[House Report 110-206]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-206
======================================================================
 
        FHA MANUFACTURED HOUSING LOAN MODERNIZATION ACT OF 2007

                                _______
                                

 June 21, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 2139]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Financial Services, to whom was referred 
the bill (H.R. 2139) to modernize the manufactured housing loan 
insurance program under title I of the National Housing Act, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     8
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................     8
Performance Goals and Objectives.................................     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................    12
Advisory Committee Statement.....................................    12
Constitutional Authority Statement...............................    12
Applicability to Legislative Branch..............................    13
Earmark Identification...........................................    13
Section-by-Section Analysis of the Legislation...................    13
Changes in Existing Law Made by the Bill, as Reported............    14
Additional Views.................................................    19

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This title may be cited as the ``FHA Manufactured Housing Loan 
Modernization Act of 2007''.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds that--
          (1) manufactured housing plays a vital role in providing 
        housing for low- and moderate-income families in the United 
        States;
          (2) the FHA title I insurance program for manufactured home 
        loans traditionally has been a major provider of mortgage 
        insurance for home-only transactions;
          (3) the manufactured housing market is in the midst of a 
        prolonged downturn which has resulted in a severe contraction 
        of traditional sources of private lending for manufactured home 
        purchases;
          (4) during past downturns the FHA title I insurance program 
        for manufactured homes has filled the lending void by providing 
        stability until the private markets could recover;
          (5) in 1992, during the manufactured housing industry's last 
        major recession, over 30,000 manufactured home loans were 
        insured under title I;
          (6) in 2006, fewer than 1,500 manufactured housing loans were 
        insured under title I;
          (7) the loan limits for title I manufactured housing loans 
        have not been adjusted for inflation since 1992; and
          (8) these problems with the title I program have resulted in 
        an atrophied market for manufactured housing loans, leaving 
        American families who have the most difficulty achieving 
        homeownership without adequate financing options for home-only 
        manufactured home purchases.
  (b) Purposes.--The purposes of this Act are--
          (1) to provide adequate funding for FHA-insured manufactured 
        housing loans for low- and moderate-income homebuyers during 
        all economic cycles in the manufactured housing industry;
          (2) to modernize the FHA title I insurance program for 
        manufactured housing loans to enhance participation by Ginnie 
        Mae and the private lending markets; and
          (3) to adjust the low loan limits for title I manufactured 
        home loan insurance to reflect the increase in costs since such 
        limits were last increased in 1992 and to index the limits to 
        inflation.

SEC. 3. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION PORTFOLIO.

  The second sentence of section 2(a) of the National Housing Act (12 
U.S.C. 1703(a)) is amended--
          (1) by striking ``In no case'' and inserting ``Other than in 
        connection with a manufactured home or a lot on which to place 
        such a home (or both), in no case''; and
          (2) by striking ``: Provided, That with'' and inserting ``. 
        With''.

SEC. 4. INSURANCE BENEFITS.

  (a) In General.--Subsection (b) of section 2 of the National Housing 
Act (12 U.S.C. 1703(b)), is amended by adding at the end the following 
new paragraph:
          ``(8) Insurance benefits for manufactured housing loans.--Any 
        contract of insurance with respect to loans, advances of 
        credit, or purchases in connection with a manufactured home or 
        a lot on which to place a manufactured home (or both) for a 
        financial institution that is executed under this title after 
        the date of the enactment of the FHA Manufactured Housing Loan 
        Modernization Act of 2007 by the Secretary shall be conclusive 
        evidence of the eligibility of such financial institution for 
        insurance, and the validity of any contract of insurance so 
        executed shall be incontestable in the hands of the bearer from 
        the date of the execution of such contract, except for fraud or 
        misrepresentation on the part of such institution.''.
  (b) Applicability.--The amendment made by subsection (a) shall only 
apply to loans that are registered or endorsed for insurance after the 
date of the enactment of this Act.

SEC. 5. MAXIMUM LOAN LIMITS.

  (a) Dollar Amounts.--Paragraph (1) of section 2(b) of the National 
Housing Act (12 U.S.C. 1703(b)(1)) is amended--
          (1) in clause (ii) of subparagraph (A), by striking 
        ``$17,500'' and inserting ``$25,090'';
          (2) in subparagraph (C) by striking ``$48,600'' and inserting 
        ``$69,678'';
          (3) in subparagraph (D) by striking ``$64,800'' and inserting 
        ``$92,904'';
          (4) in subparagraph (E) by striking ``$16,200'' and inserting 
        ``$23,226''; and
          (5) by realigning subparagraphs (C), (D), and (E) 2 ems to 
        the left so that the left margins of such subparagraphs are 
        aligned with the margins of subparagraphs (A) and (B).
  (b) Annual Indexing.--Subsection (b) of section 2 of the National 
Housing Act (12 U.S.C. 1703(b)), as amended by the preceding provisions 
of this Act, is further amended by adding at the end the following new 
paragraph:
          ``(9) Annual indexing of manufactured housing loans.--The 
        Secretary shall develop a method of indexing in order to 
        annually adjust the loan limits established in subparagraphs 
        (A)(ii), (C), (D), and (E) of this subsection. Such index shall 
        be based on the manufactured housing price data collected by 
        the United States Census Bureau. The Secretary shall establish 
        such index no later than one year after the date of the 
        enactment of the FHA Manufactured Housing Loan Modernization 
        Act of 2007.''
  (c) Technical and Conforming Changes.--Paragraph (1) of section 2(b) 
of the National Housing Act (12 U.S.C. 1703(b)(1)) is amended--
          (1) by striking ``No'' and inserting ``Except as provided in 
        the last sentence of this paragraph, no''; and
          (2) by adding after and below subparagraph (G) the following:
``The Secretary shall, by regulation, annually increase the dollar 
amount limitations in subparagraphs (A)(ii), (C), (D), and (E) (as such 
limitations may have been previously adjusted under this sentence) in 
accordance with the index established pursuant to paragraph (9).''.

