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THE STATE OF MANUFACTURED HOUSING 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INSURANCE, HOUSING AND 

COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 29, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–86 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY

JUDY BIGGERT, Illinois, Chairman 

ROBERT HURT, Virginia, Vice Chairman 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

PATRICK T. MCHENRY, North Carolina 

LYNN A. WESTMORELAND, Georgia 

SEAN P. DUFFY, Wisconsin 

ROBERT J. DOLD, Illinois 

STEVE STIVERS, Ohio 

LUIS V. GUTIERREZ, Illinois, Ranking 

Member 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

EMANUEL CLEAVER, Missouri 

WM. LACY CLAY, Missouri 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

MICHAEL E. CAPUANO, Massachusetts 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

November 29, 2011 ........................................................................................... 1 

Appendix: 

November 29, 2011 ........................................................................................... 25 

WITNESSES 

TUESDAY, NOVEMBER 29, 2011 

Burr, Carla, manufactured housing resident ........................................................ 15 

Clayton, Kevin, Secretary, Executive Committee, Manufactured Housing Institute (MHI) ........................................................................................................ 6 

Craddock, Tyler, Executive Director, Virginia Manufactured and Modular 

Housing Association (VAMMHA) ........................................................................ 8 

Czauski, Henry S., Acting Deputy Administrator for the Office of Manufactured Housing Program, U.S. Department of Housing and Urban Development ...................................................................................................................... 4 

Rush, Stanley, Account Executive, MHD Empire Service Corporation, and 

Vice Chair, Virginia Manufactured and Modular Housing Association 

(VAMMHA) ........................................................................................................... 10 

Rust, Adam, Research Director, Community Reinvestment Association of 

North Carolina ..................................................................................................... 13 

Weiss, Mark, Senior Vice President, Manufactured Housing Association for 

Regulatory Reform (MHARR) ............................................................................. 17 

Yates, Scott, President, Yates Homes, and Past Chair, Virginia Manufactured 

and Modular Housing Association ...................................................................... 11 

APPENDIX 

Prepared statements: 

Donnelly, Hon Joe ............................................................................................ 26 

Fincher, Hon. Stephen ..................................................................................... 27 

Burr, Carla ........................................................................................................ 29 

Clayton, Kevin .................................................................................................. 36 

Craddock, Tyler ................................................................................................ 45 

Czauski, Henry S. ............................................................................................. 50 

Rush, Stanley .................................................................................................... 55 

Rust, Adam ....................................................................................................... 58 

Yates, Scott ....................................................................................................... 65 

(1) 

THE STATE OF MANUFACTURED HOUSING 

Tuesday, November 29, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON INSURANCE, HOUSING

AND COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:08 a.m., at the 

Danville Municipal Building, 4th Floor City Hall, Danville City 

Council Chambers, 427 Patton Street, Danville, Virginia, Hon. Robert Hurt [vice chairman of the subcommittee] presiding. 

Members present: Representative Hurt. 

Mr. HURT. [presiding]. Good morning. I want to, first of all, welcome everybody to today’s hearing. 

As you all know, I am Robert Hurt, and I am a Member of Congress. I represent Danville and all of Southside Virginia in Congress. My district runs from Greene County, north of Charlottesville, all the way down to the North Carolina line, just a few miles 

from here, and runs from Martinsville in Henry County all the way 

over to South Hill and Lawrenceville over to the east. 

So it is a very large district, and manufactured housing is very 

important to us here in Southside for two reasons. Number one, of 

course, it provides affordable housing for thousands of people all 

across my district, which is extremely important, especially in this 

economy when we have 9 percent unemployment. 

Number two, it is also important because it is a provider of jobs. 

We have a vibrant manufactured housing sector here, as is the case 

across the country, and we have many jobs that are associated with 

this business here. 

And so, as we look at ways in Washington that we can make it 

easier for small businesses to succeed, as we look for ways on our 

Financial Services Committee that we can help ameliorate the effects of legislation that has been adopted in the past, as well as the 

economic troubles that we currently face, this hearing is an opportunity to focus on a very important part of what I think will be an 

inevitable economic recovery. 

Unfortunately, it is taking longer, I think, than anybody would 

like. But I do believe that we will get there. And the evidence that 

we will receive today will be very helpful in our committee’s deliberations. 

As I said, I am a member of the Financial Services Committee. 

I am also the vice chairman of the Insurance, Housing and Community Opportunity Subcommittee. I am the only member of the 

2 

subcommittee who will be here today, but I can tell you that everything that we hear today, we will record. 

We have a staff member from the Financial Services Committee 

here, Mr. Tallman Johnson, and we will take that evidence and we 

will carry it back with us to Washington. It will be made part of 

the record, and we will be able to use that as we go forward and 

look for legislative responses and regulatory responses that we believe will help the situation. 

I also wanted to recognize two folks on my staff. Kelly Simpson 

is my legislative director. And we also have Denise Van 

Valkenburg, who is our director of constituent services. 

Before I get started, I did want to recognize a few people that 

I really appreciate being here. Delegate Danny Marshall. There is 

Danny. Danny, of course, is our delegate in Richmond. Thank you, 

Danny, for being here. 

When I was in the House of Delegates, he and I were on the 

Counties, Cities, and Towns Committee in the General Assembly, 

a committee that dealt with a lot of these issues. Thank you for 

being here, Danny. 

I wanted to recognize Don Merricks’ chief bottle washer. Where 

is Gayle? There is Gayle Barts. Don couldn’t be with us today, but 

I did want to thank him for sending Gayle, his able assistant. 

We have a couple of folks from the city council. We have Fred 

Shanks. Thank you, Fred, for being here. And Buddy Rawley was 

here. I don’t know if he is still here. There is Buddy. Thank you, 

Buddy, for being here. 

We have James Snead, who is a member of the Board of Supervisors and also the Mayor of Ringgold. And we also have Jimmy 

Gillie, who is our commissioner of revenue here in the city. I don’t 

know if he is still here. Jimmy, thank you for being here. And we 

also have our city attorney, Clarke Whitfield. 

And I am told that we have a special guest as well, Mayor Sherman Saunders. I just want you to know, Mr. Mayor, that I told my 

staff that I do not want to sit in Mayor Saunders’ chair. 

[laughter] 

Mr. HURT. So I am going to sit down here. But Mayor Saunders, 

it is so nice of you to be with us, and thank you for hosting us here. 

This is our Mayor, Sherman Saunders. Thank you, Mr. Saunders. 

I appreciate you being here. 

[applause] 

Mr. HURT. So, with those introductions, I would like to bring this 

hearing of the Subcommittee on Insurance, Housing and Community Opportunity to order, and I will begin by making an opening 

statement, and then I will invite our witnesses to make opening 

statements. 

Good morning, and welcome to today’s Financial Services Committee field hearing on the state of the manufactured housing industry. 

I want to thank all of our witnesses for traveling here to Danville 

this morning to examine the manner in which Federal laws and 

regulations impact these manufacturers, and the affordable housing they produce, as well as jobs they create here in Virginia’s Fifth 

District and across the country. 

3 

The term ‘‘manufactured home’’ refers to a home built in a factory in accordance with the construction standards set forth in the 

National Manufactured Housing Construction and Safety Standards Act of 1974, which is administered by the Department of 

Housing and Urban Development (HUD). HUD not only establishes 

the construction standards for units of manufactured housing, but 

it also coordinates inspections of these manufacturers’ facilities to 

ensure that the homes they produce meet the quality and safety 

guidelines HUD maintains. 

