. It would remove
consumer protections put in place by the Consumer Financial Protection
Bureau. H.R. 1699 would weaken Home Ownership and Equity Protection Act
(HOEPA) requirements for people who buy manufactured homes. HOEPA
requires additional disclosures to people taking out a loan to buy a
home when the interest rate is 6.5 percent or 8.5 percent above the
annual percentage rate (APR) for the average Prime Offer Rate (APOR).
Those disclosures include: Explaining the consequences of default,
disclosing loan terms and monthly payments, and ensuring the borrower
receives homeownership counseling.
In addition, the Consumer Financial Protection Bureau, under
Regulation Z, forbids firms selling manufactured homes from steering
buyers into loans. This bill would remove these protections.
Manufactured homes are the biggest source of unsubsidized affordable
housing in the country. More than 17 million people live in
manufactured homes. If you removed manufactured housing, our national
homeownership rate would fall 6 percent. The homes are of good quality.
Thanks to the Dodd Frank Wall Street Reform and Consumer Protection
Act, high-cost loans to manufactured homeowners are rare. Wednesday, we
received updated Duty-to-Serve requirements from the Federal Housing
Finance Agency which will provide even more affordable financing to
these buyers.
Before Democrats enacted the Dodd Frank Wall Street Reform and
Consumer Protection Act, the financing for manufactured homes was
notoriously predatory. If you want to see how badly manufactured
homebuyers used to be treated, read the award-winning series of
articles in the Seattle Times. The investigation showed that the main
seller of manufactured homes--Clayton Homes--steered borrowers to
lenders like Vanderbilt Mortgage and 21st Mortgage which Clayton
actually owned.
Clayton's loans are particularly expensive compared with those of its
peers. The company locks buyers in loans at interest rates that can
exceed 15 percent. If this bill, H.R. 1699 was enacted, borrowers could
again be asked to pay 14 or 15 percent without being told that there
might be cheaper options.
I've also introduced bills to help manufactured home buyers:
The Energy Efficient and Manufactured Home Act (H.R. 515) helps
manufactured home buyers replace their outdated homes.
Two bills--the Frank Adelmann Manufactured Housing Community
Sustainability Act, (H.R. 3296) and the Fair Tax Treatment for
Manufactured Home Communities (H.R. 3399)--help residents of mobile
home parks buy the land and run their community as a cooperative.
Let's bring those bills to the House floor. Not this bill which would
steer borrowers to high-cost lenders. Now is the time to keep hard
fought protections for manufactured home buyers so they re can buy
homes they can afford. People who work with manufactured homebuyers
oppose this bill. Therefore, I include in the Record letters of
opposition from the Housing Assistance Council, Americans for Financial
Reform and MHAction.
Protect homebuyers. Oppose H.R. 1699.
Housing Assistance Council,
Washington, DC, November 27, 2017.
Hon. Keith Ellison,
House of Representatives,
Washington, DC.
Dear Representative Ellison: As a national voice for
affordable rural housing, the Housing Assistance Council
(HAC) opposes HR 1699. HR 1699 would eliminate reasonable
safeguards for consumers of manufactured homes put in place
by the Consumer Protection Financial Bureau (CPFB). Examples
include protections against high-interest loans when lower
cost options are available.
Manufactured homes are an important source of housing for
millions of Americans, especially those with low-incomes and
in rural areas. While the physical quality of manufactured
homes continues to progress. the basic delivery system of how
these homes are sold and financed needs improvement. HAC
continues to work with manufactured housing stakeholders--
including the
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industry, housing finance entities. and consumer-focused
groups--to improve the system, starting with improved data
collection. Moreover, ``Duty to Serve'' requirements of
Fannie Mae and Freddie Mac represent an important infusion of
capital into the manufactured housing market. HR 1699's
enactment could undermine such progress.
As housing costs rise for poor rural Americans--exacerbated
by recent natural disasters--it is important that Congress
seek opportunities to make housing for the rural poor more
accessible and fair. HR 1699 is a step in the opposite
direction.
Sincerely,
David Lipsetz,
Executive Director.
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Americans for Financial Reform,
Washington, DC, November 30, 2017.
Dear Representative: On behalf of the undersigned community
organizations and public interest groups, we ask you to
oppose H.R. 1699, the so-called Preserving Access to
Manufactured Housing Act of 2017. This bill poses significant
dangers for consumers and homebuyers by exempting
manufactured housing lenders from requirements that protect
borrowers against inappropriately high-cost loans.