SEC. 6. INSURANCE PREMIUMS.

  Subsection (f) of section 2 of the National Housing Act (12 U.S.C. 
1703(f)) is amended--
          (1) by inserting ``(1) Premium Charges.--'' after ``(f)''; 
        and
          (2) by adding at the end the following new paragraph:
  ``(2) Manufactured Home Loans.--Notwithstanding paragraph (1), in the 
case of a loan, advance of credit, or purchase in connection with a 
manufactured home or a lot on which to place such a home (or both), the 
premium charge for the insurance granted under this section shall be 
paid by the borrower under the loan or advance of credit, as follows:
          ``(A) At the time of the making of the loan, advance of 
        credit, or purchase, a single premium payment in an amount not 
        to exceed 2.25 percent of the amount of the original insured 
        principal obligation.
          ``(B) In addition to the premium under subparagraph (A), 
        annual premium payments during the term of the loan, advance, 
        or obligation purchased in an amount not exceeding 1.0 percent 
        of the remaining insured principal balance (excluding the 
        portion of the remaining balance attributable to the premium 
        collected under subparagraph (A) and without taking into 
        account delinquent payments or prepayments).
          ``(C) Premium charges under this paragraph shall be 
        established in amounts that are sufficient, but do not exceed 
        the minimum amounts necessary, to maintain a negative credit 
        subsidy for the program under this section for insurance of 
        loans, advances of credit, or purchases in connection with a 
        manufactured home or a lot on which to place such a home (or 
        both), as determined based upon risk to the Federal Government 
        under existing underwriting requirements.
          ``(D) The Secretary may increase the limitations on premium 
        payments to percentages above those set forth in subparagraphs 
        (A) and (B), but only if necessary, and not in excess of the 
        minimum increase necessary, to maintain a negative credit 
        subsidy as described in subparagraph (C).''.

SEC. 7. TECHNICAL CORRECTIONS.

  (a) Dates.--Subsection (a) of section 2 of the National Housing Act 
(12 U.S.C. 1703(a)) is amended--
          (1) by striking ``on and after July 1, 1939,'' each place 
        such term appears; and
          (2) by striking ``made after the effective date of the 
        Housing Act of 1954''.
  (b) Authority of Secretary.--Subsection (c) of section 2 of the 
National Housing Act (12 U.S.C. 1703(c)) is amended to read as follows:
  ``(c) Handling and Disposal of Property.--
          ``(1) Authority of secretary.--Notwithstanding any other 
        provision of law, the Secretary may--
                  ``(A) deal with, complete, rent, renovate, modernize, 
                insure, or assign or sell at public or private sale, or 
                otherwise dispose of, for cash or credit in the 
                Secretary's discretion, and upon such terms and 
                conditions and for such consideration as the Secretary 
                shall determine to be reasonable, any real or personal 
                property conveyed to or otherwise acquired by the 
                Secretary, in connection with the payment of insurance 
                heretofore or hereafter granted under this title, 
                including any evidence of debt, contract, claim, 
                personal property, or security assigned to or held by 
                him in connection with the payment of insurance 
                heretofore or hereafter granted under this section; and
                  ``(B) pursue to final collection, by way of 
                compromise or otherwise, all claims assigned to or held 
                by the Secretary and all legal or equitable rights 
                accruing to the Secretary in connection with the 
                payment of such insurance, including unpaid insurance 
                premiums owed in connection with insurance made 
                available by this title.
          ``(2) Advertisements for proposals.--Section 3709 of the 
        Revised Statutes shall not be construed to apply to any 
        contract of hazard insurance or to any purchase or contract for 
        services or supplies on account of such property if the amount 
        thereof does not exceed $25,000.
          ``(3) Delegation of authority.--The power to convey and to 
        execute in the name of the Secretary, deeds of conveyance, 
        deeds of release, assignments and satisfactions of mortgages, 
        and any other written instrument relating to real or personal 
        property or any interest therein heretofore or hereafter 
        acquired by the Secretary pursuant to the provisions of this 
        title may be exercised by an officer appointed by the Secretary 
        without the execution of any express delegation of power or 
        power of attorney. Nothing in this subsection shall be 
        construed to prevent the Secretary from delegating such power 
        by order or by power of attorney, in the Secretary's 
        discretion, to any officer or agent the Secretary may 
        appoint.''.

SEC. 8. REVISION OF UNDERWRITING CRITERIA.

  (a) In General.--Subsection (b) of section 2 of the National Housing 
Act (12 U.S.C. 1703(b)), as amended by the preceding provisions of this 
Act, is further amended by adding at the end the following new 
paragraph:
          ``(10) Financial soundness of manufactured housing program.--
        The Secretary shall establish such underwriting criteria for 
        loans and advances of credit in connection with a manufactured 
        home or a lot on which to place a manufactured home (or both), 
        including such loans and advances represented by obligations 
        purchased by financial institutions, as may be necessary to 
        ensure that the program under this title for insurance for 
        financial institutions against losses from such loans, advances 
        of credit, and purchases is financially sound.''.
  (b) Timing.--Not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall revise the existing underwriting 
criteria for the program referred to in paragraph (10) of section 2(b) 
of the National Housing Act (as added by subsection (a) of this 
section) in accordance with the requirements of such paragraph.

SEC. 9. REQUIREMENT OF SOCIAL SECURITY ACCOUNT NUMBER FOR ASSISTANCE.

  Section 2 of the National Housing Act (12 U.S.C. 1703) is amended by 
adding at the end the following new subsection:
  ``(j) Requirement of Social Security Account Number for Financing.--
No insurance shall be granted under this section with respect to any 
obligation representing any loan, advance of credit, or purchase by a 
financial institution unless the borrower to which the loan or advance 
of credit was made, and each member of the family of the borrower who 
is 18 years of age or older or is the spouse of the borrower, has a 
valid social security number.''.

