2011 PUBLIC POLICY PRIORITIES

Transcription

1 2011 PUBLIC POLICY PRIORITIES 2111 Wilson Blvd., Suite 100 Arlington, VA 22201

2 MHI s NatIONal COMMuNIty COuNCIl The MHI National Communities Council (NCC) is the only national organization representing the interests of manufactured home community owners, operators, managers, developers, lenders and suppliers. The NCC serves its members by being an effective advocate for its members and this real estate asset class before public policy makers, the media and the general public. The NCC strives to improve the business climate for its members, increase professionalism within the industry and create more opportunities for the successful development and operation of land-lease communities. Members do business with members! The NCC is a leader it impacts the legislative and regulatory issues of importance to manufactured home communities. Since its inception the NCC has left its mark on a number of important community issues, including the Housing for Older Persons Act (HOPA); occupancy standards; satellite dish and antenna regulations; EPA water monitoring and reporting requirements; bankruptcy reform; mailbox regulations; electric utility restructuring; and private property rights. The NCC serves as a clearinghouse for information of interest to manufactured home community owners, managers and service providers. This information is provided through a weekly electronic update, as well as a quarterly industry e-newsletter called Community Connections. The NCC provides networking opportunities to exchange ideas and discuss issues of importance to your business with fellow community owners, managers as well as other industry members. NCC members are encouraged to attend and participate in MHI s national business meetings as well as the National Congress & Expo, held in Las Vegas each spring. The educational and social opportunities afforded by these meetings are invaluable.. FOR MORE INFORMATION ON THE NCC: Lisa Brechtel MHI National Communities Council lbrechtel@mfghome.org

3 S.A.F.E. Act Under the Secure and Fair Enforcement of Mortgage Licensing Act (SAFE Act), Congress did not intend to classify individuals performing administrative or clerical tasks as loan originators. The law specifically excludes those performing purely clerical tasks from being defined as a loan originator. Unless compensated by a lender, mortgage broker or loan originator, the law also does not consider those performing real estate brokerage activities and are registered/licensed under existing state law as loan originators (See section 1503(3); P.L ). While not directed by Congress, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) drafted a Model State Law (MSL) to assist states in enacting SAFE Act compliant laws. The MSL disregards legislative intent and removes the exclusion Congress intended for those performing administrative or clerical tasks. This has created substantial confusion among states in applying the SAFE Act to manufactured home salespersons and retailers, a majority of whom only perform purely administrative or clerical tasks during the home sales process. HUD s final SAFE Act rule formalizing its guidance awaits release from the Office of Management and Budget. The SAFE Act also establishes new mortgage loan originator definitions that conflict with pre-existing state law and imposes new limits on the industry s ability to provide seller carry back financing. Under the Dodd-Frank Act, the newly established Consumer Financial Protection Bureau (CFPB) will assume jurisdiction over the SAFE Act from HUD. The manufactured housing industry and the NCC fully support efforts to enhance consumer protection and promote responsible lending activities. However, confusing and contradictory treatment of mortgage originators at the federal level and lack of consistent standards in the treatment of mortgage finance products has the potential to create an unlevel playing field by penalizing those living in lower cost affordable manufactured homes over more expensive site-built housing. Legislative clarification and modification is necessary to assist states in properly and efficiently implementing the SAFE Act. MHI will continue to strongly pursue appropriate application of SAFE Act requirements.

4 Dodd-Frank Wall Street Reform And Consumer Protection Act The Dodd Frank Wall Street Reform and Consumer Protection Act (P.L ) is the most sweeping rewrite of rules governing banking and financial services in decades. It provides unprecedented authority to a new Bureau of Consumer Financial Protection (CFPB) to develop mortgage lending rules, including for manufactured home loans secured by personal property. The Act adds significant new requirements on residential mortgages, including limitations on origination activities, high cost mortgages and appraisals. While the CFPB will not officially assume regulatory control over housing finance issues until July 2011, administration officials are already in the process of drafting regulatory changes required by the Act. Unless Congress passes legislation reducing burdens the Act places on low and moderate income manufactured homeowners, the availability of credit in the manufactured housing marketplace will be substantially curtailed. MHI was successful in exempting, on a limited basis, manufactured and modular housing industry salespersons and retailers from the scope of the new agency if they are only: 1) acting as an agent or broker for a buyer or seller of a manufactured home or a modular home, or; 2) facilitating the purchase by a consumer of a manufactured home or modular home, by negotiating the purchase price or terms of the sales contract, not the financial arrangement. In late 2010, MHI established a Dodd-Frank Regulatory Reform Task Force. Sheila Dey, Executive Director of the Western MHC Association, and Ken Rishel, Director of Precision Capital Funding, currently serve as the NCC s representatives to MHI s task force. To ensure financing for manufactured housing remains affordable and available, Congress is urged to enact MHI/NCC supported legislation that will: Minimize burdensome high cost mortgage standards placed on manufactured homeowners ~ New high cost mortgage triggers in Dodd Frank restrict access to affordable manufactured housing financing for low to moderate income families. Reduce uncertainty in qualified mortgage guidelines ~ Dodd Frank defines the terms of a qualified mortgage, which are exempt from certain Dodd Frank requirements. CFPB s ability to rewrite rules without Congressional oversight coupled with vague guidelines forces the manufactured housing market to operate in an uncertain environment. Eliminate conflicting federal mortgage originator standards ~ Dodd Frank establishes new mortgage loan originator definitions that conflict with pre existing law and will cause significant confusion. Eliminate unrealistic methods for appraisal manufactured housing ~ Site built oriented appraisal requirements have little applicability to manufactured housing and ultimately penalize manufactured homeowners. Curtail potential prejudicial treatment of manufactured housing loan products ~ Manufactured housing is arbitrarily subjected to new regulations ill suited to the prevailing realities of the manufactured housing market.

