Issue link: https://read.dmtmag.com/i/355277
AUGUST 2014 10 THE JOURNAL Eliminating Costly and Unnecessary Make-Work Regulation MHARR VIEWPOINT BY DANNY GHORBANI As MHARR has pointed out many times be- fore, Subpart I of HUD's Procedural and En- forcement Regulations (PER) is a costly relic of the days when manufactured homes were viewed as vehicles, rather than permanent, le- gitimate housing. Reflecting those outdated perceptions and the heritage of the original Na- tional Manufactured Housing Construction and Safety Standards Act of 1974 as an offshoot of the National Highway Traffic Safety Act, Sub- part I is essentially a product "recall" mechanism that would be familiar to General Motors, Ford and Chrysler -- but is unlike anything to be found elsewhere in the realm of housing regula- tion. After nearly forty years of federal manu- factured housing regulation, however, Subpart I should be a prime candidate for elimination. Subpart I (corresponding to section 615 of the federal law), at its core, requires manufac- tured home producers to investigate and docu- ment virtually any "information" indicating the possible existence of a "defect" or standards non-conformance in manufactured homes. In a small number of cases it requires notice to consumers and, in rare cases, correction of more serious defects, up to and including re- placement of the home. This mechanism, which has no expiration date or "statute of lim- itations," is, for the most part, a costly exercise in paper-shuffling and red tape that today adds little or nothing to the multiple layers of protec- tion that homeowners already have as a result of: (1) multi-tiered in-plant manufacturer and Production Inspection Primary Inspection Agency (IPIA) home inspections; (2) third- party design and quality control approvals; (3) state and federal manufactured housing dispute resolution programs; (4) manufacturer home warranties; (5) component supplier warranties; (6) manufacturer and/or retailer consumer sat- isfaction programs; and/or (7) contract, tort, or statutory consumer protection claims that may be available under state law -- and that is without even getting into the additional multi- layered protections available to homebuyers under the state and fed- eral installation programs adopted as a consequence of the 2000 reform law. Yet this bureaucratic nightmare costs con- sumers in ways they are not even aware of. By forcing manufacturers to hire additional employees and use additional man- hours to chase, create and review paperwork, by forcing manufacturers to pay for more IPIA time to review and assess that paperwork and by gen- erating more make-work billing hours for the program contractor to review those reviews – including a major impending hike in HUD's certification label fee to help pay for those make-work hours -- Subpart I adds substan- tially to the bottom-line cost of manufactured homes. And, in today's extremely tight man- ufactured home finance market, that can be – and often is – the difference between qualifying for a loan or being excluded altogether from the American Dream of homeownership. Even worse, Subpart I has provided a con- venient excuse for the program's entrenched contracted enforcers to intimidate manufactur- ers with demands and enforcement threats based on subjective "interpretations" of the regulations and interpretive "criteria" that far exceed any- thing required by the federal standards. In par- ticular, during the 1980s and 1990s, manufac- turers were confronted with layers of costly new "criteria" pushed by the contractor and devel- oped outside of the normal notice and comment rulemaking process that generated mounds of paperwork and related costs, but nothing of substance for consumers. Not surprisingly, given this track record of abuse, the Manufactured Housing Improvement Act of 2000 incorporated specific protec- tions designed to bring the development of all federal standards, PER regulations and interpretations (includ- ing Subpart I) into the open, through mandatory development and/or evalu- ation by the Manufactured Housing Consensus Committee (MHCC) under its transparent and accountable process, and mandatory rulemak- ing for all changes to existing practices and pro- cedures, no matter how those changes are characterized. Congress also sought to restrain the power of the program contractor by requir- ing separate contractors for separate functions and by placing limitations on the functions that program revenues could be used to fund. Based on these reforms and the purposes of the 2000 reform law – including its overriding objective of completing the transition of manu- factured homes from the "trailers" of yesteryear to full-fledged legitimate housing -- MHARR, within a few months of enactment of the 2000 law, filed a Petition for Rulemaking with HUD seeking the partial repeal and modification of specific aspects of Subpart I. This Petition, de- signed to jumpstart a regulatory process to re-