Issue link: https://read.dmtmag.com/i/67690
HUD Disappoints Industry…Again MHARR VIEWPOINT BY DANNY GHORBANI Hard reality has a way of exploding the myths that masquerade as "conventional wisdom." It happens regularly in the broader political world and is just as much a fact of life right here in our own more tightly focused realm of manufactured housing and the industry's involvement with the federal government. Every time one of those myths crashes and burns under the weight of stubborn reality, there are lessons to be learned to avoid making the same mistake over and over again -- what some might call a "teachable mo- ment." Well, the industry recently had such a moment with HUD, and the details can tell us a great deal about ourselves, about the federal reg- ulators who hold sway over the industry and the way that we, as an industry, relate – and should relate -- to those regulators. For years, a constant undertone within the industry – and an article of faith for some – has been that the industry should "go-along-to-get along" with HUD (and other) regulators, and that "cooperation" and goodwill would lead to positive results. This perspective was famously illustrated in 2010, when an industry association executive was quoted in a trade publication as saying, "you're going to have to work with these [HUD]…folks…regulators are in the business of regulating." A companion theme, fed, nur- tured, and encouraged by, among others, some in the industry press and at HUD itself, is that the industry could achieve more with HUD on specific issues if its national trade organizations presented joint positions while "working to- gether" with regulators. Of course,MHARR's consistent policy, since its formation, has been to work cooperatively, wherever possible, with the industry's regula- tors, provided that it does not sacrifice the in- terests of the industry and its consumers in general, manufacturers in particular and, most importantly, the industry's small companies. As JUNE 2012 18 THE JOURNAL a result, and because manufactured housing is a comprehensively-regulated industry, primarily at the federal level (including both production and financing), MHARR's approach has always been to maintain close scrutiny of – and insist on strict accountability for – all of the industry's reg- ulators. Nevertheless, to leave no stone unturned in its efforts to defend, protect and advance those interests, senior MHARR offi- cials, in mid-2011 began a dia- logue with their counterparts at MHI to identify specific issues on which the two associations were in agreement in order to ap- proach HUD, at the highest po- litical level with direct oversight of the federal program, with joint positions on those issues. Fol- lowing detailed, lengthy and painstaking discussion, the two groups agreed on three paramount issues to address jointly with then-new HUD Assistant Secretary-Federal Housing Commissioner Carol Galante: (1) liber- alization of the securitization requirements for Federal Housing Administration (FHA) Title I personal property (chattel) loans; (2) appoint- ment of a non-career administrator for the fed- eralmanufactured housing program, as provided by theManufacturedHousing Improvement Act of 2000; and (3) the restoration of collective in- dustry representation on the Manufactured Housing Consensus Committee (MHCC) through the appointment of non-lobbyist staff members (one each) from both MHARR and MHI. These three issues were selected because: (1) the availability of chattel financing, by broad consensus, is vital to the recovery and growth of the industry, but excessive securitization re- quirements unnecessarily exclude all but one or two lenders from the market; (2) history shows that when the federal program had an appointed non-career administrator (during the Bush Ad- ministration), the federal program was more transparent and accountable. TheMHCC func- tioned properly and independently, as intended by Congress, with an elected Chairman (and subcommittee chairmen), procedures decided by the Committee itself, full participation and ac- cess by non-members, collective national indus- try representation and proper balance of the rep- resentation and interests of all program stakehold- ers. By contrast, without an appointed non-career administrator (during all three-plus years of the Obama administration), the program, at best, is adrift. It has failed to address the vast majority of recommendations by theMHCC (as pointedly noted by Congress), it remains cut-off from HUD policy-making and programs as reflected by the virtual exclusion of manufactured housing from the goals targeted by HUD's 2010-2015 Strategic Plan and, at worst, is gradually reverting to the type of closed-door practices that Congress sought to correct and end forever with the reforms of the 2000 law. This agreement between the two associations led to a September 22, 2011 face-to-face meet- ing between Secretary Galante and the highest- powered delegation of industry leaders to be assembled since the enactment of the 2000 law, including the Chairman, Vice Chairman and President of MHARR, the Chairman, Vice Chairman and (then) President of MHI and a top executive of amanufacturer with jointmem- bership in both associations. The industry pulled out all the stops in treating thismeeting as a cru-