Manufactured housing plays a significant role in the Nation’s 

housing stock, supplying millions of units of affordable housing to 

individuals and families across the country. These homes are constructed in quality-controlled, HUD-regulated settings that produce 

cost-effective homes, expanding consumer access to affordable housing options. 

The industry is also a source of employment for thousands of 

Americans, hundreds of which reside and work here in Virginia’s 

Fifth District. From Rocky Mount to South Hill, from Charlottesville to Danville, the Fifth District is home to a number of manufacturers, retailers, suppliers, and related services, which create 

numerous jobs in connection with manufactured and modular housing. 

The impact of the industry cannot be overstated at a time when 

9 percent of Americans are unemployed. Many communities in my 

district have even higher rates of unemployment. 

According to the data from the Census Bureau, the manufactured 

housing industry experienced strong sales in the mid- to late 1990s, 

exceeding 300,000 units sold annually. Since then, these sales figures have steadily declined, with approximately 50,000 units sold 

in 2010. Today’s hearing will explore the causes of these trends and 

the impact of the relevant Federal laws and regulations on the 

manufactured housing industry’s ability to respond to changing 

economic conditions. 

Among the most critical factors in the purchase of a home is access to financing. Consumers are finding it increasingly difficult to 

obtain financing for manufactured homes, which, in turn, reduces 

demand for the product, ultimately resulting in fewer jobs for manufacturers and related businesses and fewer choices available to 

the consumer. 

The majority of manufactured home purchases are financed as 

personal property, rather than real property mortgages. This method of financing results in comparatively smaller loan balances with 

shorter durations, but higher interest rates, given that most personal property loans cannot be securitized in the secondary market 

like a conventional mortgage. 

Given the unique nature of this model of finance, we must be 

mindful that laws governing traditional mortgage finance may not 

be as effective in the manufactured housing market, case in point, 

the unintended consequences created by the Dodd-Frank Act. 

Dodd-Frank broadened the definition of high-cost loans under the 

Home Ownership and Equity Protection Act (HOEPA) and also imposed new requirements on loans considered to be high-cost loans 

under HOEPA. 

4 

While these provisions were well-intentioned, we must identify 

and mitigate the unintended consequences they produced: decreased access to affordable choices for consumers; and fewer jobs 

in the manufactured housing industry. This hearing will examine 

these and other issues that are impacting the manufactured housing industry and the consumers who utilize its products. 

Again, I want to express my appreciation for today’s witnesses, 

each of whom will speak to their expertise in a particular facet of 

the manufactured housing industry. I look forward to your testimony. 

Without objection, your written statements will be made a part 

of the record, and you will each be recognized for a 5-minute summary of your testimony. 

The first witness who will be testifying today is Mr. Henry 

Czauski, Acting Deputy Administrator for the Manufactured Housing Program at HUD. 

Thank you, Mr. Czauski, for coming from Washington. It is my 

understanding that you came by way of Blacksburg, but we are 

glad to have you here. So you are recognized for 5 minutes. 

STATEMENT OF HENRY S. CZAUSKI, ACTING DEPUTY ADMINISTRATOR FOR THE OFFICE OF MANUFACTURED HOUSING 

PROGRAM, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. CZAUSKI. I want to thank Chairman Hurt and the other distinguished members of the subcommittee for the opportunity to testify today. 

My name is Henry Czauski, and I am the Acting Deputy Administrator for the Office of Manufactured Housing Program with the 

U.S. Department of Housing and Urban Development. 

My remarks will touch on some of the key aspects of manufactured housing legislation, the role HUD plays in implementing that 

legislation, the benefits to the stakeholders, and label fees. 

In 1974, Congress enacted the National Manufactured Housing 

Construction and Safety Standards Act, which was amended by the 

Manufactured Housing Improvement Act of 2000. Congress found 

that manufactured housing plays a vital role in meeting the housing needs of the Nation and that manufactured homes provide a 

significant resource for affordable homeownership and rental housing accessible to all Americans. 

HUD established a program to administer and carry out the 

many purposes of this legislation, which was intended to: protect 

the quality, durability, safety, and affordability of manufactured 

homes; provide for establishment of uniform nationwide Federal 

construction standards; encourage innovative and cost-effective construction techniques; protect residents; establish a balanced consensus process to develop standards; and ensure uniform and effective enforcement of those standards. 

To carry out these purposes, Congress included stakeholders in 

the process—manufacturers, retailers, consumers, State regulators, 

administrative and monitoring contractors, and others. A Manufactured Housing Consensus Committee was established as a Federal 

advisory committee to provide recommendations to HUD on adopting and revising Federal standards and regulations. This comVerDate Nov 24 2008 17:25 Jun 01, 2012 Jkt 072627 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\72627.TXT TERRIE
5 

mittee is composed of 21 voting members, including 7 producers/retailers, 7 persons representing consumer interests, and 7 persons 

representing public officials and the general interest. 

An administering organization authorized by Congress assists 

the committee in its mission. This committee is an active body and 

in the past year has met on four occasions, and its subcommittees 

have held ongoing meetings throughout the year. 

The Federal standards have been the subject of ongoing review 

and updating. Over the years, HUD promulgated numerous standards, including standards that limited formaldehyde emissions in 

manufactured homes, improved wind safety requirements after 

Hurricane Andrew, enhanced smoke alarm standards, and upgraded electrical safety requirements. These standards are preemptive of State or political subdivision standards to ensure nationwide 

uniformity and comprehensiveness. 

In order to assure compliance with these standards, manufacturers contract for inspection services with primary inspection agencies accepted by HUD. The Department conducts nationwide monitoring and inspections to assure that the standards are maintained. 

Congress also authorized that States may assume responsibility 

for enforcement of standards, upon approval of a State plan approved by HUD. At the current time, 37 States have established 

plans. HUD assumes responsibility for enforcement of standards in 

the 13 States that do not have established plans. During the past 

2 years, 2 national and 4 regional meetings with State regulators 

were held to provide guidance and ensure uniformity of standard 

administration among the States. 

Once a manufactured home is determined to meet Federal standards, a certification label is permanently affixed to each home. This 

red label assures the consumer that the home was constructed in 

accordance with the Federal standards. 

Congress authorized the Secretary to establish and collect a fee 

for this label to offset expenses incurred in carrying out the legislation. The current label fee was set at $39 in 2002. In Fiscal Year 

2000, prior to the fee increase, label fee income of $11 million was 

collected. 

As a result of reductions in the production of manufactured 

homes, fee income in Fiscal Year 2008 fell to $5.7 million. In Fiscal 

Year 2011, fee income fell to less than $3 million. 

To supplement the reduced label fee income, Congress provided 

a direct appropriation of $5.4 million in Fiscal Year 2009. The appropriation rose to $9 million in Fiscal Year 2011. For Fiscal Year 

2012, the appropriation was set at $2.5 million. 

These label fees are used for conducting inspections and monitoring, providing funding to the States that have approved plans, 

administering the consensus committee, and administration of the 

enforcement of installation standards, and a dispute resolution program. 

In closing, I would like to state that the Federal standards serve 

to protect the quality, durability, safety, and affordability of manufactured housing. I want to thank you for the opportunity to provide testimony today, and I would be pleased to answer any questions. 

6 

[The prepared statement of Mr. Czauski can be found on page 50 

of the appendix.] 

Mr. HURT. Thank you, Mr. Czauski. 

The next witness that we will recognize for 5 minutes is Mr. 

