A recent opinion piece by Doug Ryan of the Corporation for Enterprise Development called for increasing financing options for manufactured housing. Yet he also made erroneous claims about the manufactured housing industry that need to be corrected.
For the record, the Manufactured Housing Institute has been leading the campaign to bring more lenders into the manufactured housing market for years. Since the housing crisis, MHI has advanced a comprehensive plan to address the availability of credit for manufactured home buyers. That includes slight adjustments to Consumer Financial Protection Bureau rules, as well as engagement both with the Federal Housing Administration to make sure its manufactured housing programs are workable, and with the Federal Housing Finance Agency and government-sponsored enterprises to foster a secondary market for "chattel" loans.
Those interested in solving the affordable housing challenges our country faces should come together to ensure financing is available for manufactured housing. But Ryan's attacks on MHI and one of its members, Clayton Homes, don't square with the facts. He argued that Clayton Homes effectively has a monopoly over the manufactured housing market. He also suggested that MHI is trying to protect this one company. But neither is the case. As the recently released 2015 Berkshire Hathaway Shareholder letter states, only 35% of manufactured homes are financed by Clayton's lenders. (Clayton Homes is a Berkshire Hathaway subsidiary.) This is hardly a monopoly. In addition, there are 39 members of MHI's Financial Services Division that direct the actions of the trade association when it comes to advocacy about financial services issues. Under no standard could this be considered a monopoly.
Any cursory examination of the facts and the record challenges Ryan's claim of MHI supporting anticompetitive practices. Indeed the record shows that Ryan and MHI's goals are often aligned. MHI's congressional testimony, advocacy on Capitol Hill and meetings with regulators demonstrate clearly to any unbiased observer that out top priority has been to increase the number of lenders offering financing for manufactured homes. Our members support that effort as well.
One key area of agreement between Ryan and the manufactured housing industry is that financing is at a pricing disadvantage to site-built housing because of a lack of secondary market support. Facilitating access to the secondary market, especially for chattel loans, would expand access to credit across the manufactured housing spectrum. MHI supports sound underwriting guidelines and robust protections for both consumers and tenants so that a secondary market for chattel loans can be safely developed.
Ryan's op-ed said MHI has "been unwilling to criticize the exclusion of chattel loans from" the recent FHFA proposal meant to increase Fannie Mae and Freddie Mac involvement with certain underserved markets, including manufactured housing. But we have actively supported chattel lending being included in the FHFA plan. MHI's public comment letter to FHFA during the last Duty-to-Serve rulemaking focused on the importance of Fannie and Freddie committing more resources to increasing the supply and affordability of manufactured housing, particularly through a commitment to purchase chattel loans.
More recently, there have been numerous articles about MHI's strong support for the inclusion of chattel lending in the rule. What's more, Ryan himself participated in an ongoing dialogue with FHFA, MHI and other interested parties about the importance of including chattel lending in the Duty-to-Serve rule. He knows a strong chattel requirement in Duty-to-Serve is a top MHI priority, and his op-ed indicated support for a Fannie and Freddie pilot program to include chattel loans.
Where we disagree with Ryan on a path forward is his support for state titling reforms to recognize manufactured homes as real estate, which he argues would more readily qualify them for GSE support. But there are compelling reasons why borrowers should not have to convert their homes to be titled as real property. This can carry significant costs, whereas a secondary market for chattel lending would respect the rights of consumers who often choose not to retitle their property.
MHI wants to expand access to financing for manufactured housing and increase the number of lenders that offer such financing. It is time that we all work collaboratively toward constructive and actionable solutions.
Lesli McCollum Gooch, Ph.D., is the senior vice president for government affairs and chief lobbyist for the Manufactured Housing Institute, the national trade organization representing all segments of the factory-built housing industry.