Issue link: https://read.dmtmag.com/i/657319
APRIL 2016 21 THE JOURNAL The Manufactured Housing Association for Regulatory Reform (MHARR) in strong written comments submitted on March 15, 2016, has admonished the Federal Housing Finance Agency (FHFA) for failing, once again, to in- clude manufactured housing personal property or "chattel" loans in a proposed rule to implement the "Duty to Serve Underserved Markets" (DTS) provision of the Housing and Economic Recovery Act of 2008 (HERA) – thereby de- priving millions of lower and moderate-income families of the American Dream of home owner- ship. MHARR's comments, noting that the ex- clusion of chattel borrowers from DTS participation is diametrically opposed to the fun- damental mission of the FHFA-regulated Gov- ernment Sponsored Enterprises (Fannie Mae and Freddie Mac) (GSEs) – to provide home own- ership opportunities for lower and moderate-in- come Americans – describe that proposal as "fundamentally flawed" and call on FHFA to withdraw and correct its already long-delayed implementation of DTS. Adopted by Congress in response to the 2008 credit crisis, DTS is both a finding that the GSEs have failed to properly serve purchasers of feder- ally-regulated manufactured homes in accor- dance with their respective Charters and their statutorily-prescribed mission, and also a rem- edy, directing the GSEs to materially increase their participation in the manufactured housing market (among others). Although Congress -- aware of the fact that manufactured homes purchased through chattel loans comprise the vast majority (80%) of the manufactured housing market and provide lower-income purchasers with access to the in- dustry's most affordable homes – specifically au- thorized FHFA to fully include both chattel loans and much-less-numerous manufactured home real estate loans in a new DTS program, FHFA's December 2015 proposed DTS implementation rule (like an FHFA proposed rule published in 2010) would completely and improperly exclude chattel loans from DTS participation. Such an approach to DTS would leave the vast majority of actual and potential purchasers of manufac- tured homes – the nation's most affordable hous- ing – subject to ongoing discrimination by the GSEs, effectively excluding millions of mostly lower and moderate-income consumers from the American Dream of home ownership, while needlessly subjecting millions more to higher- cost loans with interest rates unnecessarily in- flated by the lack of GSE securitization or secondary market support for such loans. MHARR's comments methodically and thor- oughly detail five specific aspects of the FHFA proposed rule that, if adopted in final form, would not only have a devastating impact on the manufactured housing industry as it slowly be- gins to recover from historic production lows in 2009, but, more importantly, on American homebuyers, who are ready and willing – if fi- nancing is available – to purchase today's safe and affordable manufactured homes. These un- acceptable aspects of the FHFA proposed rule are as follows: (1) The proposed rule favors large industry businesses at the expense of smaller businesses. The industry's largest manufacturer and its cap- tive finance subsidiaries (which can self-finance manufactured home loans – albeit at higher-cost interest rates) currently dominate the manufac- tured housing industry and the manufactured housing finance market. Excluding 80% of the industry's market from DTS would continue that domination and limited market competition – at the expense of smaller industry businesses. (2) The proposed rule favors industry com- petitors. By excluding 80% of the industry's market from DTS, while offering securitization and secondary market support for loans on other types of homes, the proposed rule would main- tain the discriminatory, uneven playing field that currently exists between manufactured homes and other types of housing. (3) The proposed rule would harm con- sumers. By prohibiting GSE securitization or sec- ondary market support for 80% of manufactured home borrowers following closed-door discus- sions in 2015 between FHFA officials and repre- sentatives of the industry's largest businesses – including its two dom- inant portfolio lenders -- the rule would maintain restricted competition within a HomeCarePlus "The Perfect Addition to Your Home Sales" An Exclusive Warranty For: Manufactured/Modular/ Park Model Homes "A Complete Package Designed for Today's Homes" HomeCarePlus A Warranty Program designed to eliminate Costly Repair Expenses on: Structure, Electrical, Plumbing, Heating, A/C & Appliances HomeCarePlus (800) 851-3738 Office (651) 458-2905 Fax diversifiedprofits@comcast.net No. 11 on Get It Quick Page MHARR Comments Expose Discrimination and Favoritism in FHFA Proposed Duty To Serve \ 25