5 Housing Finance Reform And Government-Sponsored Enterprises (GSEs) As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L ), in early 2011, the Administration released its recommendations on ending the conservatorship of Fannie Mae and Freddie Mac and reforming the housing finance system. For more than a decade, GSE support of manufactured home lending and finance has been limited. Even with strong Congressional guidance in the Housing and Economic Recovery Act of 2008 (HERA) which indicated the GSEs have a duty to serve the finance needs of the manufactured housing market little headway has been made to push GSEs into the business of establishing a secondary market for manufactured home loans secured by personal property. While it is unclear what system may ultimately replace the GSEs or when this may occur, MHI believes that any system private, public or public-private hybrid must fully and adequately serve the liquidity needs of the manufactured housing industry. MHI is committed to ensuring that manufactured housing loans, especially homes titled as personal property, receive the same opportunity to access capital and financing through securitization as their site-built counterparts. MHI will continue to actively work with Congress, the administration, and other external stakeholder groups at the national and grassroots level, to ensure manufactured housing is on a level playing field in any new housing finance system.

6 Carried Interest Taxation Many real estate investment funds or ventures are organized as limited partnerships. Investors typically serve as limited partners while general partners provide management and in some cases, capital. During the time that a real estate partnership s asset is held, a general partner would receive compensation and fees in the form of ordinary income. When assets are sold, however, the general partner would also receive a share of any profit, often called the carried interest, as capital gains income. The carried interest mechanism is viewed as an important tool or economic incentive for general partners, whose participation is essential in partnership structures. The real estate industry employs partnerships with carried interest on a wide variety of projects and investment ventures. Changing the tax treatment of carried interests would result in a significant tax increase for real estate partnerships President Obama s fiscal year 2010 budget proposal called for legislation to tax carried interest as ordinary income. Although this effort did not prevail, as Congress debates various tax and benefit extensions during budget considerations, those that are categorized as revenue generators continually remain vulnerable. MHI opposes any proposal that would eliminate capital gains treatment for any carried interest of a real estate partnership. MHI will continue to work with other real estate industry groups to protect and promote the value of real estate investment

7 FHA 207(m) Program Reform The FHA 207m program was designed for the development or rehabilitation of manufactured home communities, one of the most affordable housing options for millions of Americans. Financing for new communities can be very challenging, while many are also in need of financing for substantial rehabilitation. The 207m program is not a direct loan program. Rather, it is a mortgage insurance program that allows community owners and developers to obtain financing for their renewal project from approved HUD lenders by first obtaining mortgage insurance. Every year, thousands of manufactured home communities undertake substantial rehabilitation projects that would be eligible for insurance under the 207m program, yet FHA has not shown any inclination toward modernizing the program to make it more competitive in the marketplace. MHI/NCC strongly supports updating and modernizing FHA s 207(m) program to make it more competitive in the marketplace and fulfill its mission of supporting affordable housing.

8 Industry Fire Sprinkler Standard HUD is of the position that fire sprinklers are not preempted by the HUD code. MHI s TAC Committee, in response to a resolution passed in 2009 by the MHI Manufactured Housing Division, developed a proposed where required fire sprinkler standard for inclusion in the HUD code to be used in those states and local jurisdictions that require fire sprinklers in new single family homes. HUD has also proposed similar where required fire sprinkler standards. The MHI fire sprinklers proposal is pending before the Manufactured Housing Consensus Committee (MHCC). The MHCC, during its October 2010 meeting, voted to request HUD to revisit its position. It has taken the position since at least the 1990 s that fire sprinklers are not preempted by the HUD code. It also voted that the fire sprinkler proposal be sent to the Technical Structure and Design Committee for review, research and recommendation within one year. MHI has urged HUD to act expeditiously on whether it will change its position on preemption. In the meantime, MHI will continue to work with the MHCC to seek adoption of the MHI where required sprinkler provision, and to support the state manufactured housing associations that are working to keep sprinkler mandates from being required for all single family housing.

9 Section 8 Voucher Reform Currently, under Section 8 of the United States Housing Act of 1937, rental assistance payments in the form of vouchers may be used to assist certain owners of manufactured homes who rent the lots on which their homes are located. The ability of low- and moderate-income manufactured homeowners to fully access this program and benefit from federal assistance is limited by the current restrictions. MHI supports the use of the Section 8 voucher for the full cost of purchasing a manufactured home sited on leased land, by permitting funds to be used for both the cost of leasing the land, and for the monthly home purchase costs including property taxes, insurance, and tenant-paid utilities.