Manufactured Housing: Efforts Needed to Enhance Program Effectiveness and Ensure Funding Stability

In response to this recommendation, as of March 2018, HUD awarded a new administering organization of the Manufactured Housing Consensus Committee (MHCC) in June 2014. Although MHCC has held in-person, teleconference, and subcommittee meetings in 2015 and 2016 and has some planned for 2018, updates to construction and safety standards have continued to not be done in a timely manner. However, HUD officials outlined recent steps to develop a plan to implement more timely changes. First, HUD has included an option in its contract with the administering organization to conduct economic analyses for proposed changes, when deemed helpful by HUD. Second, HUD officials stated they have engaged in efforts to streamline the regulatory process for manufactured home construction and safety standards by exploring the possibility of implementing an expedited approval process within HUD. Third, as part of the overall HUD effort to review regulations, officials stated that they are currently conducting a review of current and planned federal regulations for manufactured housing with the goal to facilitate the affordability of manufactured housing and to promote durable, safe, and cost effective construction techniques for manufactured homes. Fourth, in response to Executive Order 13771 on "Reducing Regulation and Controlling Regulatory Costs,'' and Executive Order 13777 entitled, ''Enforcing the Regulatory Reform Agenda," HUD sought public comment in January 2018 to determine outdated, ineffective, or excessively burdensome regulations related to the manufactured housing program. The comment period ended in February 2018. HUD received approximately 151 comments, which are currently under review. HUD does not anticipate moving forward with any manufactured housing regulations until it completes its review. By taking steps to develop and implement a plan for updating manufactured home construction and safety standards, HUD can begin to address needed updates in a timely manner.

As of June 2023, HUD has implemented this recommendation. Since we made this recommendation, HUD has taken steps to assess how FHA financing might further promote the affordability of manufactured homes and identify the potential for better securitization of manufactured housing financing. More specifically, according to officials, HUD offices, including FHA and Ginnie Mae, have met to discuss financing options for manufactured housing. In November 2021, HUD consolidated its Title I policy guidance into its single-family handbook to make it easier for lenders to understand and use the program and also expanded eligibility requirements to make them consistent with those for mortgage financing. In October 2022, HUD issued a proposed rule to annually adjust Title I loan limits using an indexing methodology based on sale prices, number of sections of a manufactured home, and census property data, which the Housing and Economic Recovery Act of 2008 requires. HUD also took steps to identify how Ginnie Mae may provide manufactured housing mortgage-backed securities in the secondary market for Title I personal property loans and mortgages for manufactured homes as a way to promote the availability of affordable manufactured homes. In July 2022, FHA and Ginnie Mae issued a request for input on the Title I program and corresponding securitization requirements in Ginnie Mae's mortgage-backed securities guide to encourage increased lender participation and enhance the programs' effectiveness. According to Ginnie Mae officials, since the release of the HUD 2022-2026 Strategic Plan in March 2022, Ginnie Mae has coordinated with FHA to explore policy and program enhancements for manufactured housing with a focus on personal property loan lending. As of June 2023, HUD officials also told us they were exploring options to add a new financing program for manufactured housing communities. By taking these steps, HUD has developed a plan which assesses the roles of FHA and Ginnie Mae in manufactured housing financing and ways to further promote financing and a secondary market for these homes.

HUD has taken the following steps to address this recommendation. First, the Office of Manufactured Housing Programs maintains that it has significantly increased its diligence in its oversight of inspections and enforcement-related activity. HUD states that its Office of Manufactured Housing Programs has created master logs tracking various inspection and enforcement-related activity and the office has taken follow-up actions to resolve recommendations from completed audits, and ensure documentation of enforcement outcomes. These logs track program actions related to inspection findings, which helps to identify systemic issues and other production-related issues by manufacturers, according to HUD. By taking steps to strengthen the oversight of inspections and enforcement-related activities, HUD is helping to ensure that issues identified during the inspection and enforcement processes are being resolved and that federal construction and safety standards for manufactured homes are uniformly and effectively applied. Second, HUD reported that it accepted and approved a Transition Plan from its monitoring contractor providing inspection services. As we reported in July 2014, HUD's monitoring contractor for the Manufactured Housing Program did not provide a required deliverable, a Transition Plan, for the completed contract period from July 2011 through July 2012. The Transition Plan was intended to provide a plan for transferring all data and property associated with the contract to HUD or to a new contractor should HUD decide to assume the activities of the contract or transfer them to another contractor. After sending a draft of our report to the agency for comment, HUD accepted a Transition Plan from its monitoring contractor in May 2014. Although the plan was provided after the contract period, a completed transition plan helps to strengthen the oversight of inspections and enforcement-related activities by outlining provisions for sufficient staffing, transition of data and records, and transition of contracted services. Third, HUD stated that the Office of Manufactured Housing Programs has developed and implemented a tracking log to collect and evaluate information on the content of complaints received and to ensure prompt follow through to address or resolve the complaint issues. HUD provided copies of these logs. Moreover, HUD explained that less than 10 percent of manufactured home production occurs in the 15 states in which it has jurisdiction, which impacts the complaint volume that HUD receives directly. HUD further explained that 35 states have state-approved administrative entities that are responsible for conducting periodic checks on manufactured home plant records and managing and processing complaints in these states. HUD is only notified of complaints in these states if a serious defect or imminent safety hazard is involved or if manufactured home plants in more than one state are involved. By implementing a systemic complaint log, HUD has taken steps to assess the quality of performance over time, including identifying and correcting deficiencies within established timeframes.