Kevin Clayton, who is the president and CEO of Clayton Homes. 

And he joins us from Maryville, Tennessee. 

Thank you, Mr. Clayton, for being here. And we will recognize 

you for 5 minutes. 

STATEMENT OF KEVIN CLAYTON, SECRETARY, EXECUTIVE 

COMMITTEE, MANUFACTURED HOUSING INSTITUTE (MHI) 

Mr. CLAYTON. Thank you, Mr. Chairman, and members of the 

subcommittee, for the opportunity to testify this morning. 

My name is Kevin Clayton. I serve as the secretary of the Manufactured Housing Institute, or I will refer to that as MHI in my remarks. 

I am also the president and CEO of Clayton Homes. The current 

chairman of MHI, Joe Stegmayer, sends his regards. He has a facility nearby in Rocky Mount. I know that you visited that facility, 

and we appreciate your interest and support of the industry. 

My written testimony has been submitted for the record. 

For over 60 years, manufactured housing has been critical as a 

single-family housing alternative for hard-working, low- to moderate-income families across this Nation. Most manufactured 

homes are located in rural America, where there are few apartments or other housing alternatives available. 

The average cost of a new manufactured home is only $63,000 

versus $270,000 for a site-built home. More importantly, the median annual income of a manufactured homeowner is $32,000, 

versus $60,000- plus for other homeowners. 

An even greater indication of the Nation’s reliance on manufactured homes as an affordable housing alternative is that 72 percent 

of all new homes sold under $125,000 are manufactured homes. 

Additionally, since 1989, manufactured housing has served roughly 

20-plus percent of all new home sales. 

The American dream is homeownership, and the unintended effects of new regulation and lack of the secondary market by the 

GSEs is a path to tragically wipe out the remains of this important 

housing segment. The implementation of the Dodd-Frank Act 

amendments to the Home Ownership and Equity Protection Act 

stands to critically affect this industry. HOEPA, which defines 

high-cost mortgages, is designed to protect consumers and prevent 

predatory lending. 

The law uses APR limits for the annual percentage rate and fees 

charged on a loan to determine whether the loan is a high-cost 

mortgage. Prior to the Dodd-Frank Act, HOEPA only applied to 

non-purchase finance or refinance loans, but now will apply to all 

manufactured housing loans as well. 

With no secondary market, the cost of capital for manufactured 

housing lenders starts at a much higher rate, and the limits within 

the Dodd-Frank Act are based off of the current artificially low 

mortgage rates. This makes it very difficult, and impossible in 

many cases, for a lender in our industry in the future to be able 

7 

to charge enough interest rate to offset the cost of originating and 

servicing the loans and stay underneath those limits. For example, a $200,000 site-built loan and a $50,000 manufactured home loan, they cost the same in dollars to originate and 

service a loan. But as a percentage of each loan’s size, it is significantly different in interest rate spread. This difference is effectively 

discriminating against the smaller size manufactured home loans, 

putting them at a much higher risk of being categorized as highcost mortgages, even though there is nothing predatory about manufactured housing loans. 

The impact of this provision is significant. Of the 400,000-plus 

loans that our company has made since 1972, more than 50 percent 

of those would have not been done because they would have been 

classified as a high-cost mortgage under the Dodd-Frank amendments. 

Due to the liabilities and stigma associated with high-cost mortgages, lenders typically refuse to make these types of loans. The 

other real impact of HOEPA will be felt by the 19 million Americans who live in manufactured homes, who could see their ability 

to resell their homes effectively wiped out because lenders would 

be unwilling to provide the financing needed to help them sell their 

homes. 

Our regulatory challenges are not limited to HOEPA and the 

Dodd-Frank Act. The industry is already feeling the impact of the 

SAFE Act, which requires States to establish standards for licensing mortgage loan originators. Unfortunately, there has been a lack 

of clarity and uniformity in applying the SAFE Act to the manufactured housing market, specifically the manufactured home retailers 

and their salespeople. 

Similar to real estate brokers, manufactured home retailers are 

in the business of assisting customers through the home-buying 

process. However, unlike conventional real estate, there are a limited number of banks that offer financing for manufactured housing. Without the assistance of the retailer and salespeople, the consumer would be—it is very difficult to locate a manufactured housing lender. 

Salespeople are fundamentally involved in the business of selling 

homes, not originating mortgage loans. When they do not receive 

an incentive or compensation from a lender, then they should not 

be fearful to show a customer what financing options are available 

or answer basic questions about the lending process. 

Additionally, as States have attempted to implement the SAFE 

Act, the impact has been inconsistent. Because of delays in the 

Federal rulemaking and the resulting differences and approaches 

taken at State levels, manufactured home retailers are often concerned with providing the most basic level of technical assistance 

and service to customers. 

While MHI fully supports the mission of the SAFE Act, consideration should be made for the unique manufactured home-buying 

process. Our industry is critical for housing and providing jobs in 

America. Over the past decade, new manufactured home construction has declined nearly 80 percent, which has accounted for 160 

plant closures, more than 7,500 retail center closures, and the loss 

of over 200,000 jobs. 

8 

More importantly, thousands of manufactured home customers 

may be limited in their ability to purchase, sell, or refinance 

homes. Without action in these key areas, the people who live in 

manufactured homes and those whose livelihood is connected to 

this industry face significant risk. 

I thank you for the opportunity to testify and welcome your questions later. 

[The prepared statement of Mr. Clayton can be found on page 36 

of the appendix.] 

Mr. HURT. Thank you, Mr. Clayton, for your testimony. 

The next witness who will testify will be Tyler Craddock, and he 

is the executive director for the Virginia Manufactured and Modular Housing Association. He is in Richmond, and he is from 

Southside. 

Welcome, Tyler, and you are recognized for 5 minutes. 

STATEMENT OF TYLER CRADDOCK, EXECUTIVE DIRECTOR, 

VIRGINIA MANUFACTURED AND MODULAR HOUSING ASSOCIATION (VAMMHA) 

Mr. CRADDOCK. Thank you, Mr. Chairman. Thank you for the opportunity to testify this morning on the state of the manufactured 

housing industry, and thank you for hosting this hearing. 

My name is Tyler Craddock, and I am the executive director of 

the Virginia Manufactured and Modular Housing Association. 

Founded in 1965, VAMMHA is the voice of the factory-built housing industry in Virginia. We represent producers and retailers of 

manufactured and modular housing, community owners, lenders, 

suppliers, and others involved in providing Virginians with wellconstructed, factory-built, affordable housing choices. 

While most of our work is at the State and local level, we recognize that manufactured housing, by its very nature, requires a 

great deal of attention to Federal legislative and regulatory activity. For that reason, we are active members of and work in close 

partnership with the Manufactured Housing Institute, very ably 

represented here this morning by Kevin Clayton, with Clayton 

Homes. 

Manufactured housing is an important component of the housing 

stock here in Virginia. According to the 2010 census, it comprises 

about 5.6 percent of the overall housing stock in the Commonwealth. But that does not tell the entire story. 

In many rural localities, especially in Southside and southwest 

Virginia, according to the 2000 census data—that is the latest data 

we have available on a county-by-county basis—the proportion of 

manufactured homes exceeds 15 to 20 percent of the housing stock. 

That is no small wonder, given the relative lack of construction 

labor in many rural communities and the affordable nature of manufactured homes in Virginia. 

In 2010, for example, the average cost of a new manufactured home in Virginia minus land was $58,500. In spite of manufactured 

housing’s status as an affordable choice for many Virginia families, 

the manufactured housing industry in Virginia is limping along at 

present. 

