The “Trump Effect” and Access To Quality Built Manufactured Homeownership
Will the Trump Effect make the uniquely American dream of homeownership less of a “dream” and more of a reality? In short, yes!
Over the past decade or so, Americans have noticed a precipitous decline in their ability to buy their first home. With the deepening home ownership crisis attributable to several factors, the most noteworthy being high prices and a serious lack of inventory, the most recent U.S. Census Bureau report for 2016 shows the homeownership rate now stands at 63.7 percent – the lowest level in over 50 years.
Affordable housing for thousands of hardworking lower to middle-income American families has become a serious social issue that does not garner the attention as other politically charged personal injustices. Here at MFH we recently passed along official production statistics for manufactured home producers for the year ending 2016. Industry manufacturers produced and shipped a little over 80,000 homes for the year, continuing a trend of growth encompassing eight consecutive years. Realistically, those 80,000 homes per year, although commendable, does not dramatically affect the need for affordable quality housing, especially considering what manufactured homes represent in quality and affordability. Manufactured homes are at least equal and often superior to site built homes in quality and amenities and will have a cost up to 50 percent less.
Manufactured homes are the only form of non-subsidised housing in the United States. Today’s manufactured home industry has the ideal home and capacity to produce the need for 100’s of thousands of homes each year. So why doesn’t the manufactured housing industry produce more than 80,000 homes per year? The manufactured housing industry and its customers, qualified lower to middle-income Americans, continue to suffer from baseless discrimination and costly mandates brought about by oppressive regulations and imposed by government agencies, of which many were instituted by the Obama Administration.
The Trump Effect On Manufactured Homeownership
Conversely, the Trump Administration has promised to roll back many of these policies and regulations which should reinvigorate that delayed realization of the American dream of affordable quality homeownership. The following are capsules of actions, if successful, would buoy that American dream. Three of the four will require intervention by President Donald Trump. We expect “the Trump effect” will be in full force and effective. The details and full discussions of these actions have been explored in articles here at ManufacturedHomes.com recently and going back over the last few years.
Following the 2010 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act and created the Consumer Financial Protection Bureau (CFPB) and appointed Richard Cordray as the sole director with absolute authority to interpret and regulate this massive legislation. Inadvertent provisions in the law severely handicapped the sale and financing of manufactured homes. The Director has refused to eliminate the unintended consequence of provisions, even though he commanded the authority to do so. Trump has instructed the Treasury Secretary to report back within 120 days with recommendations to rollback CFPB regulations.
Rep.Keith Ellison (D.Mn) introduced this bill on 1/13/17. HR 515 is a simple piece of legislation introduced in the House of Representatives that would provide grants provided by the Dr. Ben Carson led Department of Housing and Urban Development for much-needed replacement of older (pre-HUD) mobile homes utilizing new Energy Star-rated manufactured homes. Introduced by a Democrat in the Republican-controlled chamber will most likely be signed into law by President Trump. As of this date, there has been no activity since introduction, not surprising considering the many issues taking priority in the early stages of this Congressional session.
Legislation passed Congress over 6 years ago that mandated the Federal Housing Finance Agency (FHFA) establish a “duty to serve” underserved financing markets by CSE’s (Fannie Mae and Freddie Mac). Paramount in those markets was manufactured homes. Over the last 6 years, the FHFA has stonewalled the implementation of a program to finance manufactured home chattel loans. Earlier this year the agency approved an outline of a pilot program that would finance these loans on a selected and limited basis. That program would not fulfill the duty to serve requirements of the law. The rollout of this token overture is still being “studied” and it is doubtful that any worthwhile action will be taken to address a critical path to solving this serious miscarriage of attaining parity with site-built housing. It has become obvious that vested interests by some manufactured housing industry finance entities have not endorsed or supported financing equal to site built mortgages, due to the profits garnered by the existing high-interest chattel loans. For this reason, it is becoming doubtful that this government-backed financing for manufactured homes will ever become a significant reality.
MISGUIDED HUD REGULATIONS INCREASE COST OF AFFORDABLE HOMEOWNERSHIP –
The Department of Housing and Urban Development (HUD) is the regulatory agency that controls every aspect of the manufactured housing industry. This bloated agency seems dedicated to exercising their self-serving bureaucratic control over an industry with policies and requirements that supersede any other single housing entity. The latest example of an overreach of regulatory authority initiated during the final days of the Obama Administration were a series of requirements regarding manufactured home foundations in violation of the Manufactured Housing Improvement Act of 2000; D.O.E. manufactured housing energy standards, even though the existing standards are equal or superior to the standards for comparable site-built homes. This alone would add about $6,000 to the purchase price of a new manufactured home, or more. The Trump Administration, immediately upon taking office issued a warning letter on January 20th with a regulatory freeze on all federal regulations. Previously, the Republican House of Representative leadership had also issued a warning letter to curtail pending regulations until Trump was sworn in as President. That letter was ignored by HUD officials. It is encouraging that Dr. Ben Carson is now heading HUD. Perhaps his leadership will gain control of HUD’s rogue defiance of previous warnings by the House Republican leadership to halt implementation of all the pending regulations that would be harmful to the manufactured housing industry and the customers they serve. Our guess is that the Trump warning will suffice.
Note: Our kudos to the Manufactured Housing Association for Regulatory Reform (MHARR) for their leadership representing the manufactured housing industry interests and their customers dreaming of homeownership.