SEC. 10. GAO STUDY OF MITIGATION OF TORNADO RISKS TO MANUFACTURED 
                    HOMES.

  The Comptroller General of the United States shall assess how the 
Secretary of Housing and Urban Development utilizes the FHA 
manufactured housing loan insurance program under title I of the 
National Housing Act, the community development block grant program 
under title I of the Housing and Community Development Act of 1974, and 
other programs and resources available to the Secretary to mitigate the 
risks to manufactured housing residents and communities resulting from 
tornados. The Comptroller General shall submit to the Congress a report 
on the conclusions and recommendations of the assessment conducted 
pursuant to this section not later than the expiration of the 12-month 
period beginning on the date of the enactment of this Act.

                          Purpose and Summary

    The purpose of H.R. 2139 is to modernize the Federal 
Housing Administration (FHA) Title I loan insurance program for 
personal property manufactured homes. The bill includes a 
number of statutory changes to this program, in order to 
reverse the substantial decline in the number of Title I 
manufactured home loans insured by FHA over the last 15 years. 
The volume of such loans has fallen from an estimated level of 
over 30,000 loans in 1992 (which already reflected reduced 
levels related to a recession) to fewer than 1,500 loans last 
year--a level which makes the program of little practical 
value.
    Manufactured housing plays a vital role in providing 
affordable homeownership opportunities for low- and moderate-
income families. Historically, FHA loan programs have generally 
served as a reliable source of mortgage credit, in particular 
providing stability when other lenders exit volatile markets. 
Unfortunately, the severe volume reduction in FHA Title I 
manufactured home loans has meant that this program has not 
fulfilled this role for such loans in recent years. This has 
undermined the ability of lower income families to achieve 
homeownership through purchase of an important and affordable 
type of home, a manufactured home sited on leased land.
    The purpose of the bill is to modernize the FHA Title I 
manufactured program through changes designed to encourage 
increased private sector lender participation in the program, 
to modify the form of the loan guarantee to make the program 
more acceptable in the secondary market, to raise loan limits 
to make up for an extended period in which statutory limits 
have not kept up with inflation, and to provide statutory 
provisions for loan fees and underwriting criteria to ensure 
that the program will be maintained on a sound financial basis.

                  Background and Need for Legislation

    The basic FHA 203(b) mortgage loan program under title II 
of the Federal Housing Act insures loans for homes attached to 
land which is owned by the borrower. These 203(b) FHA loans are 
backed by the full faith and credit of the federal government, 
and as such, are readily securitized and sold into the 
secondary market through the Government National Mortgage 
Association (GNMA), thereby providing for highly competitive 
mortgage interest rates. The essential feature of the FHA 
guarantee for such loans is that GNMA can securitize these 
loans for a very low fee and still make money, because of the 
strong federal guarantee provided by law.
    Title I of FHA was originally created to provide a federal 
loan insurance program for home improvement loans. 
Subsequently, Title I was expanded to include the authority to 
insure loans on personal property manufactured homes sited on 
leased land, to insure land on which such homes are sited, to 
insure a combination of the two, and to insure loans for 
alternations, repairs, and improvements to existing 
manufactured homes.
    Manufactured homes sited on land owned by the borrower 
(which are generally characterized as real property loans) can 
be financed under the FHA Title II Section 203(b) loan program. 
However, manufactured homes sited on leased land, which are 
generally considered personal property loans, have a higher 
degree of risk. This is because of legal issues related to the 
leased land and also to the fact that the loan security does 
not include land, which is often a major source of home 
property appreciation. Alternative private sector loans on 
personal property manufactured homes are generally available at 
relatively higher rates and more restrictive loan terms than 
are available under private sector real property loans. This 
magnifies the importance of rejuvenating the FHA loan program 
for personal property loans, so that borrowers will have 
options for such loans at affordable rates and under reasonable 
terms and conditions.

                      STRUCTURE OF LOAN GUARANTEE

    By statute FHA Title I loan programs operate under 
different terms and conditions than Title II loans (and Section 
203(b) loans in particular). These differences have important 
consequences with respect to the ability to securitize such 
loans and thereby offer competitive rates. First the Title I 
program works more as a co-insurance loan program, since 
participating lenders assume 10 percent of the loss on any 
claim made for a foreclosed home (compared to Title II, in 
which the lender assumes less than 1 percent of any loan loss 
claim). Secondly, FHA limits the maximum exposure of any Title 
I loan loss for any one participating lender to only 10 percent 
of the lender's total Title I manufactured housing insured 
loans outstanding (whereas no such limit exists for Title II 
loans). The third difference is that the federal insurance is 
not provided to the loan, but to the lender. Finally, unlike 
Title II loans where the federal insurance is largely 
unconditional, FHA title II insurance is conditioned on a 
number of factors related to the loan and the lender, which 
reduce the certainty and value of the federal guarantee.
    All these factors have created a substantial impediment to 
GNMA participation in securitizing FHA Title I manufactured 
housing loans. As a result, Title I loans have higher interest 
rates than would otherwise be available if GNMA were 
securitizing the loans. These factors have also discouraged 
private sector participation in the program. The result has 
been limited loan availability and the steep plunge in loan 
volume.
    The bill makes a number of changes designed to conform the 
nature of the Title I loan guarantee more with the Title II 
guarantee, with the goal of encouraged increased lender 
participation and securitization. The bill eliminates the 
statutory portfolio cap that limits maximum FHA exposure to 10 
percent of a lender's outstanding Title I loans. The bill also 
strengthens the federal loan guarantee in order to gain 
acceptance in secondary markets, by explicitly providing that 
the contract for insurance ``shall be conclusive evidence of 
the eligibility'' of the lender for insurance and that such 
insurance contract ``shall be incontestable . . . except for 
fraud of misrepresentation on the part of such institution.''

