Issue link: https://read.dmtmag.com/i/720597
SEPTEMBER 2016 14 THE JOURNAL Unnecessary Regulation Threatens to Destroy the American Dream MHARR VIEWPOINT BY MARK WEISS Most folks probably did not get the word, but June 2016 was officially "National Homeownership Month" at HUD. In a press release issued on June 1, 2016, the Department proclaims: "HUD kicks off National Homeownership Month by recogniz- ing how homeownership enhances lives and con- tributes to thriving communities … reinforcing the long-held belief that owning a home remains one of the cornerstones of the American Dream." It continues: "Homeownership Month is a good time to reflect on the progress the Obama Administra- tion has made to ensure that owning a home is al- ways within the grasp of the average American family." Over in the real world, meanwhile, Bloomberg News reported on July 28, 2016 that homeowner- ship in the United States has fallen to its lowest level since 1965. The homeownership rate for minorities (as reported in July 2015) continues to lag the broader index at 47.2%, while homeown- ership for African-Americans is just 43.8%. Commenting on this "years-long decline," Bloomberg states, "First-time buyers have been struggling to find affordable properties…. 'One of the biggest hurdles now is affordability' … a sen- ior economist at Wells Fargo Securities, LLC in Charlotte, North Carolina, said … 'Home prices are rising so much faster than incomes, so it's hard for buyers to save for a down payment.'" (Em- phasis added). So, according to this – and other – experts, one of the main driving factors behind record-low homeownership rates is the lack of affordable housing and, with that, correspondingly high down-payment levels that more and more Amer- icans simply cannot afford. Given this fact, one might reasonably expect that HUD, as the steward of the nation's most af- fordable homeownership resource – manufactured housing – would, along with other federal agen- cies, actually want to expand the availability of those homes, so that ensuring homeownership "is always within the grasp of the average American family," is more than just an empty slogan and false promise. This is especially so insofar as the Manufactured Housing Improvement Act of 2000, as one of its congressionally-mandated pur- poses, directs HUD to "facilitate the availability of affordable manufactured homes and to increase homeownership for all Americans." But as so often happens in Washington, D.C., there is an enormous disconnect be- tween political rhetoric, on the one hand, and concrete actions on the other. As it happens, while HUD is "cel- ebrating" homeownership and sup- posed "progress" in ensuring that homeownership is "always within the grasp of the average American family," federal regulators – the de facto "fourth branch" of gov- ernment – have been hard at work devising and implementing debilitating new regulations for manufactured housing that will significantly and unnecessarily increase its cost while, at the same time, effectively excluding millions of lower and moderate-income Americans from acquiring their own "cornerstone of the American Dream." And all this is happening while objective HUD metrics prove that manufactured home-builders are pro- ducing their best homes ever. The most immediate and most serious example of this disconnect is the pending manufactured housing energy rule proposed by the U.S. De- partment of Energy (DOE) on June 17, 2016. For non-life-safety energy measures already avail- able to consumers on an optional basis as a matter of free-choice, the proposed rule would add any- where from $2,100 to $5,800.00 to the cost of a new manufactured home, and even that price in- crease would be just the beginning, because -- as DOE itself has now acknowledged -- the cost- benefit analysis supposedly supporting the proposed rule does not include costs for testing, enforce- ment, or any aspect of regulatory compliance, along with a host of other significant cost factors as detailed in MHARR's comprehensive August 8, 2016 written comments. Of course, the evolving story of excessive and unnecessary regulatory burdens does not end there. As MHARR detailed extensively in the May 2016 MHARR Viewpoint, this DOE pro- posed rule is just part of a much wider regulatory onslaught against the industry – reaching across multiple federal agencies -- that will seriously im- pair its ability to compete with other segments of the housing industry and enter new and emerging markets, meaning that gradual industry growth in recent years will remain effectively capped at needlessly low levels, to the detriment of the industry, consumers and the nation as a whole. At HUD, there is the Department's unworkable and needlessly costly new on-site construction rule, as well as its continuing baseless expansion of in- plant regulation – including costly new monthly record inspections -- and its unwarranted (and unauthorized) new intrusions into the state regu- lation of home installations, just to name a few. Meanwhile, the Government Sponsored En- terprises – Fannie Mae and Freddie Mac – con- tinue to discriminate against HUD Code housing and consumers by denying securitization and sec- ondary market support for the 80% of the manu- factured housing market represented by chattel loans, while the Federal Housing Finance Agency -- still lacking a final "Duty to Serve" (DTS) im- plementation rule -- for the second time in five years has proposed a blanket exclusion of manu- factured home chattel loans from DTS. At the same time, support for manufactured home consumer chattel financing under the Fed- eral Housing Administration's (FHA) Title I pro- gram has fallen to insignificant levels as the Government National Mortgage Association – a HUD agency, like FHA – excludes willing finance companies through its unduly restrictive 10-10 rule. This is just the tip of the iceberg, but it shows how – contrary to Administration policy -- three federal agencies are decimating an industry that produces the nation's most affordable housing at a time when affordable housing and homeownership are severely lacking. Sadly, though, with part of the industry re- flexively willing to "go along to get along," gov- ernment agencies will continue to see manufactured housing as a con- venient whipping boy and target for the imposition of their own preferred agendas, and \ 15