Issue link: https://read.dmtmag.com/i/532854
JULY 2015 2 THE JOURNAL HUD and its Contractors Beating the Bushes for Complaints MHARR VIEWPOINT BY MARK WEISS The reported termination of the dispute resolu- tion (DR) subcontract between the Savan Group, L.L.C. (Savan) and HUD's entrenched "moni- toring" contractor, the Institute for Building Technology and Safety (IBTS) – apparently at the direction of HUD -- potentially resolves one spe - cific issue raised by MHARR concerning the fed- eral DR program for "default" states, i.e., the prospect of the DR system being abused to funnel unsubstantiated complaints and other "informa- tion" into the Subpart I system which IBTS over- sees (and from which it derives substantial revenue). While that action is significant, it nevertheless leaves the primary HUD-Savan DR contract intact and, more importantly, does nothing to address a much broader issue that is di- rectly implicated by Savan's mission as established by the HUD program. During a lengthy presentation at the April 7- 9, 2015 HUD meeting with State Administrative Agencies (SAAs), Primary Inspection Agencies (PIAs), manufacturers and others, Savan repre- sentatives disclosed important data concerning the federally-administered DR program for default states and the state-based DR programs in two "representative" states, Texas and Virginia. That data -- which is consistent with information ob- tained from HUD in response to a September 2012 MHARR Freedom of Information Act (FOIA) re- quest, indicating an extremely low number of DR referrals within the federal system – is nonetheless startling. According to the data presented by Savan, between 2008 and 2014, of the 123,174 HUD Code manufactured homes placed in 23 fed- erally-administered "default" states, only 24 homes -- or .019% -- were referred to federal dispute resolution (then being administered by HUD). Of those 24 referrals, only 3 – or .002% -- were found to actually qualify for DR resolu- tion. Meanwhile, in both Texas and Virginia, the DR referral rate in 2014 was only marginally higher – an identical 1.4% in both states – and still miniscule in comparison to the number of homes delivered and placed in those jurisdictions. Given the fact that DR is available for defects reported during the first year after a new manu- factured home is installed, DR referrals are a di- rect barometer of compliance with the relevant construction and installation standards, and the responsiveness of regulated parties (including manufacturers, installers and retailers) to home- buyers. Apparently, however, based on Savan's description of its impending DR contract activities, HUD -- rather than attributing the remarkable long-term absence of DR referrals to high-qual- ity, compliant homes, proper installation under the stan- dards mandated by Congress in the 2000 reform law and timely, effective customer service -- instead views the absence of DR referrals as ev- idence of: (1) a lack of co nsumer "knowledge" of the federal DR program; and (2) the need for ad- ditional consumer "outreach" and "education" – Washington, D.C. code-words for revenue-dri- ven contractor "make-work." The Department, it seems, reached this conclusion even though every purchaser or lessee of a new manufactured home, under applicable regulations (i.e. , 24 C.F.R. 3288.5), must be provided with a de- tailed DR "disclosure" -- when the relevant con- tract is signed -- informing them of the availability of dispute resolution services, and even though DR referrals in both states cited by Savan as role models for "outreach" and "education," remain at minimal levels. Consequently, from this surreal presentation, it appears that the mission of HUD's DR contractor is to seek out and solicit complaints to drive-up the number of DR referrals, using revenue derived from manufacturer label fee payments hiked by HUD in 2014 to the tune of 156%. Like many other aspects of the current HUD program, this revenue-driven activity would do little or nothing for consumers, while greatly benefiting the con- tractor and gratifying HUD regulators. Faced, then, with clear evidence of the long- term success of the federal construction and safety standards under the 2000 reform law (dating to a point well prior to the unilateral imposition of HUD's program of expanded in-plant regulation) and the installation standards mandated by that law (based largely on the finding of the National Commission on Manufactured Housing that the majority of manufactured housing consumer complaints were related to "improper in- stallation"), HUD, instead of acknowledging that success, promoting that success and using that success to advance the availability and utilization of affordable manufactured housing, will pay a contractor to find and/or induce the complaints that its entrenched agency culture tells it must be out there. Put dif- ferently, if all things were equal, such miniscule DR referral rates would, should -- and do -- in- dicate that the industry is doing an outstanding job for its consumers. But all things are not equal at HUD, and that is the problem. Unfortunately, it should be no surprise that HUD, to this day, while publicly paying lip serv- ice to the quality of modern manufactured hous- ing, lacks faith or confidence in the HUD Code homes that the Department – itself – regulates. Consider, for example, among other things: • That the federal program, as an organization, remains buried within HUD's office of "risk man- agement," cut-off from mainstream housing pol- icy and visibility within the Department; • That manufactured housing is not even men- tioned as an affordable housing resource – or any- thing else -- in HUD's latest 2014-2018 Strategic Plan, published in July 2014; • That despite minimal complaint levels, HUD continues to impose costly, intrusive and unnecessary new "make-work" regulatory mandates on manu factur- ers, including but not limited to, "monthly" Subpart I record reviews and manda- \ 6