                              LOAN LIMITS

    Existing statute sets dollar amount loan limits for Title I 
manufactured home loans. The statute provides that the maximum 
loan on a manufactured home only is $48,600, the maximum loan 
on a lot only on which such a home is to be sited is $16,200, 
the maximum loan on a home sited on a lot is $64,800, and the 
maximum loan for the purpose of financing alterations, repairs, 
and improvements for existing manufactured housings is $17,500.
    These statutory loan limits have not been updated since 
1992. Since that period, the median price of manufactured homes 
has risen by approximately 50 percent. Four years ago, Congress 
enacted legislation to update statutory loan limits for most 
FHA loan programs, to reflect housing cost increases since 
1992, the last time limits had been updated. That legislation 
also provided that these loan limits would subsequently be 
adjusted each year according to an objective inflation 
adjustment.
    However, that legislation did not update loan limits for 
FHA Title I manufactured housing loans. This bill would update 
the statutory loan limits, raising the maximum loan on a 
manufactured home only to $69,678, raising the maximum loan on 
a lot only to $23,226, raising the maximum loan on a home and 
lot combined to $92,904, and raising the maximum loan for 
alterations, repairs, and improvements to $25,090. The bill 
also provides that HUD shall develop a method of indexing these 
loan limits and shall provide an annual inflation adjustment 
according to such method.

                          FINANCIAL SOUNDNESS

    The bill includes a number of provisions designed to ensure 
that the modernized FHA Title I manufactured loan program is 
operated in a manner which maintains the financial soundness of 
the program.
    First, language is included in the bill to require HUD to 
establish underwriting criteria for these loans ``as may be 
necessary to ensure that the program under this title . . . is 
financially sound.'' This replaces the current structure in 
which participating lenders are given far greater latitude in 
establishing underwriting criteria and in approving individual 
loans.
    Secondly, the bill gives HUD authority to charge an upfront 
fee (``premium'') for such loans of up to 2.25 percent, and an 
annual premium of up to 1 percent of the outstanding loan 
amount. The bill requires HUD to set premiums in amounts that 
are sufficient to maintain a negative credit subsidy for the 
program, thus ensuring that an annual credit subsidy 
appropriation will not be needed to operate the program. As a 
result, the program will not require subsidies by federal 
taxpayers.
    However, the bill also limits HUD's authority to set 
premiums, with language stating that the premiums that are to 
be established shall be in amounts that do not exceed the 
minimum amounts necessary to maintain a negative credit 
subsidy. This provision is designed to prevent fees from being 
set at unnecessarily high levels, in order to ensure that the 
program does not become a piggy bank merely to fund other 
federal programs or to subsidize federal general fund revenues.
    Third, the bill provides HUD with general authority to 
handle and dispose of Title I manufactured home properties in 
the case of loan nonpayment, which is similar to authority HUD 
now has with regard to FHA Title II loans.

                     SOCIAL SECURITY ID REQUIREMENT

    The bill provides that FHA may not insure Title I 
manufactured home loans, unless each member of the family of 
the borrower who is 18 years or older or is the spouse of the 
borrower has a valid social security number.

                             TORNADO STUDY

    The bill provides for a GAO study, under which the 
Comptroller General shall assess how HUD utilizes the FHA Title 
I manufactured home loan program the CDBG program, and other 
programs and resources available to HUD to mitigate the risks 
to manufactured housing residents and communities resulting 
from tornadoes. The report must be submitted to Congress within 
12 months after the date of enactment of the bill.

                                Hearings

    No hearings were held on H.R. 2139 in the 110th Congress.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 23, 2007 and ordered H.R. 2139, the FHA Manufactured 
Housing Loan Modernization Act of 2007, as amended, favorably 
reported to the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the bill, as amended, to the House with a favorable 
recommendation was agreed to by a voice vote. During the 
consideration of the bill, the Committee considered the 
following amendments:
    An amendment by Mr. Bachus, No. 1, requiring a GAO study of 
mitigation of tornado risks to manufactured homes, was agreed 
to by a voice vote.
    An amendment by Ms. Brown-Waite, No. 2, requiring the 
social security number for assistance, was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The objective of the bill is to modernize the FHA Title I 
manufactured program through changes designed to encourage 
increased private sector lender participation in the program, 
to modify the form of the loan guarantee to make the program 
more acceptable in the secondary market, to raise loan limits 
to make up for an extended period in which statutory limits 
have not kept up with inflation, and to provide statutory 
provisions for loan fees and underwriting criteria to ensure 
that the program will be maintained on a sound financial basis.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                                      June 1, 2007.
Hon. Barney Frank, Chairman,
Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2139, the FHA 
Manufactured Housing Loan Modernization Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

