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July 2014

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JULY 2014 12 THE JOURNAL A Benchmark Achievement for Manufactured Housing and Consumers MHARR VIEWPOINT BY DANNY GHORBANI As the congressional summer recess ap- proaches, prognostications abound concerning the future of legislation in Congress to reform the Government Sponsored Enterprises (GSEs) and the role of the federal government in home financing. Efforts to read the political tea leaves, particularly in the Senate – which, un- like the House, has produced a bi-partisan re- form bill (S. 1217) and policy approach -- generally focus on three factors: (1) the size and scope of the bill and what it seeks to achieve; (2) the time remaining for floor action in a mid-term election year; and (3) jockeying on both sides of the political aisle to generate addi- tional support for the bill, which was approved by a bi-partisan 13-9 majority in the Senate Banking Committee on May 15, 2014. While MHARR's congressional sources con- tinue to indicate that prospects for a floor vote on the Senate GSE reform bill remain roughly 50-50 in the current session, confidence is high among experts that the same – or a similar – GSE reform bill will ultimately be considered by Congress, if not during the current session, then before the current Administration leaves office in 2016. Typical of this view are com- ments by a senior official of the Credit Union National Association (CUNA) reported in the May 26, 2014 edition of the Credit Union Times: "We know that the floor time will be limited this summer and we're going into an election. [I]t's important to keep in mind that generally speaking, major bills like this are not proposed and enacted in one Congress. It may not go anywhere this year but that doesn't mean it dies in committee or it dies because it didn't get a strong enough vote…. The cir- cumstances that have drawn Congress to look at this issue continue to exist and they will likely to continue to exist in the future so I would ex- pect Congress to continue to wrestle with this issue." Although the near-term future of the current Senate bill thus remains unclear for now, one thing that has been established in the process of developing this bill – and is clear – is that the ice has been broken and the die has now been cast for the inclusion of all types of manufactured housing loans in the structures, institutions and programs that will ul- timately replace the exist- ing GSEs. That process began a year ago, when MHARR's Executive Committee determined that the Association should take the lead – during the early formative stages of bi-partisan Sen- ate GSE reform legislation – to ensure the full inclusion of all types of manufactured home loans. It continued during the following weeks as MHARR developed the necessary language, secured consumer support (via the National Manufactured Home Owners Association – NMHOA), and then presented that language and related concepts to Congress – initially in September 2013 to a group of Senate Banking Committee staff members, followed by the As- sociation's October 2013 written testimony to the full Banking Committee, and finally a se- ries of one-on-one-meetings with key Senate offices during the remainder of 2013 and the start of 2014. All of this activity to educate and inform Congress on the necessity of including all types of manufactured home chattel, hybrid land- home and real estate loans in the latest bi-par- tisan version of S. 1217 – advanced by Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) – ultimately bore fruit for the industry and con- sumers on March 16, 2014, when Senators Johnson and Crapo unveiled their bill, incor- porating, word-for-word, the specific manu- factured home loan inclusion provisions developed and proposed to Congress by MHARR. First, the Johnson-Crapo bill contains MHARR-developed lan- guage that defines an "Eligi- ble Single-Family Mortgage Loan" as including "loans se- cured by manufactured homes, as defined by section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974." The bill also incorporates MHARR-developed lan- guage that defines "Residential Real Estate Loans" as including any "personal property loan secured solely by the home itself; [and any] hy- brid land-home loan for a manufactured home, as defined by section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974, to which the require- ments of paragraph (29)(A)(v) shall not apply." What particularly distinguishes these definitions as the language prepared and sub- mitted to Congress by MHARR, is the ending proviso -- dealing with title insurance – that tracks MHARR's original draft. Second, MHARR developed and submitted language to Congress for the inclusion of all types of manufactured home loans in a special fund – and related programs -- for the promo- tion and advancement of affordable homeown- ership. MHARR's proposed language stated that those "programs shall include manufactured homes purchased through both real estate and personal property loans and manufactured homes utilized as rental housing…." And, like the el- \ 15

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