MHI Lobbies for Credit to Replace Pre-1976 Homes
MHI held a series of Congressional visits on Capitol Hill to discuss three important Energy issues which affect the manufactured housing industry. Meetings were held with staff members from the following Senate offices: Senator Tim Johnson (SD-D), Senator Richard Burr (NC-R), Senator Ron Wyden (OR-D), Senator Maria Cantwell (WA-D), Senator Lisa Murkowski (AK-R), Senator Blanche Lincoln (AR-D), and Senator Bob Corker (TN-R).
The discussion included S. 1320 within the energy package. A provision of this bill is intended to encourage owners of pre-1976 manufactured homes to replace those homes with new energy efficient manufactured homes that meet Energy Star standards. This legislation would offer $7500 rebates which may be provided to facilitate the purchase of a new Energy Star qualified home. As reported earlier, MHI staff worked with Rep. Baron Hill (D-IN) to introduce H.R. 1749, the "Energy Efficient Manufactured Housing Act of 2009." This bill was included within the omnibus energy package, H.R. 2454, the "American Clean Energy and Security Act of 2009" which passed the House of Representatives on June 26th with a vote of 219-212.
Congress Adopts Extension of Home Buyer Tax Credit
The week of Nov. 2, both the U.S. House of Representatives and the U.S. Senate adopted an extension of the home buyer tax credit which was due to expire on December 1. The extension runs until June 30, 2010. The tax credit applies to purchasers of manufactured homes, including both ’home only’ and ’land/home’ transactions. First-time homebuyers may claim a credit of up to $8000 if their annual income is less than $125,000 for individuals, and less than $225,000 for couples. In addition, the plan would allow a $6,500 tax credit for move-up home buyers who purchase a primary residence if they owned their current home for at least 5 consecutive years in the previous 8 years. President Obama was expected to sign the extension into law.
This represents a huge victory for MHI and its members. Starting with the MHI Summer Meeting in Washington last June, MHI members have been communicating to their Members of Congress the importance of the home buyer tax credit to our industry and the necessity of extending it. Hopefully, the extension of the tax credit through the middle of next year will encourage home buyers to purchase manufactured homes in significant numbers.
MHI Obtains Specific Clarification for Manufactured Homes in New Home Buyer Tax Credit Extension
In an effort to combat fraudulent activities which have been reported in the news, the extension of the new home buyer tax credit legislation requires taxpayers to include a “settlement statement” with their tax returns as proof of purchase. Manufactured housing ’home-only’ transactions typically involve a retail sales contract instead of a HUD-1 settlement statement. MHI, with strong assistance from the Arkansas and Florida Manufactured Housing Associations, engineered a floor colloquy among three key Senators on the Senate floor which clarifies that retail sales contracts for home only manufactured home transactions, in lieu of settlement statements, will be acceptable to the IRS as proof of purchase. These Senators included Finance Committee Chairman Max Baucus (D-MT), as well as Finance Committee Members Bill Nelson (D-FL) and Blanche Lincoln (D-AR).
Industry Efforts Continue on SAFE Act
Last summer, as part of the Housing and Economic Recovery Act of 2008, Congress adopted the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act. The Act provides for a nationwide licensing system for mortgage originators, and the federal law provides a definition of what constitutes a mortgage loan originator- specifically anyone who negotiates loan terms or receives compensation from lenders. MHI-NCC worked hard to protect the interests of our industry in a difficult political climate, and successfully worked to have language included in the bill that would greatly minimize the impact on our industry.
The Conference of State Banking Supervisors (CSBS), however, was directed by Congress to draft model legislation for states to adopt. This model legislation broadens the scope to essentially require licensing to anyone who is part of the home transaction. In particular, manufactured housing retailers (and community owners) who are in the business of selling homes may come under this definition found in the model bill, despite the fact that they are not in the mortgage origination business and should not be required to be licensed as such per the federal law. Manufactured housing retailers and salespeople oftentimes assist customers who wish to purchase a home by providing them a credit application form to complete and then forwarding that information along to lenders for loan processing and underwriting. The vast majority of retailers and salespersons do not collect any compensation or fee from the lender for forwarding this information, nor do they offer or negotiate loan terms. MHI-NCC has been working over the past year negotiating and educating CSBS, HUD, legislators, and other regulators just what the intent of the SAFE Act was, and what triggers licensing under the SAFE Act.
To date, 49 states have adopted some version of the SAFE Act. HUD, the federal agency which has ultimate oversight for the implementation of the bill, will be releasing a proposed rule for the SAFE Act before the end of the year. This rule should provide more direction in what exactly triggers licensing. MHI lender and community members will be working over the coming weeks advocating our position.
House Financial Services Committee Approves the Consumer Financial Protection Agency (CFPA) Act of 2009
The House Financial Services Committee, by a 39-29 vote, approved H.R.3126, the Consumer Financial Protection Agency (CFPA) Act of 2009. All regulation of businesses that offer financial services including lenders would be consolidated under the CFPA, which would be charged with devising consumer protection regulations that would apply to those businesses.