H.R. 2139--FHA Manufactured Housing Loan Modernization Act of 2007

    Summary: H.R. 2139 would amend the Federal Housing 
Administration's (FHA's) loan guarantee program for 
manufactured housing. Under title I of the National Housing 
Act, FHA insures loans for individuals for the purchase and 
improvement of manufactured housing--single-family homes 
constructed entirely in a controlled factory environment and 
built to a Federal code administered by the Department of 
Housing and Urban Development (HUD). This bill would require 
FHA to insure such loans on an individual basis, raise the 
maximum loan limits, require FHA to charge premiums necessary 
to maintain a negative credit subsidy (as estimated under the 
Federal Credit Reform Act) for the loan guarantees, and make 
other administrative changes to the program. Implementing the 
manufactured housing loan program, like all of FHA's insurance 
programs, is contingent on the enactment of appropriation laws 
that provide annual commitment authority.
    CBO estimates that implementing H.R. 2139 would result in a 
negligible cost or savings of less than $500,000 a year over 
the 2009-2012 period, assuming enactment of appropriation laws 
necessary to implement the program. Until the reforms in the 
bill can be fully implemented, CBO expects that continuing the 
manufactured housing loan-guarantee program in 2008 would cost 
$1 million. Enacting the bill would not affect direct spending 
or revenues.
    H.R. 2139 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: For this 
estimate, CBO assumes that the bill will be enacted near the 
beginning of fiscal year 2008. The estimated budgetary impact 
of H.R. 2139 is shown in the following table. The costs of this 
legislation fall within budget function 370 (commerce and 
housing credit).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2007      2008      2009      2010      2011      2012
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending for Manufactured Housing Loan Guarantees
 Under Current Law \1\:
    Budget Authority \1\............................         1         0         0         0         0         0
    Estimated Outlays...............................         1         0         0         0         0         0
Proposed Changes:
    Estimated Authorization Level...................         0         1         *         *         *         *
    Estimated Outlays...............................         0         1         *         *         *         *
Spending for Manufactured Housing Loan Guarantees
 Under H.R. 2139:
    Estimated Authorization Level \1\...............         1         1         *         *         *         *
    Estimated Outlays...............................         1         1         *         *         *         *
----------------------------------------------------------------------------------------------------------------
NOTE: * = costs or savings of less than $500,000.
\1\ The figure for 2007 is the estimated portion of the total credit subsidy appropriated for that year that
  will be used by FHA for the manufactured housing loan-guarantee program.

    Basis of estimate: CBO estimates that over the 2009-2012 
period, implementing the manufactured housing loan program 
would result in costs or savings of less than $500,000 a year. 
Until the reforms in the bill can be fully implemented, 
continuing the loan guarantee program would cost $1 million in 
2008.

Background

    Manufactured housing loan guarantees fall under title I of 
the National Housing Act; under title I, FHA also has authority 
to insure house improvement loans. The volume of manufactured 
housing loans guaranteed by FHA has fallen from 30,000 per year 
in the 1990s to less than 2,000 loans per year in recent years. 
Furthermore, in the late 1980s the Government National Mortgage 
Association (GNMA) experienced significant losses from its 
securitization of the manufactured housing loans. (GNMA is 
responsible for guaranteeing securities backed by pools of 
mortgages insured by the federal government. In exchange for a 
fee charged to lenders or issuers of the securities, GNMA 
guarantees the timely payments of scheduled principal and 
interest due on the pooled mortgages that back those 
securities.) As a result of those losses, GNMA imposed a 
moratorium on new issuers of manufactured housing loan 
guarantees into its Mortgage-Backed Securities (MBS) program.
    Moreover, financing options for manufactured housing are 
very limited. Currently, only two private lenders participate 
in the FHA program, and because no private secondary market 
exists, most private lenders and insurers have no incentive to 
make loans or loan guarantees for manufactured housing. Despite 
the fact that there are relatively few financing options 
available for manufactured housing, there are about 11 million 
manufactured homes in the United States (mostly in rural 
areas), according to the Manufactured Housing Institute (MHI). 
Most of those manufactured houses are financed through personal 
loans. Enacting this legislation would make several 
programmatic changes designed to increase demand for FHA's 
manufactured housing loan program.

Proposed changes

    Under current law, FHA limits its loss exposure on 
manufactured housing loan guarantees by capping the lender's 
insurance coverage at 10 percent of the value of the lender's 
portfolio for the title I program. That is, FHA pays only 
lender claims amounts that are less than or equal to 10 percent 
of the value of the lender's loan portfolio for the title I 
loans. As a result, the amount of insurance that FHA provides 
for each loan varies. Enacting H.R. 2139 would eliminate this 
insurance structure for loans associated with manufactured 
homes and would direct FHA to insure 90 percent of each 
individual loan. Those changes would significantly expand 
government liability under the program.
    Enacting this legislation also would raise the loan limits 
for insuring a manufactured home by about 40 percent and would 
require that the limits be indexed for inflation on an annual 
basis. According to FHA, the average cost of a manufactured 
home is about $60,000. Current loan limits restrict the 
purchase of a manufactured home to $48,000; under H.R. 2139, 
this limit would increase to $69,678 after the program changes 
are implemented in 2009.
    Currently, borrowers are charged a 1 percent up-front fee 
for a manufactured home loan guarantee. Because the fees 
collected are not expected to exceed the cost of defaults, FHA 
estimates that the manufactured housing loan guarantee program 
has a subsidy rate of about 1 percent. Enacting this 
legislation would require FHA to assess higher premiums that 
would offset the costs of expected defaults to yield an 
estimated negative credit subsidy rate for the program. Based 
on information from FHA, CBO expects that FHA would set the up-
front premiums for borrowers at about 2.25 percent and the 
annual premiums at 1 percent. CBO expects that those fees may 
be sufficient to make the program's estimated subsidy rate near 
zero, assuming that the pattern of future default rates in this 
program is similar to recent history about--9.5 percent. 
Because there is essentially no private market for manufactured 
housing loan guarantees to compare to the federal program, it 
is uncertain whether those higher fees would result in a 
program with no net cost. On balance, CBO estimates that 
implementing the bill would result in net costs or savings of 
less than $500,000 a year beginning in fiscal year 2009.
    Cost of Program. Based on information from FHA and MHI, CBO 
estimates that it would take about one year to implement the 
changes proposed under the bill. Furthermore, CBO anticipates 
that significant outreach by FHA would be needed to identify 
and educate prospective borrowers and lenders about the 
manufactured housing program reforms. Thus, CBO estimates that 
the number of loans insured under the program would begin to 
grow by about 5 percent annually beginning in 2009. Assuming 
this gradual increase in demand and an estimated subsidy rate 
for 2009 and subsequent years that is near zero, CBO estimates 
that implementing this legislation would result in a net cost 
or savings of less than $500,000 a year.
    CBO estimates that in 2008, while the programmatic changes 
are underway, FHA would require an appropriation of about $1 
million to maintain the program at its current level.
    GNMA Savings. According to GNMA, the agency would consider 
securitizing additional manufactured housing loans following an 
evaluation of the program after the proposed changes are 
implemented and to the extent FHA has begun to guarantee a 
significant number of loans, most likely with a face value 
close to at least $1 billion. Because CBO estimates that it 
will take FHA many years to increase its business volume to 
that level, we do not estimate that any additional offsetting 
collections associated with GNMA's MBS program would be 
generated over the next five years.
    Intergovernmental and private-sector impact: H.R. 2139 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Susanne S. Mehlman; 
Impact on state, local, and tribal governments: Elizabeth Cove; 
Impact on the private sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2139 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Short bill title: ``FHA Manufactured Housing Loan 
Modernization Act of 2007.''