In 1990, over 5,400 homes were shipped into Virginia. That number rose to over 7,000 homes in the mid- to late 1990s and dropped 

9 

over time to only 1,155 homes in 2010. Thus far in 2011, we are 

at approximately 30 percent off of our numbers from 2010, having 

only 670 shipments as of the end of September. 

The decline in manufactured home shipments is mirrored in the 

decline we have seen in the number of manufactured homes actually produced here in Virginia. In 1990, 3,595 homes were produced 

in the Commonwealth. In the years that followed, that number 

went as high as 4,422 homes in 1998, but declined to only 113 

homes in 2009. 

While many of the issues we face are State or local in nature, 

and others testifying today can offer more in-depth perspective on 

the Federal issues affecting our industry, I would certainly be remiss if I did not highlight a couple of issues that have arisen as 

I have visited with VAMMHA members around the State. First and 

foremost, the lack of financing from manufactured home purchasers is putting many of our customers and our industry overall 

in a pinch. 

Time and time again, retailers tell me that they have customers 

who are ready and willing to purchase a new home, but they cannot get financing for the purchase. In many cases, these are families who, in years past, would have had no trouble qualifying for 

a loan, but they cannot do so now. 

In addition, for our customers who qualify, there remains the 

real threat that their home will not appraise for a value that will 

allow their home purchase to move forward. While appraisals are 

tighter across-the-board for the entire housing industry, a number 

of my members report that the problem lies not so much with appraisals in general, but with specific appraisers who do not understand our product and its unique nature. As such, there may be an 

opportunity for the industry and HUD to work in partnership to 

help ensure that appraisers are well educated with respect to manufactured homes. 

Another issue that continues to concern our membership is the 

SAFE Act. While the final rule promulgated by HUD earlier this 

summer provides some helpful guidance and flexibility for our 

State regulators, it does not entirely clarify issues of critical concern to the industry. 

The industry is seeking additional statutory language to clarify 

that licensed manufactured home salespersons not engaged in loan 

origination activities are not mortgage loan originators and, thus, 

subject to licensing. As it stands, given the unique nature of the 

retail side of our industry, manufactured home retailers, who are 

not in the business of making loans, could be on the hook for thousands in licensing fees at a time when they can least afford it. 

In addition, the industry is seeking relief for those who originate 

only a small number of manufactured home loans on an annual 

basis and for those sellers financing the sale of their own manufactured homes. At a time when financing options are very limited for 

manufactured home buyers, regulatory burdens imposed by the 

SAFE Act are further limiting the few financing options available 

to low- and moderate-income manufactured home buyers. 

Mr. Chairman, thank you for the opportunity to testify, and I 

certainly welcome any questions. 

10 

[The prepared statement of Mr. Craddock can be found on page 

45 of the appendix.] 

Mr. HURT. Thank you, Mr. Craddock. 

We also have with us Stan Rush, who is an account representative with MHD Empire Services Corporation here in Danville. Mr. 

Rush, thank you very much for joining us today, and we will recognize you for 5 minutes. 

Thank you, sir. 

STATEMENT OF STANLEY RUSH, ACCOUNT EXECUTIVE, MHD 

EMPIRE SERVICE CORPORATION, AND VICE CHAIR, VIRGINIA MANUFACTURED AND MODULAR HOUSING ASSOCIATION (VAMMHA) 

Mr. RUSH. Thank you, Chairman Hurt, and members of the subcommittee for the opportunity to testify regarding the state of manufactured housing personal property financing. 

My name is Stanley Rush, and I am an account executive with 

MHD Empire. I am also currently serving as vice chair of the Virginia Manufactured and Modular Housing Association. 

I have in worked many different areas of the manufactured housing industry since 1981 with almost 20 years of manufactured 

housing personal property financing experience. The most serious 

obstacle that exists with personal property financing is the SAFE 

Act and its inherent regulations. 

Primarily, States do not know how to enforce the new regulations. Most States, especially Virginia, already had predatory lending laws that were passed years ago. The SAFE Act has confused 

a situation that was working. 

The SAFE Act creates confusion for the manufactured housing 

salespeople who are assisting customers with the process of obtaining financing for affordable homes they want to purchase. There is 

great uncertainty about the SAFE Act and how it applies with respect to the need for manufactured housing salespeople to obtain 

a mortgage loan originator’s license to be able to assist with a credit application. 

Manufactured housing salespeople are licensed and regulated by 

the State. Any additional licensure is costly and unnecessary, as 

the salespeople are not making any lending decisions, merely helping with paperwork. 

The SAFE Act is also preventing manufactured housing community owners from doing their own financing, which is necessary at 

this time because so many sources of money are no longer available. While the recent guidance from HUD and conversations between our industry and State regulators have been helpful, they 

are based only on current interpretations and, as such, are subject 

to change in the future. 

Additionally, these positive first steps do not completely address 

the industry’s concerns. That is why we strongly encourage you to 

support clarifying language to state that manufactured housing 

salespersons not engaged in loan origination do not need to be registered, and language that provides some relief to folks making 

only a few loans and sellers financing the sale of their own homes. 

At one time, there were more than a dozen national lenders 

doing manufactured housing personal property financing. Now, we 

11 

are down to four. One of the reasons personal property financing 

has become so scarce is that banks are being told by regulators 

that if it is the least bit out of the ordinary, don’t do it. 

Manufactured housing personal property financing is out of the 

ordinary, and thus, the banks stay away. The new financial regulatory format is only making this situation worse. 

Our industry is by no means perfect. None is. But we have gotten caught up in a perfect storm of unintended consequences that, 

on top of the prolonged poor economy, is keeping our customers out 

of the most affordable housing available today. 

Thank you again, Chairman Hurt, for the opportunity to testify 

today, and I will be glad to answer any questions that you may 

have. 

[The prepared statement of Mr. Rush can be found on page 55 

of the appendix.] 

Mr. HURT. Thank you for your testimony, Mr. Rush. 

And now, it is my pleasure to introduce Scott Yates, who is president of Yates Homes in Pittsylvania County. It is a family-owned 

business that has operated since 1986, and thank you very much 

for coming down to the big City of Danville— 

[laughter] 

Mr. HURT. —to testify. You are recognized for 5 minutes. 

STATEMENT OF SCOTT YATES, PRESIDENT, YATES HOMES, 

AND PAST CHAIR, VIRGINIA MANUFACTURED AND MODULAR HOUSING ASSOCIATION (VAMMHA) 

Mr. YATES. Thank you, Congressman Hurt, for giving me the opportunity to appear before you today. 

My name is Scott Yates, and I am president of Yates Homes, a 

family-owned business that has operated in Pittsylvania County 

since 1986. 

Over the course of my career, I have sold manufactured and modular homes, and I own and operate a manufactured housing community. I am also a member of the Virginia Manufactured and 

Modular Housing Association, have served as its chairman, and I 

am also a member of the executive committee, the board of directors, and had the pleasure of being elected to MHI, representing 

Virginia for a number of years. 

From day one, I have sold manufactured homes because I knew 

there was a need for affordable housing, but wanted to help consumers realize the American dream of homeownership. For quality 

of life and economic competitive reasons, every community needs a 

steady, well-built supply of affordable housing choices, and I decided early on that I wanted to play a part in helping provide that 

in Southside Virginia. 

