Issue link: https://read.dmtmag.com/i/283550
APRIL 2014 18 THE JOURNAL It's De JA Vu All Over Again MHARR VIEWPOINT BY DANNY GHORBANI When Yogi Berra spoke those immortal words, it's unlikely he had the manufactured housing in- dustry and its Washington, D.C. representation in mind. But history has a way of repeating itself and the efforts of the manufactured housing in- dustry in the nation's capital are no exception. So, it only makes sense to revisit that history from time-to-time, to seek-out and hopefully learn (or re-learn) the lessons it has to offer, in order to avoid repeating the same mistakes over and over again – as is currently the case with the man- ufactured housing industry's consumer financing predicament. The formation of MHARR as a voice for HUD Code producers in the nation's capital was an outgrowth of the transition from state-based reg- ulation of the manufactured housing industry to comprehensive federal regulation under the Na- tional Manufactured Housing Construction and Safety Standards Act of 1974. With the incep- tion of the federal manufactured housing program and the rapid expansion of HUD regulation in the 1980s, including the development and enforce- ment of subjective "interpretations" and other non-regulatory criteria, it became apparent to a number of industry pioneers that the existing na- tional industry representation was more interested in "going along" with regulators, than in protect- ing the industry from excessive or unfair regula- tion. So, MHARR was established in 1985, with a prime mission of pursuing a functional federal program based on fair, reasonable and cost-effec- tive regulation that would provide a level playing field for all regulated parties. Fast-forward to the late 1980 and early 1990s. When it became apparent that the 1974 law needed revamping due to a record of regulatory abuses and a widening disconnect between a law designed for the semi-vehicular "trailers" of yes- teryear and the reality of modern manufactured homes, MHARR, with broad industry support, began a drive in Congress for statutory reform. Helped by the favorable image of the manufac- tured housing industry as providing affordable non-subsidized homeownership as well as highly- sought manufacturing jobs, an expansive reform law, including a removable chassis provision – the so-called "Hiler Amendment," named for its chief sponsor, then-Rep. John Hiler (R-IN) – was developed and introduced in less than a year. On the eve of a crucial House-Senate conference committee vote, though, the Hiler Amendment was torpedoed by opposition from some within the industry and effectively killed. What followed next was a ten-year effort by MHARR to convince the broader industry – all over again -- of the need for fundamental statu- tory reform, even though the other key stake- holder group in the federal program, i.e. , homeowners, recognized that need and agreed all along. The reason that effort took as long as it did is quite simple – many of the industry's largest entities were content with a "trailer" law, accus- tomed to "going along" with the industry's federal regulators and, in fact, were happy to do so be- cause, as has long been documented by the U.S. Small Business Administration, the financial bur- den of regulation falls disproportionately on smaller businesses, i.e. , their competitors. All that changed, though, in 1998 – and the indus- try finally got its much-needed reform law in 2000 – when a group of leaders, comprised of a non- MHARR manufacturer, a post-production exec- utive and a state association executive, finally bucked "the system," convinced their respective constituencies, and genuinely cooperated with MHARR and consumers to bring the rest of the industry along and achieve a legislative break- through in a surprisingly short time. Fast-forward again to today (and recent times). The industry's consumer financing – its lifeblood – has been in shambles for years. And while MHARR does not have finance companies as dues-paying members, the availability – or un- availability – of consumer financing impacts all segments of the industry, so MHARR became in- volved in advancing efforts to open-up and ex- pand manufactured home consumer financing. That involvement started with a genuinely coop- erative effort with MHI on key issues in the mid- 2000s, that was successful in achieving improve- ments to both public and private consumer fi- nancing, including the enactment of Federal Housing Administration (FHA) reform and the "duty to serve underserved markets" (DTS) di- rective as part of the Housing and Economic Re- covery Act of 2008 (HERA). Subsequently, though, with no independent national post-production representation in the nation's capital, critical matters of interest to re- tailers, communities and finance companies fell through the cracks. For example, the industry was not "at the table" to secure essential exemp- tions from the SAFE Act and the Dodd-Frank fi- nance reform law, leaving both it and consumers facing restrictions on communications regarding financing choices and prohibitions against "high- cost" loans that could severely impact chattel lending. In an attempt to cure these lapses after- the-fact, the industry has engaged in a costly multi-year effort to reform and correct relevant provisions of the Dodd-Frank law, but that effort has failed to meet its stated goal of obtaining statutory relief prior to the January 2014 effective date of Dodd-Frank implementing regulations. MHARR, for its part, while supporting the in- dustry Dodd-Frank reform effort, has been sharply focused on legislation to deal, once and for all, with the underlying root cause of the con- sumer financing problems that have bedeviled the industry and its homebuyers for decades, and has reduced industry production to a fraction of his- torical levels. Specifically, MHARR is targeting reform designed to provide a basis in the law to end longstanding discrimination against manufac- tured homebuyers and secure equal treatment for all types of manufactured housing loans (i.e. , real estate, personal property and land-home) by the Government Sponsored Enterprises (GSEs) and/or their successors. This MHARR effort has effectively brought the industry back to the situation it faced in early 1998 – thus the "de ja vu." Reform is essential. Con- sumers are ready for greater access to consumer \ 21