Issue link: https://read.dmtmag.com/i/76207
MHI FOCUS MHI Advocates Industry Positions in Special Testimony to Congress BY Richard "Dick" Jennison One of the key responsibilities of a national trade association like MHI is to advocate on its members' behalf before important federal regu- latory agencies and legislative bodies. MHI did just that on July 11 before the U.S. House of Representative's ever-important Committee on Financial Services' Subcommittee on Financial Institutions and Consumer Credit. Tom Hodges, General Counsel for Clayton Homes, Inc., represented MHI and the manufactured housing industry by detailing the unforeseen, negative consequences of the recently enacted Dodd-FrankWall Street Reformand Consumer Protection Act (Dodd-Frank Act) and the Se- cure and Fair Enforce- ment of Mortgage Licensing Act (SAFE Act). Other groups testify- ing included the Securi- ties Industry and Tom Hodges, General Counsel for Clayton Homes, Inc., FinancialMarkets Asso- ciation, the National Consumer Law Center, theNationalAssociation of Mortgage Brokers, theNationalAssociation of Home Builders, the National Association of Realtors, and the Mortgage Bankers Association. MHI was the only manufactured housing industry group in- vited to testify before the Subcommittee. With respect to Dodd-Frank's impact on represented MHI and the manufactured housing industry by detailing the unforeseen, negative consequences of the recently enacted Dodd-FrankWall Street Reformand Con- sumer Protection Act (Dodd-Frank Act) and the Secure and Fair Enforcement of Mortgage Licensing Act (SAFE Act). manufactured housing, Hodges pointed to spe- cific regulations being developed by the Con- sumer Financial Protection Bureau (CFPB) as key areas of concern: • New high-cost mortgage definitions that do not adequately account for the price pressures on small-balance manufactured home loans, which may diminish consumer accessibility to AUGUST 2012 14 THE JOURNAL tured housing industry and manufactured homeowners did not take part in the question- able lending practices which helped bring about the recent decline in the housing market, Dodd-Frank unfairly lumps manufactured housing loans into the same category as sub- prime predatory site-builtmortgages. Under the Act's provisions, a small-sized manufactured home loan can potentially exceed the thresh- olds in the Act and be categorized as "high- cost" or predatory under Dodd-Frank's provisions, even though there is nothing preda- tory about the features of the loan. this form of sustainable housing. • Lack of regulatory guidance in applying the SAFE Act definition of a mortgage originator to the unique activities of those selling manufac- tured homesmay diminish the level of customer assistance available to those seeking to purchase affordable manufactured housing; and • Limitations on points and fees for "qualified mortgages" could serve as a disincentive for serving the already credit-constrained manu- factured housingmarket due to the fact that the costs to originate such loans cannot adequately be recouped. Hodges noted that although the manufac- Hodges also pointed out that the lack of a secondary market means that lenders who want to participate in themanufactured housingmar- ket must hold these loans in their portfolios, making their costs of capital higher than those which are able to be securitized through gov- ernment-sponsored enterprises or through asset-backed securities. Likewise, since only those lenders who have the financial ability to hold the loans they originate on their balance sheets can participate in a meaningful way, this either eliminates or severely limits the ability of smaller lenders to enter themanufactured hous- ing market, further reducing the credit avail- ability for low- to middle-income con- sumers. Hodges pointed out that an internal analysis of his company's lend- ing activities showed that of all loans origi- nated in 2010 and 2011 approximately 40% to 60% would have ex- ceeded one or both of the "high-cost mort- gage" provisions. Had these provisions been in effect, it is highly likely that a majority of these loans would not have beenmade. If these provisions remain in place, millions of families could see the ability to re- sell their homes effectively wiped out because lenders would be unwilling to provide the fi- nancing needed to sell them. SAFE Act As to the SAFE Act, Hodges testified that the industry is concerned over the lack of clar- ity in the implementation of the Act, with sub- stantial confusion among states on how to apply the SAFE Act's mortgage origination licensing