Since 1986, I have seen our industry hit some of its highest 

points, and likewise, I have been through some of its toughest 

times, as is the case today. At the peak of the industry, our business sold 180 houses a year and employed 19 people. As the economy went into a tailspin and the housing market slowed to a crawl, 

I have had to adjust our company to only 5 employees, including 

myself and my partner, and we are only selling 30 homes a year. 

This being the third downturn we have been through and the 

longest of my career, I think we have outsmarted ourselves for the 

12 

sake of fixing the housing problem and forgotten commonsense resolutions. With the constant pressure of government regulation at 

all levels, and a lack of reliable financing sources for customers, we 

have turned to modular homes instead of manufactured homes. 

The finance community has turned from manufactured homes because of secondary markets not wanting to buy portfolios that contain this type of housing. The true loser is the customer who wants 

to provide shelter for their family at an affordable price and who 

understands that manufactured housing is a viable option to do exactly that. 

Four years ago, we recognized that lending sources for manufactured home buyers were drying up. As such, we deemed it necessary to explore an alternative business model so that our company could survive. We moved into modular homes because they 

are built to the prevailing local codes, which is the Virginia Uniform Statewide Building Code, the same standard that applies to 

site-built homes. 

They have fewer restrictions for customers seeking financing and 

feature many of the same terms as the site-built homes. With manufactured homes, the interest rates are generally higher. In addition, we observed that the appraisals were coming in well below 

the price for which the home had sold. 

Finally, it got to the point that selling manufactured homes was 

a losing scenario from a financial point of view. We were selling at 

a lower margin and being cut to the point that we could not make 

a small profit to keep our company going. 

In this scenario, however, the true loser is not me or our company. The true loser is the American people. Not every family can 

afford a home over $100,000. These are the families today who are 

suffering the most in our economy. They are being squeezed between job losses and the increasing cost of providing necessities 

like food, clothing, and whatever type of shelter for their families. 

In time, this leads to more people depending on our government 

to support them, thereby perpetuating the cycle of entitlement and 

spending that has brought our Nation to the brink of financial destruction. That is certainly not what this country was founded on, 

and in my opinion, it is not the direction our forefathers had in 

mind when they bravely affixed their names to the Declaration of 

Independence. 

In closing, I would like to share a story from my first year in 

business. A couple came in with two children. The loving father 

and mother wanted to provide a home for their family. We had a 

$4,000 used manufactured home for sale. They wanted to put it on 

the property that their family owned. 

The father and mother had saved and worked hard to purchase 

this home. When they wrote us a check for the $4,000, the notation 

in the memo line contained two very simple, but powerful words, 

‘‘a home.’’ 

I never forgot that family, and those words that remind us that 

whether a home has a $1 million price tag or a $4,000 price tag, 

it is a home that meets their housing needs and provides a home 

for their family. 

Chairman Hurt, thank you for the opportunity to testify today, 

and I welcome any questions. 

13 

[The prepared statement of Mr. Yates can be found on page 65 

of the appendix.] 

Mr. HURT. Thank you very much, Mr. Yates. 

I would now like to recognize for 5 minutes Mr. Adam Rust, who 

is the research director for the Community Reinvestment Association of North Carolina, and he comes to us from Durham, North 

Carolina. 

Mr. RUST. That is right. 

Mr. HURT. So thank you for being with us, and you are recognized for 5 minutes. 

STATEMENT OF ADAM RUST, RESEARCH DIRECTOR, COMMUNITY REINVESTMENT ASSOCIATION OF NORTH CAROLINA 

Mr. RUST. Honorable Chairman Hurt, thank you for inviting me 

to testify before your panel today. 

My name is Adam Rust, and I am the research director for the 

Community Reinvestment Association of North Carolina. Our main 

focus is housing finance. I am the author of, ‘‘This Is My Home: 

The Challenges and Opportunities of Manufactured Housing.’’ And 

since 2010, I have served as a general member of HUD’s Manufactured Housing Consensus Committee. 

In my opinion, today there is no better example of a community 

that is obstructed from accessing good credit than the local manufactured housing park. That is why I think it is important that this 

hearing is happening today. 

To your first question, what has caused the manufactured housing industry to go from 300,000 units produced in 1999 to only 

50,000 units in 2010? I would offer that an equally valid question 

is, what would help the manufactured housing industry ship more 

homes in the near future? 

I see two opportunities—better participation by the GSEs and a 

better industry effort to take advantage of demographic change in 

our population. The manufactured housing industry finds it hard 

to ship more units because fewer people can get the financing they 

need to buy the homes. 

I agree with the sentiment expressed by Mr. Rush, Mr. Clayton, 

Mr. Yates, and Representative Hurt. Your opinion of personal property lending may determine your thoughts on the most important 

issues for how credit is accessed, how we interpret the way that the 

GSEs operationalize their duty to serve in the case of manufactured housing. 

The GSEs have expressed that they want to narrow their commitment to only real property. I believe that we need to find a middle ground. I believe that the GSEs can be a lever that elevates the 

quality of manufactured housing lending for personal property. I 

imagine that if a GSE did focus on buying these loans, it would 

serve as a lever to elevate the quality of lending. 

I think there are important conditions to set with that, including 

full disclosure under RESPA for closing costs, no balloon payments, 

and loans that do not bind people unable to get a refinance in the 

near future. 

Secondly, the manufactured housing industry needs to do a better job of serving people with disabilities. We know the population 

is graying. The point of purchase is not when you know if you will 

14 

need a home with disability protections. As an example, you never 

know if you are going to need a seatbelt, but I believe that we are 

all glad that cars now come with seatbelts. 

We know the population is graying, and I think it is about finding a middle ground. And to that, I want to say that I voted 

against the sprinkler proposal. But hallway widths are an important topic. 

I have two letters that I have brought today from the Paralyzed 

Veterans of America and the American Association of People with 

Disabilities. Both of them specifically asked the Manufactured 

Housing Consensus Committee to establish a minimum hallway 

width of 36 inches in the HUD code. 

The actions to consider with regard to financing include that the 

GSEs should not just focus on real property, but also on personal 

property loans, and that we change the rules associated with the 

GSEs’ MH Select program, which currently require PMIs for some 

homes with higher LTVs. For better or worse, there were less than 

200 PMI contracts written for manufactured homes in 2010, compared to more than 10,000 just as recently as 2004. The products 

are not being offered. 

We need to create credit enhancement facilities for second position loans to help people acquire manufactured housing parks. And 

last, we need to engage and encourage State housing finance agencies to use their tax credit dollars to encourage manufactured housing lending. 

Straight to the third question, what role will the CFPB play for 

the manufactured housing industry under Dodd-Frank, I believe 

that Dodd-Frank will reward the good guys by eliminating the competitive threat posed by a race to the bottom among financing companies. CFPB’s focus is on consumer protection. It is not the SAFE 

Act. It is different. 

And here is what is wrong with personal property lending. We 

know that it is hard to shop around for a better loan when the financing comes from a retailer that is selling the home. It is even 

harder when there is no requirement for closing costs. And then, 

ultimately, the homes come with features that may change the ultimate resale value of the home, including balloon payments or prepayment penalties. 

One in five borrowers ends up unable to make their payments. 

Some people are getting these loans that they couldn’t qualify for 

a mortgage. It is bad for consumers, and it stands to reason that 

this will be bad for the future of the industry. 

In fact, the problems facing manufactured housing took place and 

developed before the idea of the CFPB was even imagined. The 

CFPB will not regulate manufacturers. It will supervise, enforce, 

and write rules only for nonbank financial institutions and only if 

they are considered larger participants. 