Section 2. Findings and purposes

    Provides findings and purposes--including establishing the 
value of the program, citing the decline in program loan 
volume, identifying factors that have contributed to that 
decline, and stating the purpose of modernizing the program.

Section 3. Exception to limitation on financial institution portfolio

    Removes the existing portfolio cap that limits federal risk 
of loss related to each lender to 10 percent of that lender's 
Title I manufactured loan insured portfolio. Retains the 
existing risk sharing, under which FHA takes the risk for 90 
percent of any claim, and the lender takes the risk for 10 
percent of the claim.

Section 4. Insurance benefits

    Provides for a federal guarantee comparable to the FHA 
Title II loan guarantee--by providing that the insurance is 
based on the loan, instead of having FHA insurance being 
provided to the lender (as is now the case), and by stating 
that the insurance contract shall be incontestable except for 
fraud or misrepresentation on the part of the loan originator.

Section 5. Maximum loan limits

    Updates the statutory dollar amount loan limits for 
manufactured homes and manufactured home lots, by providing an 
inflation adjustment from 1992 (the last time limits were 
updated) to the current year. Also provides for subsequent 
annual indexing of such loan limits.

Section 6. Insurance premiums

    Authorizes HUD to charge, for FHA Title I Manufactured Home 
loans, an upfront premium of up to 2.25 percent, and an annual 
premium of up to 1 percent of the outstanding loan balance. 
Also authorizes HUD to increase such premiums up to amounts 
that are sufficient, but do not exceed, the minimum amounts 
necessary, to maintain a negative credit subsidy for the 
program.

Section 7. Technical corrections

    Makes technical and conforming corrections.

Section 8. Revision of underwriting criteria

    Requires HUD to establish underwriting criteria for the 
program to ensure it is financially sound.

Section 9. Requirement of Social Security account number for assistance

    Prohibits loans for this program unless the borrower and 
each member of the borrower's family over the age of 18, 
including the spouse of the borrower, has a valid Social 
Security number.

Section 10. GAO study of mitigation of tornado risks to maufactured 
        homes

    Requires the GAO to assess how HUD utilizes the FHA Title I 
manufactured home loan program, the CDBG program, and other 
programs and resources available to HUD to mitigate the risks 
to manufactured housing residents and communities resulting 
from tornadoes, and to submit a report on this to Congress 
within 12 months after enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

NATIONAL HOUSING ACT

           *       *       *       *       *       *       *



TITLE I--HOUSING RENOVATION AND MODERNIZATION

           *       *       *       *       *       *       *



                  INSURANCE OF FINANCIAL INSTITUTIONS

  Sec. 2. (a) The Secretary is authorized and empowered upon 
such terms and conditions as he may prescribe, to insure banks, 
trust companies, personal finance companies, mortgage 
companies, building and loan associations, installment lending 
companies, and other such financial institutions, which the 
Secretary finds to be qualified by experience or facilities and 
approves as eligible for credit insurance, against losses which 
they may sustain as a result of loans and advances of credit, 
and purchases of obligations representing loans and advances of 
credit, made by them [on and after July 1, 1939,] for the 
purpose of (i) financing alterations, repairs, and improvements 
upon or in connection with existing structures or manufactured 
homes, and the building of new structures, upon urban, 
suburban, or rural real property (including the restoration, 
rehabilitation, rebuilding, and replacement of such 
improvements which have been damaged or destroyed by 
earthquake, conflagration, tornado, hurricane, cyclone, flood, 
or other catastrophe), by the owners thereof or by lessees of 
such real property under a lease expiring not less than six 
months after the maturity of the loan or advance of credit; and 
for the purpose of (ii) financing the purchase of a 
manufactured home to be used by the owner as his principal 
residence or financing the purchase of a lot on which to place 
such home and paying expenses reasonably necessary for the 
appropriate preparation of such lot, including the installation 
of utility connections, sanitary facilities, and paving, and 
the construction of a suitable pad, or financing only the 
acquisition of such a lot either with or without such 
preparation by an owner of a manufactured home; and for the 
purpose of financing the preservation of historic structures, 
and, as used in this section, the term ``historic structures'' 
means residential structures which are registered in the 
National Register of Historic Places or which are certified by 
the Secretary of the Interior to conform to National Register 
criteria; and the term ``preservation'' means restoration or 
rehabilitation undertaken for such purposes as are approved by 
the Secretary in regulations issued by him, after consulting 
with the Secretary of the Interior. [In no case] Other than in 
connection with a manufactured home or a lot on which to place 
such a home (or both), in no case shall the insurance granted 
by the Secretary under this section to any such financial 
institution on loans, advances of credit, and purchases made by 
such financial institution for such purposes [on and after July 
1, 1939,] exceed 10 per centum of the total amount of such 
loans, advances of credit, and purchases[: Provided, That 
with]. With respect to any loan, advance of credit, or purchase 
[made after the effective date of the Housing Act of 1954], the 
amount of any claim for loss on any such individual loan, 
advance of credit, or purchase paid by the Secretary under the 
provisions of this section to a lending institution shall not 
exceed 90 per centum of such loss.