This bill would undermine already vulnerable homeowners by
stripping away protections created by Congress and
implemented by the Consumer Financial Protection Bureau
(CFPB). These protections were put in place for a reason: to
give manufactured-homeowners the same protections as
traditional homeowners. The last housing crisis showed that
loan-originator compensation and exorbitant loan pricing were
particular areas of abuse. Congress and the CFPB decided to
protect homeowners from those practices. However, H.R. 1699
would repeal those protections for the buyers of manufactured
homes. In particular, H.R. 1699 would reverse much of this
progress by:
Raising the interest-rate trigger for protections under the
high-cost mortgage protections of the Home Ownership and
Equity Protection Act (HOEPA).
Under H.R. 1699, chattel loans (the type used for most
manufactured homes) that are less than $75,000 and that have
an interest rate close to 10 percentage points above the
prime rate would no longer receive HOEPA protections. In the
current market, this would permit an interest rate of more
than 13% for a 15- or 20-year loan on a family's home
mortgage without enhanced protections. In comparison, the
going rate for traditional real-estate mortgages is around 4%
or less.
Raising the points-and-fees trigger for HOEPA protections.
Currently, borrowers who sign high-cost loans get HOEPA's
protections if the loan has points and fees totaling the
lesser of 8% of the loan amount or $1,000 for loans under
$20,000 and 5% of the loan amount for larger loans. However,
under H.R. 1699, borrowers would not be protected for chattel
loans under $75,000 until the points and fees exceeded the
greater of 5% or $3,000. This would weaken protections for
low-income homeowners where they are needed most. This means
that a homeowner with a $70,000 chattel loan could pay almost
$3,500 in documents or other junk fees without getting any of
the federal protections intended for such borrowers. It also
suggests that every loan less than $60,000 will incur $3,000
in fees regardless of actual origination costs.
Exempting manufactured-home retailers from the definition
of mortgage originators.
This would perpetuate the conflicts of interest and
steering that plague this industry and allow lenders to pass
additional costs onto consumers. This provision would also
stifle competition and likely discourage new entrants to the
manufactured housing finance market, just as Fannie Mae and
Freddie Mac begin implementing their plans to serve this
sector.
Despite claims from industry lobbyists that the new
protections are squelching manufactured housing lending, the
data tell a different story. There was an initial dip in
lending in 2014, the year the new rules went into effect.
However, since then, lending volumes have started to recover.
In 2015, lending volume was roughly similar to what it was
before the new rules went into effect. And these loans were
broadly safer, without the predatory features that were
common before the new rules, and few of them had very high
rates and fees. Last year, loan volume decreased slightly by
about 5 percent--however, loan quality remained improved. As
the industry adjusts to the new standards and as new
competition enters the market, we expect loan volumes and
loan quality to continue improving. Historically, failure
rates for these loans have been exceedingly high. The
industry wide default rate for most manufactured-home loans,
those made as personal property loans, has been about 28
percent. Improved loan quality as a result of the Dodd-Frank
rules should decrease this astronomical default rate.
In short, H.R. 1699 would harm homeowners through weaker
consumer protections and costlier loans that are harder to
repay. It would make homeownership more costly for those who
can least afford it.
We strongly urge you to stand up for consumers and oppose
H.R. 1699.
Sincerely,
Allied Progress; Americans for Financial Reform; Center for
Responsible Lending; Consumer Action; NAACP; National
Association of Consumer Advocates; National Consumer Law
Center (on behalf of its low-income clients); National Fair
Housing Alliance; National Manufactured Home Owners
Association; Prosperity Now (formerly CFED); UnidosUS
(formerly National Council of La Raza); Woodstock Institute;
California Coalition for Rural Housing (CA); Housing and
Economic Rights Advocates (CA); National Housing Law Project
(CA); San Marcos Mobile Home Residents Association (CA); The
Committee to Elect Pierre Beauregard for Congress (CA).
AMISTAD (CO); C-MOB Boulder (CO); Orchard Grove Neighbors
Association (CO); Vista Village Homeowners' Association (CO);
Vista Village Manufactured Home Association (CO); Honorable
Al-Bey J.L.Esq. & Affiliates, LLC. (DE); Affordable
Homeownership Foundation Inc. (FL); Jacksonville Area Legal
Aid, Inc. (FL); MHOAI (IL); Coasap (IA); Public Justice
Center (MD); Massachusetts Communities Action Network (MA);
All Parks Alliance for Change (MN); Opportunity Alliance
Nevada (NV); New Hampshire Community Loan Fund (NH); Native
Community Finance (NM); Coalition on Human Needs (C.H.N.)