The CFPB is only about making sure that people get the best financed product that they deserve, and I think that enhancing the 

role of the GSEs is the first step to making that happen. 

Ultimately, and to conclude, as transactions become more transparent and as more finance products prove to be sound, results will 

be seen and the quality of manufactured housing communities and 

the experience that owners have and in the perception of the indusVerDate Nov 24 2008 17:25 Jun 01, 2012 Jkt 072627 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\72627.TXT TERRIE
15 

try—I believe that the only way that the industry will go forward 

and return to health is to address this issue of financing. 

Thank you. 

[The prepared statement of Mr. Rust can be found on page 58 of 

the appendix.] 

Mr. HURT. Thank you, Mr. Rust. 

The next witness that we will hear from is Ms. Carla Burr. She 

is a manufactured housing resident, and she is from Chantilly, Virginia. And we will recognize you, Ms. Burr, for 5 minutes. 

STATEMENT OF CARLA BURR, MANUFACTURED HOUSING 

RESIDENT 

Ms. BURR. Thank you. 

Good morning, Vice Chairman Hurt, and I thank you for the opportunity to testify. 

My name is Carla Burr, and I am a proud owner of a manufactured home in Chantilly, Virginia. But I am not just representing 

myself. I am representing 17 million families who live in these 

homes across this country. 

Owners of manufactured homes are frequently ignored by Federal housing policy. So I am very grateful that we have this attention paid to it today. 

We believe if you want to understand why manufactured home 

sales have dropped so dramatically, it is critical to ask the homeowners and buyers and residents among these communities: Would 

you recommend them to others? Would you recommend your child 

buy one? 

I would certainly recommend someone buy a manufactured 

home. My only mistake was putting it in a park, where I have no 

control. The issues regarding manufactured housing in a community such as ours is so grave that people are walking in and turning in their title to their home because they can’t sell it. It is too 

old. They can’t get a replacement. 

There are many people in our community who are suffering so 

badly that they can’t even buy food. It is a toss-up between food 

and medical bills and lot rent. 

In my particular community, the lot rent is going to increase this 

next year to $919 a month. In most communities, we are finding 

the lot rent is higher than the mortgage, and this is unconscionable. In some communities, the lot rent is almost equal to the mortgage. 

We know one homeowner in my community, their lot rent is like 

$100 less than their mortgage. A $2,000 a month payment for a 

manufactured home in a community is just absurd. 

What we are facing right now is a constant threat by the—not 

manufactured housing, but by the landlord of this property. We are 

really considering how we are going to try and get out of this community. We would like to buy it. We would love to buy the property. 

In fact, if I had the chance to buy the land my house sits on, I 

would do it in a heartbeat. But there are no provisions. We don’t 

have any rights as far as homeowners. There is no right of first refusal for us. 

16 

The landlord could basically sell the property out from under us, 

and we would never know until the sale happened. And then, we 

would be frantically trying to find someone to buy our home for less 

than what it is worth. 

Right now, we have been successful as a community in getting 

our property taxes lowered because the assessment values were 

way out of line. We felt that they were using this Wingate appraisal method to actually assess our homes, and we found it to be 

absurdly unrealistic. My house I could probably sell for less than 

half of what I paid for it, and I would be lucky to get that. 

Anyway, for the nearly 3 million homeowners like me on leased 

land, we are in a financially precarious position. We are not notified if the land owner decides to sell. Like I said, we don’t have 

right of first refusal. 

There are practices of certain community owners that further 

erode the value of my investment if I want to sell. For example, 

landlords can refuse to sell to someone who wants to buy my home. 

They can limit how I market my house. They can steer potential 

buyers to other homes within the community, toward their product, 

which is happening in my community. 

In my community, it has gotten so bad that people are turning 

in their title, which I have said. We feel like prisoners in a feudal 

system. 

The other practice is where management is not equitably applying the rules across-the-board. They single out those of us who are 

taking action to effect change. They try and persuade other homeowners to not attend our meetings because we are really seeking 

to get the whole community involved. 

They single out those of us who are taking action, and they use 

tactics to scare the homeowners. ‘‘We are not going to renew your 

lease.’’ Whether they do it or not, we don’t know. This is an unacceptable position to be in, in any community. 

And why is the manufactured housing community singled out? 

Because of nonexistent protection under the law. Although Virginia 

does have some vague laws about this type of retaliation, and even 

our rental agreement says the landlord cannot retaliate, they basically ignore those rules. 

I truly believe that manufactured housing can be a part of the 

solution to our need for affordable homes, and can create jobs, save 

energy, and provide attractive homes for people who want to buy 

them. 

There is much that Congress can do to improve the regulatory 

marketplace so buyers get the best possible loans, and ensure that 

Federal agencies use their resources to help homeowners buy a 

quality home that they can afford, and require protections for owners living in communities. Everyone—the people who build the 

homes, the people who sell the homes, the people who finance the 

homes, and the people who buy these homes—should work together 

to improve outcomes for buyers like me. 

I would love to provide an unqualified recommendation for manufactured housing. However, until we fix the financing issue to provide equal access benefits and ensure secure tenure, manufactured 

home sales will remain slack. 

17 

Finally, as an owner of a manufactured home, I really look forward to the day when we have equal rights under the law as a 

homeowner. Whether it is stick-built or some other condominium, 

we are also petitioning our local representatives in Virginia to pursue some sort of rent control or restructuring so that land owners 

cannot raise the lot rent without impunity. And there needs to be 

some sort of ceiling. 

We know rent control is gone for the most part in this country, 

but for our purposes, there is no way we can stay. We have determined there is no affordable housing in Fairfax County. It doesn’t 

exist. And an article in the Washington Post even confirmed that. 

So thank you for listening. 

[The prepared statement of Ms. Burr can be found on page 29 

of the appendix.] 

Mr. HURT. Thank you, Ms. Burr, very much for your testimony. 

Not on the program is a gentleman from the Manufactured Housing Association for Regulatory Reform. His name is Mark Weiss. 

He is behind you, Ms. Burr. If we could get that microphone to 

him, I would like to ask unanimous consent to recognize him to 

make a brief statement for the record. 

He comes from Washington. 

STATEMENT OF MARK WEISS, SENIOR VICE PRESIDENT, MANUFACTURED HOUSING ASSOCIATION FOR REGULATORY REFORM (MHARR) 

Mr. WEISS. Thank you, Mr. Chairman. I appreciate the opportunity to speak here today. 

Mr. HURT. Yes, sir. Thank you. 

Mr. WEISS. My name is Mark Weiss, and I am senior vice president of the Manufactured Housing Association for Regulatory Reform. 

MHARR is a national trade association of mostly smaller producers of HUD-regulated manufactured housing. MHARR first requested an oversight hearing on the HUD Manufactured Housing 

Program and was promised such a hearing by Chairman Bachus 

earlier this year. MHARR specifically requested an oversight hearing on HUD’s failure to fully and properly implement key reform 

provisions of the Manufactured Housing Improvement Act of 2000. 

We expressed our wish to present testimony showing the devastating impact of that failure on the industry and particularly the 

smaller independent manufacturers that MHARR represents, as 

well as American consumers of affordable housing, which would 

then provide the committee with a basis to seek answers from 

HUD officials on those issues. 

The smaller businesses represented by MHARR have major and 

specific grievances based on HUD’s failure to fully and properly implement those key reforms of that law, reforms that were designed 

to ensure that manufactured homes are treated as housing rather 

than the trailers of yesteryear. Some of those reforms have been 

distorted, others have been ignored, and yet others have been effectively read out of the Act entirely by process of interpretation. 