           *       *       *       *       *       *       *

  (b)(1) [No] Except as provided in the last sentence of this 
paragraph, no insurance shall be granted under this section to 
any such financial institution with respect to any obligation 
representing any such loan, advance of credit, or purchase by 
it if the amount of such loan, advance of credit, or purchase 
exceeds--
          (A)(i)  * * *
          (ii) [$17,500] $25,090 if made for the purpose of 
        financing alterations, repairs and improvements upon or 
        in connection with existing manufactured homes;

           *       *       *       *       *       *       *

          (C) [$48,600] $69,678 if made for the purpose of 
        financing the purchase of a manufactured home;
          (D) [$64,800] $92,904 if made for the purpose of 
        financing the purchase of a manufactured home and a 
        suitably developed lot on which to place the home; and
          (E) [$16,200] $23,226 if made for the purpose of 
        financing the purchase, by an owner of a manufactured 
        home which is the principal residence of that owner, of 
        a suitably developed lot on which to place that 
        manufactured home, and if the owner certifies that he 
        or she will place the manufactured home on the lot 
        acquired with such loan within 6 months after the date 
        of such loan.

           *       *       *       *       *       *       *

The Secretary shall, by regulation, annually increase the 
dollar amount limitations in subparagraphs (A)(ii), (C), (D), 
and (E) (as such limitations may have been previously adjusted 
under this sentence) in accordance with the index established 
pursuant to paragraph (9).

           *       *       *       *       *       *       *

          (8) Insurance benefits for manufactured housing 
        loans.--Any contract of insurance with respect to 
        loans, advances of credit, or purchases in connection 
        with a manufactured home or a lot on which to place a 
        manufactured home (or both) for a financial institution 
        that is executed under this title after the date of the 
        enactment of the FHA Manufactured Housing Loan 
        Modernization Act of 2007 by the Secretary shall be 
        conclusive evidence of the eligibility of such 
        financial institution for insurance, and the validity 
        of any contract of insurance so executed shall be 
        incontestable in the hands of the bearer from the date 
        of the execution of such contract, except for fraud or 
        misrepresentation on the part of such institution.
          (9) Annual indexing of manufactured housing loans.--
        The Secretary shall develop a method of indexing in 
        order to annually adjust the loan limits established in 
        subparagraphs (A)(ii), (C), (D), and (E) of this 
        subsection. Such index shall be based on the 
        manufactured housing price data collected by the United 
        States Census Bureau. The Secretary shall establish 
        such index no later than one year after the date of the 
        enactment of the FHA Manufactured Housing Loan 
        Modernization Act of 2007.
          (10) Financial soundness of manufactured housing 
        program.--The Secretary shall establish such 
        underwriting criteria for loans and advances of credit 
        in connection with a manufactured home or a lot on 
        which to place a manufactured home (or both), including 
        such loans and advances represented by obligations 
        purchased by financial institutions, as may be 
        necessary to ensure that the program under this title 
        for insurance for financial institutions against losses 
        from such loans, advances of credit, and purchases is 
        financially sound.
  [(c)(1) Notwithstanding any other provision of law, the 
Secretary shall have the power, under regulations to be 
prescribed by him and approved by the Secretary of the 
Treasury, to assign or sell at public or private sale, or 
otherwise dispose of, any evidence of debt, contract, claim, 
personal property, or security assigned to or held by him in 
connection with the payment of insurance heretofore or 
hereafter granted under this section, and to collect or 
compromise all obligations assigned to or held by him and all 
legal or equitable rights accruing to him in connection with 
the payment of such insurance until such time as such 
obligations may be referred to the Attorney General for suit or 
collection.
  [(2) The Secretary is authorized and empowered (a) to deal 
with, complete, rent, renovate, modernize, insure, or sell for 
cash or credit in his discretion, and upon such terms and 
conditions and for such consideration as the Secretary shall 
determine to be reasonable, any real or personal property 
conveyed to or otherwise acquired by him, in connection with 
the payment of insurance heretofore or hereafter granted under 
this title and (b) to pursue to final collection, by way of 
compromise or otherwise, all claims against mortgagors assigned 
by mortgagees to the Secretary in connection with such real or 
personal property by way of deficiency or otherwise: Provided, 
That section 3709 of the Revised Statutes shall not be 
construed to apply to any contract of hazard insurance or to 
any purchase or contract for services or supplies on account of 
such property if the amount thereof does not exceed $1,000. The 
power to convey and to execute in the name of the Secretary, 
deeds of conveyance, deeds of release, assignments and 
satisfactions of mortgages, and any other written instrument 
relating to real or personal property or any interest therein 
heretofore or hereafter acquired by the Secretary pursuant to 
the provisions of this title may be exercised by an officer 
appointed by him without the execution of any express 
delegation of power or power of attorney: Provided, That 
nothing in this paragraph shall be construed to prevent the 
Secretary from delegating such power by order or by power of 
attorney, in his discretion, to any officer or agent he may 
appoint.]
  (c) Handling and Disposal of Property.--
          (1) Authority of secretary.--Notwithstanding any 
        other provision of law, the Secretary may--
                  (A) deal with, complete, rent, renovate, 
                modernize, insure, or assign or sell at public 
                or private sale, or otherwise dispose of, for 
                cash or credit in the Secretary's discretion, 
                and upon such terms and conditions and for such 
                consideration as the Secretary shall determine 
                to be reasonable, any real or personal property 
                conveyed to or otherwise acquired by the 
                Secretary, in connection with the payment of 
                insurance heretofore or hereafter granted under 
                this title, including any evidence of debt, 
                contract, claim, personal property, or security 
                assigned to or held by him in connection with 
                the payment of insurance heretofore or 
                hereafter granted under this section; and
                  (B) pursue to final collection, by way of 
                compromise or otherwise, all claims assigned to 
                or held by the Secretary and all legal or 
                equitable rights accruing to the Secretary in 
                connection with the payment of such insurance, 
                including unpaid insurance premiums owed in 
                connection with insurance made available by 
                this title.
          (2) Advertisements for proposals.--Section 3709 of 
        the Revised Statutes shall not be construed to apply to 
        any contract of hazard insurance or to any purchase or 
        contract for services or supplies on account of such 
        property if the amount thereof does not exceed $25,000.
          (3) Delegation of authority.--The power to convey and 
        to execute in the name of the Secretary, deeds of 
        conveyance, deeds of release, assignments and 
        satisfactions of mortgages, and any other written 
        instrument relating to real or personal property or any 
        interest therein heretofore or hereafter acquired by 
        the Secretary pursuant to the provisions of this title 
        may be exercised by an officer appointed by the 
        Secretary without the execution of any express 
        delegation of power or power of attorney. Nothing in 
        this subsection shall be construed to prevent the 
        Secretary from delegating such power by order or by 
        power of attorney, in the Secretary's discretion, to 
        any officer or agent the Secretary may appoint.

