Issue link: https://read.dmtmag.com/i/119220
MHARR VIEWPOINT ...And Time for Action on Chattel Financing BY DANNY GHORBANI The last two editions of the MHARR Viewpoint have focused on one of the key "policy" limitations that has prevented manufactured housing from becoming fully diversified throughout the entire spectrum of the housing market -- i.e., the "permanent chassis" mandate that has needlessly restricted the affordable housing options available to American homebuyers while simultaneously hindering the growth, expansion and technological evolution of the industry. The permanent chassis "requirement," however, is only one of the battering rams being used by competitors and regulators to cram manufactured housing into an increasingly narrow segment of the overall housing market -- and now it's time to address that second key restriction. Specifically, federal regulators and agencies are denying and depriving lower and moderate-income American consumers of the best and most direct path to homeownership available to them, through their unwillingness to provide any type of market support for manufactured home personal property (chattel) loans. Together with the permanent chassis mandate, these two "bookend" policies effectively choke-off industry growth and could ultimately squeeze the life out of what is left of today's HUD Code manufactured housing industry. At the higher-end of the potential market, the permanent chassis mandate prevents the development and marketing of consumer-option removable chassis homes that would effectively compete with smaller site-built homes. Meanwhile, at the other end of the cost spectrum, the virtual unavailability of consumer chattel financing has undermined sales of the industry's most affordable homes. As a result, manufactured homes are, more than ever, shoehorned into a sliver of the housing market. At the upper end, financing is available but the correct, cost-effective, consumer-friendly product is not, due to the ban on removable chassis. At the other end, the corAPRIL 2013 14 THE JOURNAL rect product is available but financing is not. Either way, the current situation is unacceptable, but the industry has been slow to step-up and respond. The statistics showing the growing need for readily-available manufactured home consumer chattel financing are compelling. Census Bureau data shows that the number of manufactured homes titled as personal property is rising rapidly. Since the beginning of the recession in 2008, the proportion of manufactured homes placed as personal property has increased from 62% to 76% -- a full two-thirdsplus -- of the entire HUD Code market in 2011. This lopsided proportion indicates -- as grassroots industry members well know -- that there is significant additional un-met demand for chattel-financed manufactured homes. This includes spaces in manufactured home communities and other situations where site space is leased. That demand for highly affordable manufactured home ownership, however, is being thwarted in the nation's capital by regulators, industry competitors and, at least in part, by the short-sightedness of some within the industry. Any analysis of chattel financing discrimination – and, more importantly, the approaches needed to secure an effective remedy – has to recognize that the relevant government (and quasigovernmental) agencies, i.e., HUD, the Federal Housing Administration (FHA) (with respect to its Title I program), the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac, among others, take a dim view (at best) of manufactured housing and manufactured home consumers – regardless of the facts -- and, given any choice, have no interest in supporting, facilitating, or being part of the manufactured housing finance market, even though their common statutory mission is to advance the availability of affordable home ownership, which is the preeminent and, in fact, unequaled, strength of manufactured housing. To ask "why," is to invite a flood of excuses, all based – as the agencies themselves acknowledge -on "perceptions;" which is why it is completely accurate to call these policies "discriminatory." Ask for hard data about the loan performance of current-day manufactured homes produced after the establishment of the installation and consumer satisfaction programs mandated by the Manufactured Housing Improvement Act of 2000 and you get blank stares because there is none – at least none that the regulators have or can get their hands on. So, millions of consumers are excluded from the housing market and hundreds of American factories lie idle not because of facts and data, but because of flat-out discrimination rooted in supposition, assumptions and "perceptions" that would be unacceptable in any other context and should be unacceptable in this case. In large measure, these discriminatory perceptions and policies – skillfully fanned by industry competitors in Washington, D.C. -- have been able to fester because of the climate created by the insolvency, conservatorship and uncertain status of the Government Sponsored Enterprises (GSEs) – and, more recently, the financial difficulties facing FHA (among other things). The relevant regulators speak in terms of the perceived "risks" associated with manufactured home chattel fi-