(NY); Friends of the North Country, Inc. (NY); HomeSmartNY
(NY); MHAction (NY).
Mobile Manufactured Homeowners Association Suffolk Inc.
(NY); National Federation of Community Development Credit
Unions, Inc. (NY); North Carolina Justice Center (NC); CASA
of Oregon (OR); Network for Oregon Affordable Housing (OR);
Fayette County Community Action Agency Inc. (PA); Cantrell
Legal PC (SC); New Level Community Development Corp. (TN);
Addison County Community Trust (VT); CVOEO Mobile Home
Program (VT); Law in the Public Interest, L3C (VT); Helping
Overcome Poverty's Existence, Inc. (VA); Virginia Housing
Alliance (VA); H&R Properties of River Falls LLC (WI);
Metropolitan Milwaukee Fair Housing Council (WI).
As manufactured homeowners, we are writing to express our
opposition to the Preserving Access to Manufactured Housing
Act of 2017 (H.R. 1699). MHAction works with homeowners and
residents in manufactured home communities across the country
on housing and economic justice issues. We believe that
manufactured home communities play a key role in providing
affordable, safe and accessible housing for all families.
This bill would make it easier for dealers to steer
potential buyers of manufactured homes, commonly referred to
as mobile homes, to high cost loans resulting in financial
hardship for borrowers. This bill would remove recent
consumer protections for manufactured homebuyers implemented
by the Consumer Financial Protection Bureau. This bill, if
passed, would only undermine the economic and retirement
security of thousands of prospective manufactured homeowners.
I am passed, this legislation would add additional fuel to
the harmful trends that are chipping away at this important
affordable housing sector that thousands of seniors, low-
income workers and immigrant families rely on for their
housing needs. Beyond the abusive and discriminatory lending
practices that have been well documented in an award-winning
series of articles in the Seattle Times, the manufactured
housing sector overall is bearing witness to disturbing
trends that are disrupting the housing security of families
across the nation.
Over the past 20 years, manufactured home communities
increasingly have gone from ``mom and pop'' enterprises to
ownership by large, multi-state corporations and private
equity. While many residents own their own homes, they pay
rent, known as lot fees, for use of the land. The increase of
multi-state, corporate ownership has brought with it an
unsustainable business model that is based on rapidly
escalating lot fees and decreasing investments in community
maintenance. This creates an economic trap for homeowners,
who are unable to move their home for structural or
regulatory reasons and therefore must either pay increasingly
high lot fees or abandon their property.
Cost cutting by corporate owners also leads to decreasing
investment in community maintenance resulting in increased
wastewater treatment/septic system failures, improperly
maintained roads and other infrastructure issues. Each act of
disinvestment increases the economic, health and safety risks
for manufactured homeowners and negatively impacts the
quality of life of the surrounding community.
Our organization views H.R. 1699 as simply another
indication of harmful trends being perpetrated by corporate
community owners and predatory lenders that are causing havoc
to the economic, retirement and housing security needs of
manufactured home owners. Please retain the Consumer Bureau's
rules that protect manufactured home buyers from loans that
strip their wealth. We are asking that you oppose H.R. 1699.
Signed on behalf of MHAction and the 16,873 members we
represent.
Aimee Inglis, California; Patti Ann Rose, California;
Yvonne McCurley, California; Cesiah Guadarrama Trejo,
Colorado; Maria De La Luz Galicia, Colorado; Clara McNichol,
Delaware; Patricia Norberg, Delaware; Samuel Saunders,
Delaware; Terry Saunders, Delaware; Marjorie Mathers,
Florida; Debra Kiel, Illinois; Jeffrey Kiel, Illinois; Linda
Reynolds, Illinois; Pat Bohlen, Illinois; Terry Nelson,
Illinois; Ronel Remy, Massachusetts; Shandra BP-Weeks,
Michigan; Amanda Devecka-Rinear, New Jersey; Joe Mangino, New
Jersey; Dianne Enriquez, New York; Kevin Borden, New York;
Nathalie Hernandez, New York; Rachel Rivera, New York;
Richard Robinson, Utah; Sondra Robinson, Utah.
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