On August 13, 2014, the Department of Housing and Urban Development (HUD) published a final rule that increased its revenues for the Program by implementing a user fee increase from $39 per manufactured home unit to approximately $100 per unit. The final rule became effective in September 2014. As of March 2018, HUD stated the label fee is adequately funding the program within congressionally authorized and appropriated levels. Further, HUD maintains that the label fee is reviewed by the Office of Manufactured Housing Programs on a regular basis to ensure that label fee revenue can continue to adequately fund the program.

As of September 2023, HUD has implemented this recommendation, HUD stated that the Office of Manufactured Housing Programs continues to implement both the installation and dispute resolution programs in the default states with the technical assistance of contractors for both programs. The installation and dispute resolution programs are continuing to mature. Officials stated in its assessment of these programs since these programs have been implemented, there is no need to establish user fees for these programs. More specifically, for the dispute resolution program, officials explained the average intake of possible dispute resolution cases in HUD-administered states is 10 per year. Given the low number of dispute requests that have been received, HUD stated it was concerned that establishing user fees may decrease user participation which would have a significant negative effect on the utility of the program which is already very limited. Moreover, officials stated the user fee revenue that could result from implementing user fees are not likely to offset the costs of the program due to the low case intake. For the installation program, HUD issues an average of 95 licenses per year. These licenses are needed in 14 default states where HUD implements the federal installation program. Officials explained that the relatively low incomes of installers make it difficult for these entities to have to pay additional fees for the ability to do business or provide consumer protection and/or installation. HUD remains concerned that establishing a user fee in addition to other required costs, such as training and insurance/surety bonds, may inhibit submission of license applications and suppress the expansion of the field. For both programs, the user fee revenue that could result from implementing these fees are not likely to offset the costs of the program and the certification label fees collected from manufacturers is adequate to fund all contracts and cooperative agreement grants to states that are necessary for implementation of the full scope of HUD's manufactured housing programs, including dispute resolution and installation. HUD plans to continue to monitor data for both these programs, including increased usage, and will reconsider the need for establishing user fees, if warranted. By reviewing the implementation of these programs, including usage and cost, after changes made to its label fees, HUD has assessed the feasibility of putting in place user fees for its dispute resolution and installation.

As of September 2023, HUD has implemented this recommendation. Since we made this recommendation, HUD has developed a policy framework and management strategy to guide the manufactured housing fee trust fund. The document provides historical industry trends for manufactured housing, a review of the manufactured housing program economic needs, and proposed policy framework and management strategy.More specifically, according to the document, HUD Reserve Policy Framework and Management Strategy (as of May 2023) will apply for both the Manufactured Housing Trust Fund balance and the budget carryover to help ensure the long-term financial stability of the fee-funded program. The strategy aims to maintain the trust fund in a self-funded status and allow HUD to respond to varying economic conditions. The framework also establishes goals to ensure accountability with a minimum at $3 million, maximum at $6 million and a target of $4 million. The strategy also outlines possible approaches should the goals not be met, such as seeking a budget appropriation increase or begin the process to increase the label fee rate. HUD plans to monitor and report the reserve level trends semi-annually to HUD leadership. By setting clear goals for the reserve of Manufactured Housing Fees Trust and outlining how those reserves will be used, HUD has begun to ensure greater accountability and transparency to both Congress and users of the fee-based programs.