Having just returned from the MHI (Manufactured Housing Institute) Annual Meeting yesterday I wanted to share some highlights of the meeting with you.
 
HUGE NEWS!  It appears that MHI will be merging with competing national association MHARR (Manufactured Housing Association for Regulatory Reform) and Danny Ghorbani will join MHI as a Vice President.  This unprecedented announcement, with most of the logistics yet to be worked out, marks a significant turning point for our industry.  Bringing the two associations together as a single, unified voice on Capitol Hill is a huge step in the right direction.  Kevin Clayton, President of Clayton Homes and Barry McCabe of Hometown America (MHI’s incoming Chairman) made the announcement during our Monday luncheon and the initial reaction in the room was positive.  Kevin credited Barry with being the catalyst that negotiated this merger.  MHARR is a manufacturer-backed group focused primarily on the implementation of the 2000 HUD Manufactured Housing Improvement Act.  On a personal note, the highlight of the MHI meeting for me was spending 30 minutes or so talking with Kevin Clayton on Monday evening.  For being arguably the most powerful person in our industry you couldn’t meet a more regular guy.  We had a great talk and he certainly won me over as his latest fan.  Thanks, Kevin for being to congenial toward me and my guests, Michelle Rossi, Kim Trounce and Paul Maley. 
 
The Government Relations Committee of MHI discussed at some length manufactured home community closures and its far-reaching affect on our industry.    A variety of responses/solutions were discussed, including the implementation of a national relocation fund for residents displaced by closures – and a nationwide need for replacement communities.  Interestingly, the community closure issue has become a major stumbling block in passing FHA Title 1 legislation.  Things were going smoothly in hearings until it came time for the testimony of one person affected by a “park” closure in her state.  This jogged the memories of a few committee members having recalled the fallout associated with closures in their states, resulting in tabling FHA Title 1 reform until the implication of closures was investigated in more detail.  It seems our government has serious concerns about the way we treat our customers, so they’ve asked the Senate Banking Committee to study the issue.  I did not know until that moment the magnitude closures have played in our reputation nationally, and the obstacle it could create in attracting better finance programs to our industry.  This is the perfect example of how these closures, if they continue to occur without addressing the needs of the displaced homeowners and underlying home lenders, may cause a further deterioration of home sales in land-lease and rental communities.  It’s a local, state and national issue and it’s not going away. 
 
FEMA and the Department of Homeland Security are dealing with the 10,000+ never-lived-in, brand new HUD-coded 3 bedroom 1 bath manufactured homes built as temporary housing for the victims of Hurricane Katrina.   The Department of Homeland Security Appropriations Bill includes language that will require the government to search for ways to donate unused “temporary FEMA units” prior to selling them to the public. This change will allow the nearly 10,000 temporary units that are currently stored in staging areas (primarily in Hope, Ark.) to be used to benefit the taxpayers who paid for them. The language overrides a Stafford Act provision that directed the government to attempt to sell the disaster relief housing to the public prior to donation. The new language requires all homes in current inventory to be disposed of through the General Services Administration (GSA). GSA regulations require that surplus and excess property must first be offered elsewhere within the parent agency (DHS/FEMA), then to other federal agencies, next to the states, local public agencies and public service organizations, and only after exhausting all of these avenues, the homes can then be sold to the public.   FEMA travel trailers are already being sold on eBay and our industry has serious concerns that a dumping of this product onto the market could have a disastrous effect on us.
 
You simply would not believe the stories surrounding these “temporary FEMA units.”  The homes were built to FEMA standards that are downright ugly, according to those who have toured them recently, and many are sunk in mud at a closed airport in Hope, Arkansas.  Some have mold, mildew and other moisture damage, many have been vandalized, and many industry experts agree the actual number of un-used homes in storage is closer to 16,000.  That’s over $1.4 Billion wasted tax dollars and thousands of hurricane victims remain homeless to this day.  Local governments refused to allow the homes to be used because they don’t allow manufactured homes in “flood areas” (I’m not making this stuff up folks) and in Mississippi alone over 90,000 people are still in travel trailers, needing better temporary housing, 13 months after the hurricane.  Don’t worry --- Congress has now appropriated another $480 Million to FEMA to cure the need for temporary and permanent affordable housing by asking FEMA to buy 7000 park models, ranging from 350 square feet in size (known affectionately as the Katrina Cottage), 704 square foot 2 bedroom 1 bath homes and 850 square foot 3 bedroom 1 bath homes, and they want to build “green homes” with solar panels.  FEMA wants these to be on-frame Modular homes, not HUD-coded homes and this recommendation is being pushed by Mississippi Governor Haley Barbour.  A very outspoken and obviously well-informed state association director from that area, whom I’m sure would prefer not to be quoted, said FEMA never asks our industry for ideas or input on building these homes with aesthetics pleasing to the eye or features the occupants can use that will make their stay more comfortable.  Instead, we have statistics showing an alarming rise in domestic abuse and other types of violence as these people try to live in cramped quarters and endure the never-ending struggle to survive.  The bottom line is that FEMA’s specs are terrible and local governments won’t allow the homes.  But the federal government continues to buy the homes and the local governments continue to keep them out.  The Mississippi Association went so far as to have a regional manufactured design a beautiful and aesthetically pleasing single section, front porch home that would come totally equipment with furniture, linens, kitchen ware, toiletries and everything else you need for immediate turn-key living but FEMA rejected the proposal and opted for their own specifications instead. 
 
The Government Relations Committee also discussed potential legislation capping Fannie Mae and Freddie Mac home loan portfolios, something the Republican majority is promoting.  The industry opposes this legislation and has added strong language to the bill stating they have a duty to serve our industry.  The administration has dug-in and insists on portfolio caps.  MHI said if the Democrats regain control of the house after this election cycle we will not see theses portfolio caps and we should have a Fannie Mae mortgage pilot program giving manufactured housing on real estate site built underwriting if we build a product much like NW Pride has proposed --- a product with the appearance (roof pitch and materials), community attributes and foundation comparable to site built.  They may even name the product something slightly different, such as a “residential manufactured home” as one committee member suggested.  These talks are in the most preliminary stages but mirror the forward-thinking discussions coming out of the NW Pride Committee (our Idaho, Oregon & Washington tri-state manufactured housing image enhancing advertising campaign) that have been widely touted in recent months. 
 
In other news…
 
I received an email on October 26, 2006 from Michael O’Brien at MHI regarding the ongoing sub-metering issue in MH Communities:
(click here to read the email)
 
We strongly support MHI’s stance on submetering and have volunteered our time and resources to get legislation passed that allows us to submeter public water to our residents.  Submetering always results in the significant conservation of water and it is the only fair and equitable way of spreading the cost of water usage to those who use it.
 
We continue to experience positive results in selling new manufactured homes in land-lease communities in Oregon and Washington.  We attribute this significant up-tick in business to two things: 1). The decline in repossessions being dumped on the market, which has helped restore resale values, and 2). The high cost of site built housing, making our homes more affordable than ever.  If you aren’t partnering with a local manufactured home retailer or manufacturer to attract new home buyers to your community you are missing a terrific business opportunity.
 
SAVE THE DATE!  Commonwealths’ 5th Annual Manufactured Housing Industry Summit is January 25, 2007 at the Red Lion Hotel on the River in Portland.  Come and hear Randy Rowe, Gub Mix and (tentatively) George Allen entertain and enlighten you with the latest news and information on the manufactured housing industry.

To Register, print and complete the registration form linked below, and mail to Commonwealth Real Estate Services along with your payment.

• Registration Form
  (Format: PDF, Pages: 1, File Size: 84 KB)

Greg Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101