Magazine article American Banker

Manufactured Housing Giant Endorses HUD's Call for Regulatory Relief

Magazine article American Banker

Manufactured Housing Giant Endorses HUD's Call for Regulatory Relief

Article excerpt

Byline: Brian Collins

WASHINGTON -- The dominant player in manufactured housing, Clayton Homes, is supporting the Department of Housing and Urban Development's review of construction and safety standards on manufactured homes.

In a sign that it was considering easing standards to boost manufactured housing growth, HUD announced the review in January and invited industry comments.

John Weldy, Clayton Homes' director of engineering, said in the company's comment letter that the current constructions standards are overly restrictive.

"Our company is concerned that HUD's Office of Manufactured Housing Program has developed in a manner that has increased the costs of operating in the industry without providing a commensurate benefit to consumers," Weldy wrote. "Some of HUD's expansion of regulatory programs has stepped into state functions, reinterpret regulations in ways that are at odds with long-standing and accepted building practices, and implemented regulations and guidelines that unnecessarily limit consumer choice and increase costs."

Manufactured homes account for 10% of single-family dwellings, with 22 million people living in factory-built homes.

"I believe one of the biggest things that we can do for rural housing is to eliminate the huge regulatory burdens that we have on manufactured housing," HUD Secretary Ben Carson said at a Senate Banking Committee hearing last month. "This is an area that has been under-utilized and will provide tremendous advantages for us in the future."

Carson told the senators that some of the regulations on manufactured homes are "ridiculous."

"So we are inspecting all of those regulations and getting rid of a lot of them," he said.

But housing advocates are concerned HUD may go too far and undermine the quality of manufactured housing.

"The key to advancing affordable homeownership in the United States is making high quality housing stock available to purchase-ready customers," according to a comment letter by 24 housing advocacy groups including Prosperity Now.

The groups said manufactured housing can play a bigger role in advancing affordable housing, but "to do so, however, buyers, lenders, advocates and local policy makers must have confidence in the quality of all aspects of the manufactured homes, including the manufacture, installation, foundations and home amenities."

In addition to restrictions on construction, financing has also been a stumbling block for the manufactured housing industry.

The Federal Housing Administration endorsed 32,500 manufactured housing loans classified as real estate in fiscal year 2017 and 814 manufactured housing loans classified as personal or chattel loans.

But the FHA has suffered major losses from insuring MH loans in the past and is unlikely to increase its role in this sector.

"People aren't counting on FHA, which is a shame," said Doug Ryan, director of affordable homeownership at Prosperity Now. …

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