Manufactured Housing Tour
PREPARED REMARKS FOR
BRIAN MONTGOMERY, FHA COMMISSIONER
TUESDAY, JUNE 24, 2008
Thank you. I am pleased to join Gayle (Cardwell), Brian (Cooney) and all of you for this event.
As you know, I go a long way back on manufactured housing. I became familiar with manufactured housing issues during my years at the Texas Department of Housing and Community Affairs.
So I am mindful of the importance of manufactured housing. During my time as FHA Commissioner, I have developed an even deeper appreciation for the quality housing that this industry provides to the American people. Your work is a key component of the housing market and our nation's economy.
I fully expect manufactured housing to be a first choice - if not the first choice - for developers of affordable housing in the years to come. Given what I have seen today, that is a reasonable expectation. Peppermint Woods is a very impressive manufactured housing community. Here you have shown what can be done, what is possible.
I feel that I've gone from factory to front porch. Last year, I toured the Weatherford, Texas Manufacturing plant where it was 110 degrees in the shade! Now I'm here to observe the installation process. It has been a fascinating experience.
Because America needs your efforts, as FHA Commissioner I have looked for ways to serve our constituents through manufactured housing. But one problem has been the lack of financing that's been available for manufactured housing.
I have testified in strong support of legislation that would change FHA's Title I to spark more financing options, and consider it to be a critical element of our efforts to modernize the FHA.
If you have followed this, you also have watched a long legislative journey. The FHA Manufactured Housing Loan Modernization Act of 2006 passed the House, and is now incorporated in the Senate version of the FHA Modernization Act. The President is still waiting for Congress to send FHA Modernization to his desk. I am hopeful that the changes to Title I remain part of the final legislation.
Another issue is the FHA's limitation on condominiums. Current FHA regulations do not allow manufactured homes to be insured as individually owned condominium units. So our office is developing a proposed rule to allow manufactured housing condominium developments to be eligible for FHA condominium ownership mortgage insurance.
Another rule we are considering would remove FHA requirements that reference site-built permanent foundations and/or perimeter enclosures.
This would be designed in compliance with either the Minimum Property Standards or the Permanent Foundations Guide for Manufactured Housing.
In its place, FHA would substitute a requirement that installations must meet or exceed the requirements set forth in HUD's Model Installation Standards as well as applicable state and local regulations.
This will avoid the obvious confusion of HUD having two completely different sets of installation requirements for manufactured homes.
Of course, there are some matters we have already settled. Thanks to your work the rules for the new national programs for dispute resolution and installation required by the Improvement Act of 2000 have all been published.
The Manufactured Home Dispute Resolution Program rules were published on May 14, 2007 and became effective on February 8, 2008.
And, we have received our first request for dispute resolution, which was resolved by the manufacturer and retailer without the need for mediation.
In addition, the Model Manufactured Home Installation Standards were published on October 19, 2007 and the Manufactured Home Installation Program Rules were published last Friday.
The rules provide for HUD-enforced compliance with the entire DAPIA approved installation manual, just as you recommended.
Other rules now in process include updates to the Test Procedures for Roof Trusses, two comprehensive sets of revisions: Construction and Safety Standards, and revisions to SubpartI of the Procedural and Enforcement Regulations.
The proposed rule for On-Site Completion of Construction of Manufactured Homes is an important step forward. Just about everybody likes this one, and I think we can get a proposed rule out this year.
As you know, our approach to program enforcement changed significantly following a serious incident that involved an uninspected Alternative Construction home in late 2006.
We have conditioned all Alternative Construction renewals on proof of a complete inspection history and required that all inspections be conducted prior to occupancy.
And we also took action against the manufacturer of that home, leveling a fine and requiring a new certification of the plant where the home was built.
This certification was done under the close supervision of HUD and its monitoring contractor, with a strong emphasis on quality control.
We've broadened this effort to emphasize quality control for the rest of the plants that are certified to apply the HUD label.
We think this will result in fewer defects, which means lower service costs for the industry and more consumer and lender confidence in the safety and durability of HUD-labeled homes.
Finally, I know you are interested in the regulations regarding Primary Inspection Agencies. It is our belief that the current regulations giving manufacturers complete discretion to hire and fire private Primary Inspection Agencies plainly discourages Primary Inspection Agencies from providing HUD with the compliance information it needs to properly enforce the standards.
That's why we've asked the industry to help us revise our regulations to make it easier for the agencies that we approve to do our primary inspections to report violations directly to HUD.
We need to do all of this and more. The nation needs to overcome the turbulence in the marketplace and get back on track for increased and sustainable homeownership. We need to put the housing market on a firm, solid foundation. And we do this, manufactured housing will be a large part of our response, now and in the future.
By working together, we can help bring stability to the housing market. Together, we can establish a firm foundation for the market now and in the years to come.
We can help people find the American Dream. And that is work worth doing.