At the request of MHI, Rep. Joe Donnelly (D-IN) offered an amendment to this legislation that would exclude manufactured and modular housing retailers from the CFPA’s jurisdiction. The amendment was passed by voice vote in the Financial Services Committee, and represents a major victory for industry retailers.
MHI was also able to convince the Committee to drop language from the bill that would have required toxic disclosures and liability exposure for any lender that offered financial products not considered "plain vanilla" by the CFPA. The danger posed by that provision was that the CFPA could have deemed only 30 year fixed rate loans as plain vanilla, thus placing chattel loans with shorter terms of years in a category requiring the toxic disclosures with attendant liability exposure. The removal of the plain vanilla provision represents a major victory for industry lenders.
During the bill’s markup, the committee also approved an amendment from Rep. Gary Miller (R-CA) to sunset the Home Valuation Code of Conduct (HVCC). The HVCC is a set of rules for choosing appraisers, and prohibits lenders from accepting reports from appraisers selected by mortgage brokers, realtors or lenders’ own production staff. The HVCC program has been identified by many trade groups, including MHI, as additional regulation which has lengthened underwriting times, increased costs to the buyer and seller, and slowed the housing market recovery.
MHI will continue to work this legislation as it moves to the Senate for consideration.
FTC Delays Implementation of Red Flags Rule Until June 1, 2010
At the request of Members of Congress, the Federal Trade Commission is delaying enforcement of the “Red Flags” Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.
The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft. MHI believes the rule applies to retail sales centers and land-lease communities with home sales operations.
The Commission previously delayed the enforcement of the Rule for entities under its jurisdiction until November 1, 2009. The Commission staff has continued to provide guidance to entities within its jurisdiction, both through materials posted on the dedicated Red Flags Rule Web site
(www.ftc.gov/redflagsrule), and in speeches and participation in seminars, conferences and other training events to numerous groups. The Commission also published a compliance guide for business, and created a template that enables low risk entities to create an identity theft program with an easy-to-use online form. FTC staff has published numerous general and industry-specific articles, released a video explaining the Rule, and continues to respond to inquiries from the public. To assist further with compliance, FTC staff has worked with a number of trade associations that have chosen to develop model policies or specialized guidance for their members.
On October 30, 2009, the U.S. District Court for the District of Columbia ruled that the FTC may not apply the Red Flags Rule to attorneys. Today’s announcement that the Commission will delay enforcement of the Rule until June 1, 2010, does not affect the separate timeline of that proceeding and any possible appeals. Nor does it affect other federal agencies’ ongoing enforcement for financial institutions and creditors subject to their oversight.
MHI Submits Comments to FHFA Regarding Duty to Serve Underserved Markets for GSEs
MHI filed its comment letter with the Federal Housing Finance Agency (FHFA) regarding its proposed rulemaking for Fannie Mae’s and Freddie Mac’s "duty to serve" manufactured housing, as mandated in the 2008 housing act. The letter can be viewed at www.manufacturedhousing.org under Quick Links. Among its many recommendations, the comment letter urges the FHFA to require Fannie and Freddie to create a chattel flow program whereby the GSEs would purchase these loans on a continuous, long-term basis. The FHFA is expected to continue its rulemaking process throughout this fall so that it can promulgate final regulations in time for the January 2010 effective date relating to the "duty to serve" mandate. MHI will continue to communicate its views on this subject to the FHFA, Fannie Mae, and Freddie Mac.
MHI Sends Letter to SEC to Address the Industry’s Inventory Finance Problem
Responding to the nationwide economic downturn facilitated by the ongoing credit crisis; MHI joined a business coalition to send a letter to Secretary Elizabeth M. Murphy of the U.S. Securities and Exchange Commission. The organizations represent a diverse range of industries that rely on a well-functioning and liquid money market to support their financing needs. The group commends the U.S. Securities and Exchange Commission (SEC) for proposing amendments to the Investment Company Act of 1940, but opposes the proposed amendment to prohibit money market funds from investing in securities that carry the second highest credit rating. Companies that issue A2/P2 commercial paper are large well-established corporations and such action would have a negative and unintended impact on the capital formation that far outweighs any speculative increase in investor protection. Allowing money market funds to buy A2/P2 paper can help fund the commercial paper marketplace which helps fund dealer floor plan lending for manufactured housing. We will continue to closely monitor this issue and keep members apprised of any new developments. If you are a MHI member and have questions, contact Brian Cooney at
firstname.lastname@example.org or Rae Ann Bevington at email@example.com.
MHI Sends Letter to Federal Reserve Board on Escrow Issue
MHI sent a letter to the Federal Reserve Board regarding a requirement that all "higher priced loans," including personal property loans, must have escrow accounts. Click here to view the letter. As the letter points out, the lack of a unified, systematic process for the collection of taxes among local governmental entities will force lenders to cease providing manufactured housing personal property loans. In light of these and other compliance difficulties, MHI requested that personal property loans for manufactured homes be exempt from the escrow requirements. Thanks go to Don Glisson of Triad Financial Services, Inc. who shared with MHI a similar letter sent by the Independent Community Bankers Association relating to the escrow issue.