As the financing problems in the industry have worsened over the last several years, many in the industry have turned to the FHA Title II program to support their land-home business. Indeed, in many cases, it has been a life preserver—which is one of its intended functions. Sadly, the same cannot be said for the FHA Title I program for home-only loans. During the last major recession in 1992, the Title I program financed over 30,000 loans—a key element in bringing the industry out of recession. Last year, which saw the lowest shipments since 1962, the Title I program financed a meager 1,000 homes, providing no relief to the industry.

One of the oldest FHA programs dating back to 1934, the Title I program has fallen steadily out of favor with its regulator and its users for several important reasons. Unlike the Title II program, which insures loans 100 percent, the Title I program only goes to 90 percent and limits payments to lenders for losses to 10 percent of their outstanding Title I loan portfolio. This conditional nature of the insurance provides a lot of protection for FHA, but not lenders, who have avoided the program in recent years. Others who have been interested have not been able to be approved by FHA to provide the financing.

Another major problem with the Title I program has been its loan limits. Currently, the program will only insure a loan on a manufactured home up to $48,600—a figure that has not been adjusted since 1992. As many of us know, $48,600 does not buy the same house it did 14 years ago and it certainly would not cover many of the homes desired by buyers in our communities today.

Because of the importance of communities to the overall health of the manufactured housing industry, MHI has committed to reforming the Title I program to correct these deficiencies through federal legislation and is making it a top priority. As with any bill in Congress, it will not be an easy road and we will need the support of all NCC members to make it happen. I know we can count on your support.

On a final note, this is my last column as chairman of the National Communities Council. I will be turning over my gavel at the conclusion of the NCC meeting in October. It has been a pleasure these past two years serving the industry and advancing the cause of communities. There has been a long list of issues and projects that we’ve dealt with over the past two years. From the repossession crisis to working with Fannie Mae and Freddie Mac to challenging EPA on submetering to stopping new mailbox standards to publishing the first-ever guide to community renewal, the issues and projects have certainly been challenging. And contrary to what you may read in other publications, the manufactured home community is not dead—indeed, it is thriving and poised to be a major source of affordable housing for years to come!

I appreciate all the support many of you have given me over the past two years, and I look forward to continuing my active support of the NCC as a board member.

As always, feel free to email your thoughts and concerns to me at rrand@wi.rr.com.

Richard J. Rand
Chairman, National Communities Council
President, Great Value Homes