           *       *       *       *       *       *       *

  (f)(1) Premium Charges.--The Secretary shall fix a premium 
charge for the insurance hereafter granted under this section, 
but in the case of any obligation representing any loan, 
advance of credit, or purchase, such premium charge shall not 
exceed an amount equivalent to 1 per centum per annum of the 
net proceeds of such loan, advance of credit, or purchase, for 
the term of such obligation, and such premium charge shall be 
payable in advance by the financial institution and shall be 
paid at such time and in such manner as may be prescribed by 
the Secretary.
  (2) Manufactured Home Loans.--Notwithstanding paragraph (1), 
in the case of a loan, advance of credit, or purchase in 
connection with a manufactured home or a lot on which to place 
such a home (or both), the premium charge for the insurance 
granted under this section shall be paid by the borrower under 
the loan or advance of credit, as follows:
          (A) At the time of the making of the loan, advance of 
        credit, or purchase, a single premium payment in an 
        amount not to exceed 2.25 percent of the amount of the 
        original insured principal obligation.
          (B) In addition to the premium under subparagraph 
        (A), annual premium payments during the term of the 
        loan, advance, or obligation purchased in an amount not 
        exceeding 1.0 percent of the remaining insured 
        principal balance (excluding the portion of the 
        remaining balance attributable to the premium collected 
        under subparagraph (A) and without taking into account 
        delinquent payments or prepayments).
          (C) Premium charges under this paragraph shall be 
        established in amounts that are sufficient, but do not 
        exceed the minimum amounts necessary, to maintain a 
        negative credit subsidy for the program under this 
        section for insurance of loans, advances of credit, or 
        purchases in connection with a manufactured home or a 
        lot on which to place such a home (or both), as 
        determined based upon risk to the Federal Government 
        under existing underwriting requirements.
          (D) The Secretary may increase the limitations on 
        premium payments to percentages above those set forth 
        in subparagraphs (A) and (B), but only if necessary, 
        and not in excess of the minimum increase necessary, to 
        maintain a negative credit subsidy as described in 
        subparagraph (C).

           *       *       *       *       *       *       *

  (j) Requirement of Social Security Account Number for 
Financing.--No insurance shall be granted under this section 
with respect to any obligation representing any loan, advance 
of credit, or purchase by a financial institution unless the 
borrower to which the loan or advance of credit was made, and 
each member of the family of the borrower who is 18 years of 
age or older or is the spouse of the borrower, has a valid 
social security number.

           *       *       *       *       *       *       *


           ADDITIONAL VIEWS OF RANKING MEMBER SPENCER BACHUS

    H.R. 2139 includes several important reforms to the Title I 
manufactured housing program, which will encourage greater 
private sector participation and increase the availability of 
FHA loans for manufactured housing. The manufactured housing 
industry has evolved in the last decade to deliver a higher 
quality product that saves as much as 25 percent of development 
costs associated with traditional single-family homes.
    During the markup of H.R. 2139, the Committee adopted an 
amendment I offered directing the Government Accountability 
Office (GAO) to assess how the Secretary of Housing and Urban 
Development utilizes the FHA manufactured housing loan 
insurance program and other programs administered by HUD to 
mitigate the risks to manufactured housing residents and 
communities resulting from tornadoes.
    Every year, an average of 800 tornadoes sweep across the 
United States, resulting in 80 deaths, more than 1,500 
injuries, and millions of dollars in property damage. One of 
nature's most powerful and violent storms, large tornadoes 
often record wind speeds in excess of 250 miles per hour. These 
natural catastrophes can strike with little warning, forcing 
communities to confront a loss of infrastructure, and, 
unfortunately, a loss of life. In my home state of Alabama in 
early March, eight people were killed, including students, when 
a powerful tornado ripped through a high school.
    Many residents of homes have a place to go in the event of 
a tornado, whether it is a basement or an interior room. 
Manufactured housing residents do not have a basement and they 
often do not have an interior room. Despite rapid advances in 
tornado warning technologies, residents of manufactured housing 
communities often do not have adequate access to proper 
shelter. In 2003, I authored legislation authorizing 
communities to use Community Development Block Grant (CDBG) 
monies to construct or improve tornado-safe shelters located in 
manufactured housing parks. Unfortunately, this authority is 
not used often enough.
    As we improve the Title I manufactured housing loan 
program, it is important that Congress do everything in its 
power to ensure that residents of manufactured housing 
communities have adequate protection from natural catastrophes 
such as tornadoes.
    H.R. 2139 will facilitate greater access to manufactured 
housing, and my amendment will help to ensure that residents of 
manufactured housing communities can acquire sufficient 
resources to prepare and protect their families from the next 
tornado.

                                                    Spencer Bachus.

                                  
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