We trust and hope that during the next session of the 112th Congress, a hearing on those specific implementation issues will be 

held where our small business members and their witnesses can 

18 

appear and testify before the committee. In the interim, we would 

ask that my statement be included in the record, as well as a series 

of fact sheets specifically addressing those implementation issues 

that we have prepared and will submit to the committee. 

Mr. HURT. Without objection, those documents will be admitted 

to the record. And thank you for your statement, Mr. Weiss. 

Mr. WEISS. Thank you, Mr. Chairman. 

Mr. HURT. Now, we will commence with a period of questioning 

for the witnesses, and I will ask a few questions. 

First up, Ms. Burr, thank you for your testimony. One of the 

things that I was wondering about as you testified was whether or 

not there is a market for being able to sell your home in the, I don’t 

know if you call it the secondhand market or used market? 

Ms. BURR. Yes. 

Mr. HURT. Is there a market for that? And I would imagine living in Fairfax County, like you do, that it would be very difficult 

to find affordable housing in Fairfax County. We would, just for the 

record, invite you to move to Pittsylvania County. 

[laughter] 

Mr. HURT. But with that said, is there a vibrant market at this 

time for used manufactured housing? 

Ms. BURR. Not from what we can see. The county has actually 

made it so difficult. They have changed the zoning on some of the 

land. You can’t actually move it. If you buy a piece of land in Fairfax County, it is probably zoned in such a way that you can’t put 

your home on it. So even if I could move it, there is nowhere to 

move it. 

And I have checked with communities like ours all the way into 

Maryland and West Virginia. They don’t have lots big enough to 

put my house on. And if you want to buy a piece of property, the 

zoning doesn’t allow you to move it there. So we are stuck. 

Mr. HURT. Okay. Thank you. 

And Mr. Rust, I would like to ask you a question. If you would 

try to use the microphone for the court reporter, if you don’t mind? 

Thank you for your testimony, Mr. Rust. I was wondering if you 

could just address—you talked a lot about the GSEs, and of course, 

that is something that has taken up a lot of our focus in Washington is dealing with Fannie Mae and Freddie Mac and how do 

we—taxpayers provided a $160 billion bailout for those two organizations. And I think that there is across-the-aisle support for trying 

to wind those down. 

The key, the key to the success for that, though, will be bringing 

the private sector into the secondary mortgage market. That is the 

only way it works if we don’t want to make it worse for housing 

and make it worse for the real estate market. 

So I was wondering if you could speak to that. Obviously, it 

would be nice to see that secondary mortgage market evolve in the 

private sector, and I didn’t know if you had any comments as it relates to that? 

Mr. RUST. It is true that there is hardly a market for those kind 

of homes on the private investor side. One issue that— 

Mr. HURT. How do we correct that without— 

Mr. RUST. Okay. So I am worried about the loan level price adjustments, which are a series of costs that are imposed on the deVerDate Nov 24 2008 17:25 Jun 01, 2012 Jkt 072627 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\72627.TXT TERRIE
19 

livery of manufactured homes or any mortgage to the secondary 

market. And specifically, I am concerned about the additional costs 

that are passed on for borrowers even when they haven’t demonstrated a poor credit record. 

There is an additional fee specifically designated for a manufactured home so that is raising cost that is passed on either in the 

interest rate or in the closing costs. And so, that is one thing I 

would encourage you to look at because I think it is a little bit 

under the radar, and it has been taking place since about 2009 and 

continues to evolve. But it is really hurting the secondary market 

and liquidity. 

Mr. HURT. Okay. Thank you. 

Mr. Yates, I have a question for you. Thank you again for your 

testimony, and I appreciate the 35 years of experience that you 

bring to this. 

When you think about the regulatory structure, and I don’t mean 

just as it relates specifically to manufactured housing and modular 

housing, but the regulatory structure generally, just as a small 

business, a family-owned business for 35 years, I would imagine 

that those regulatory burdens, whether it be taxes or whether it be 

environmental issues, can you talk a little bit about that burden 

just generally as a small business? 

And do you have any advice for us in terms of how we make it 

easier for you to succeed so that you are not—your testimony is 

very compelling when you talk about how your business has 

changed in the last 10 years. 

Mr. YATES. The regulatory environment is a moving target. It is 

constantly moving. I will give you one quick example. Basically, 

bringing the consumer back into it because that is what drives all 

of our businesses. It is not just myself; it is the consumer. In Pittsylvania County today, it costs $700, approximately $725 

just to get a well and septic permit. Now that is before you do anything. That is just a permit on the property to say, I can put a 

home here, whether it is a manufactured home, a modular home, 

or a stick-built home. 

But from the consumer, the regulation that is coming down, the 

permit for this, the permit for that, and I understand the State 

needs its funding, local government needs its funding. But— 

Mr. HURT. It all adds up, doesn’t it? 

Mr. YATES. Absolutely. And it takes people who want to buy from 

our business, it takes them off of the buying arena because these 

fees keep adding up. 

I can remember when my closing files used to be this big. Now, 

they are this big. 

Mr. HURT. Right. 

Mr. YATES. We had someone out of Richmond come in last week 

and check our company. We are visible. So we are constantly getting people in, making sure you have this license, you have that 

license. I am not saying license is a bad thing. I think it needs to 

be regulated. 

But again, as I said in my statement, when we get past, when 

we outsmart ourselves and we forget the commonsense approach 

to, number one, the consumer, and number two, to business, we are 

hurting from top to bottom all the way down. 

20 

Mr. HURT. Sure. Thank you. 

Mr. Rush, you talked a little bit about the appraisal standards 

and the changes that were brought by Dodd-Frank. And I was wondering if you could just talk a little bit about those appraisal standards and how those changes have and will affect the marketplace. 

Mr. RUSH. The problem that has come into, and I think it is affecting the real estate market also is that the Federal guidelines 

are one thing, and then each lender has their own set of guidelines 

for how they are doing manufactured housing and how they are 

doing site-built housing. 

Right now, we have a situation where a modular home can be 

built to the statewide building code and the frame can be left under 

it. And if that is the case, then the Federal guidelines from FHA 

are that the appraiser has to appraise it like a manufactured 

house, a HUD code manufactured house, which means they can 

only use comps that are HUD code houses. That limits the comps, 

especially in the market today, where there are not that many 

being sold, and there are almost none being resold because of the 

appraisal process and the lack of financing. 

So they are condensing us down into a little, small pinhole that 

is not helping the industry, and it is drastically hurting the industry as far as appraisals. We need to be able to comp a mod to a 

mod if that is—or site-built because they are built to the same 

code, whether it has a frame under it or it doesn’t have a frame 

under it. That is just one area where the appraisals are being affected. 

The other thing is that they are not supposed to be using foreclosures for comps, and the appraisers are. And it is hurting the 

prices because people are doing short sales. Lenders are doing 

short sales. We don’t have any bigger problem with foreclosures 

than the site-built industry, but we all have them right now with 

the way the economy has been going for such a long period of time, 

with folks out of work. 

So there are foreclosures out there in both the site-built and the 

manufactured housing industry. These things are all, as I said in 

my testimony, a perfect storm of negative things that are affecting 

our industry. 

Mr. HURT. Good deal. Thank you, Mr. Rush. 

Tyler, a question for you. From your viewpoint in Richmond, can 

you just talk a little bit about how the Federal—dealing with HUD 

and the Federal regulations, as well as the State regulations and 

the local regulations that Mr. Yates was talking about, can you 

talk about that dynamic? What are the regulations that are the 

hardest to deal with? Who can learn from whom maybe is another 

way to— 

Mr. CRADDOCK. Certainly. A couple of issues specifically. One, of 

course, and we have mentioned it, is the SAFE Act. That is one of 

the poster children because in Virginia we have the State corporation commissions and the Bureau of Financial Institutions, which 

regulates—which is enforcing the SAFE Act in Virginia, for lack of 

a better term. 

What that has created in this dynamic is—and we have seen it 

in other States—that is why I am talking to my counterparts in 

other States—is this dynamic where we have State regulators who 

21 

may be willing to work with us on some of the flexibility that our 

industry needs, but they feel that their hands are tied because of 

the guidance they are getting from HUD. And certainly as a lobbyist, you are not going to lobby the State government, saying you 

need to go against what HUD is telling you, go against the Federal 

Government. Don’t mind the supremacy clause, etc. 

One of the other areas where we see that dynamic play out, 

though, and we didn’t mention it as much here, is in the actual administration of the HUD code itself. The thing about this, you 

have, for lack of a better term, a Federal building code that is a 

Federal code that is administered in Virginia by the State. We 

have an SAA, a State administrative agency, which is the Virginia 

Department of Housing and Community Development, but then is 

enforced by local officials. 

So you have this building code that really is being acted upon at 

three different levels. And what that ends up at the end of the day, 

I have had retailers tell me you end up in a situation where local 

building official says ‘‘X’’ needs to—putting a house on the site, ‘‘X’’ 

needs to be done. 

The retailer says, no, that is not what is in the HUD code. So 

you end up with this 2-day runaround trying to call Richmond and 

get an answer because Richmond is trying to enforce something on 

behalf of HUD. And so, it does create a confusing dynamic at times. 

Mr. HURT. How do you fix that? 

Mr. CRADDOCK. That is the million dollar question. Because 

when you are out there, when you are waiting on a certificate of 

occupancy for a home, do you really want to butt heads with the 

same inspector who is going to not only be inspecting this home, 

but the next one that you hopefully have closing in 2 weeks and 

2 or 3 weeks after that? 

A lot of the key for us, we have found, rather than some sort of 

punitive fix or slap on the wrist is just simply better education and 

communication. In a lot of instances, as far as administration of 

the HUD code on the local level and the building official level is 

simply working—and our SAA has been really good and diligent 

about this, but it is just moving that process forward. It is a process that is ongoing so we have to keep working at it. 

Mr. HURT. Okay. Thank you very much, Mr. Craddock. 

Mr. Clayton, I would love it if you could—if you had anything to 

add to his question that I asked about the Federal, State, and local 

dynamic. And then I also wanted you to comment, if you could, it 

is my understanding that HUD intends to raise the label fee from 

$39 per label to $60 per label. And I wanted to find out if you had 

any thoughts on how that would affect the marketplace. So, if you 

could address both of those issues? 

Mr. CLAYTON. There is nothing specifically I would add to that. 

I think HUD is faced with doing what we have all had to do when 

our sales are running about 20 percent of where they once were. 

We have all had to make drastic cutbacks. So I think looking at 

what the real requirement budget need is versus only shipping 

50,000 homes this year needs to be looked at carefully. 

Mr. HURT. Okay. Do you have anything to add in terms of the 

Federal, local, and State—the regulatory dynamic? 

22 

Mr. CLAYTON. I thought that was addressed very well already. 

What our industry desperately needs right now is legislation that 

will move forward, that will modify HOEPA loan limits. Otherwise, 

what little is left of the industry, half of that will be wiped out. 

Because when you take a home-only customer who is not financing land in and you are operating and the limits are basically 6.5 

percent over an artificially low, where Treasury is helping buy 

down mortgage rates. So it is based off of that, that spread there. 

When our cost of funds are starting out—because we have no secondary market, we have no GSE support or Treasury support. 

There has been no government help whatsoever. 

Our cost of funds starting out is double because we are going 

through normal commercial paper debt instruments. We start out 

at a double. And that just wasn’t thought about and recognized in 

the creation of the Dodd-Frank. 

So it is very logical. Everybody that you mention this to, they see 

the need to change it. We have great Republican support. There 

needs to be some Democratic support urgently to move that forward and stop it. 

It is the last piece of the housing segment that needs to be hurt 

right now. Our best-selling model right now is below $50,000. That 

is where the economy is. That is all that most people can afford 

right now. And that is an underserved market. 

It is in rural America, where there are few apartments out in 

rural America, and there are certainly not affordable housing options. 

Mr. HURT. Thank you very much. 

Mr. CLAYTON. Thank you. 

Mr. HURT. Mr. Czauski, I wonder if you could just address the 

fee issue, raising the fee from $39 to $60 per label? And then conclude with anything else you might want to add. 

Mr. CZAUSKI. There has been discussion about raising the fee, as 

you are aware, to $60. And it is currently under review within the 

Department. Going from a fee of $39 to $60 is somewhat of an increase, especially at a time when the industry has been depressed 

and the number of homes being built has gone down. 

The Manufactured Housing Program is unique, and I have been 

with HUD for 32 years, 30 of which were in the Office of the General Counsel. So I have worked with many programs. This is the 

only one with a Federal advisory committee, consensus committee. 

And any regulations that are implemented go through that consensus committee. 

That consensus committee is composed of manufacturers and retailers, consumers, as well as State regulators. So all the parties 

involved at this table and in this room are represented on that consensus committee. And that committee makes a recommendation to 

the Department, and that will also occur with regard to the fee 

issue. 

The Department is interested in getting feedback with regard to 

the impact of any fees on the industry, on the consumers, and how 

that will affect the industry. So I think it is an opportunity for everybody to provide feedback, and it is a second bite of the apple because even after those recommendations are provided, and there is 

23 

a regulation that would increase the fee, there is the opportunity 

for public comment. 

And that is something the Department is interested in hearing. 

It is very interested in making sure that the industry is stable and 

yet protecting the consumers. 

Mr. HURT. I thank you for that, and I trust that you all will take 

that seriously because I think, as Mr. Yates was pointing out, it is 

just a little fee, a little fee, a little bit here, a little bit there, and 

the next thing you know, you are talking about something that is 

a barrier to being able to do what the consumer wants to do. And 

I think that is something all of us at every level of government 

have to be really keenly aware of. 

So thank you for your answer. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to these witnesses and to 

place their responses in the record. 

I also understand that Congressman Fincher has a statement 

that he would like to have entered into the record. And so, I would 

ask unanimous consent for that. Without objection, that is so ordered. 

I would also like to recognize—I think Larry Campbell is here, 

from the city council. Thank you, sir, for being here. 

I wanted to again thank the city for making this available. Many 

thanks to Mayor Saunders and all of the staff who put this together. 

I also thank the Sheriff’s Office, and all of our staff here who 

worked so hard to put this together. 

Finally, let me thank everybody in the audience who attended 

today. I am very grateful to you all for your interest in this subject 

and, of course, thanks to each of the witnesses for traveling here 

today to be with us. I think this hearing was very helpful to us, 

and I know that it will be very useful as we go back to Washington 

and consider these important subjects. 

And so, with that, this hearing is now adjourned. 

Thank you. 

[Whereupon, at 10:21 a.m., the hearing was adjourned.] 

(25) 

A P P E N D I X 

November 29, 2011 

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