Consumer Analysis of Senate Bill S.1452
May 6, 2000

Remember first that this is industry-sponsored legislation. This is the fourth time the industry has advanced such legislation in the last eleven years. When the Heiler Amendment of 1989 was defeated, Congress directed a National Commission of Manufactured Housing. They spent a few million dollars on this deal and the industry decided that they did not like the outcome and walked away from the final report in 1994 and there were no consequences to them for walking away. Everytime the industry gets a chance they re-introduced this same Bill except to amend it to counter any recent successful efforts to enforce the Act by Government Authorities. The industry got their act together this time and united the MHARR (Manufactured Housing Association for Regulatory Reform) and the MHI (Manufactured Housing Institute) both industry lobbying organizations and to help this legislation along they spent 100’s of thousands of dollars to finance this effort with various members of Congress.

AARP has tried to amend the legislation through negotiations with the industry and congressional staff. Some of us have already discovered that you can not negotiate with this industry and any ground given by the industry is only in areas that do not effect their main objectives. The major problem is due to the complexity of this program it is hard for anyone to successfully argue with the well-informed industry. Those who do have the ability to debate the issues have been silenced by the industry through use of the industry’s political influence and money.

HUD Secretary Cumo and Assistant Secretary/FHA Commissioner Bill Apgar initially expressed concerns over this legislation but in the gave in to industry pressure in addition to other motivations and blessed off on this legislation in spite of strong opposition from other organizations.

The original intent of Congress when they enacted this legislation in 1974 was to insure that the first purchaser of a HUD-code manufactured home receives at occupancy a home that conforms to HUD standards and presents no safety hazards to the homeowner and those who live around manufactured homes. Many of us that have reviewed and studied the FMHCSS are aware that the current ACT embodies the language to make this program work and its failure is not the result of the law but is due to inconsistent, non-existent and improper implementation and enforcement of the regulations.

The facts have been manipulated by the industry to make it appear as if it is the ACT itself that lacks the structure to work. The truth is that the industry has used its political know how and money to apply pressure on HUD and Congress on the National level and in several key States to keep the program in a state of confusion and off-balance. COSAA had made some head way with educating all of the participating SAA’s on knowing and understanding the program. All this did was increase the industry’s effort to change the law to legitimize the current state of affairs and undo any headway made by organizations in the enforcement of the current regulations.

Here are some of the arguments that the industry is using to cover up what their real objective is and this is to take control of the National Manufactured Housing Program.

There is a need for a consensus committee

This may be needed but you don’t need this legislation to do this. HUD to perform this role sanctions the NFPA and the NFPA has processes in place to meet ANSI criteria or has produced extensive work over the last 2-3 years to update the HUD-code. The May 2000 report by NFPA consists of 707 pages of thoroughly documented amendments. HUD is already obligated by Public law 104-113, National Technology Transfer Act of 1995, as incorporated into OMB Circular A-1 19 to utilize standards developed by the private sector whenever possible. This legislation is not needed to accomplish this goal. HUD has done its job in this area.

There is a need to allow Monitoring Inspection fees to be used to fund additional HUD staff

This legislation is needed to allow Monitoring Inspection (label) fees to be utilized to fund additional/adequate HUD staff and to fund activities related to promulgation (proliferation, spread) of standards. This is not accurate, monitoring inspection/label fees may be utilized to fund inspection related activities and miscellaneous activities involving the performance of inspection related activities and in general inspections and investigations as may be necessary to PROMULGATE or enforce the Federal Standards established under this Title. This covers everything unless there is some spurious reason that a narrower interpretation is needed.

This will allow HUD to impose fees in States with SAA programs that are imposed by States for monitoring and labeling fees and make them Federal Fees. This will significantly change the role of the States beyond dollars in this program.

There is a need to strengthen National Preemption

This would only be true if the ACT was under constant challenge, this is not the case, and there have been few challenges to it. One could argue that this legislation actually weakens national preemption by diluting the public exigency purpose to improve safety, quality, and durability and by putting AFFORDABILITY at the front of the objectives WITHOUT DEFINING IT. It also eliminates the words HIGHEST STANDARDS OF PROTECTION, taking into account existing State and Local Laws relating to manufactured home safety and construction, which has been the basis to uphold preemption n a previous legal challenge.

This legislation is needed to allow for unfettered industry innovation.

How in the world does a PERFORMANCE CODE of this nature prevent innovation. Nothing in the ACT sets specific building techniques, all it does is set minimum performance standards. The ALTERNATE CONSTRUCTION PROCESS allows homes to be built not in conformance with the code as long as the manufacturer can show that an equal or superior performance to the code can be achieved. The industry’s own publication, The Manufactured Housing Journal published an article where they said that Manufacturers can introduce new design improvements within months, new safety devices within days and customized alterations within hours of the home heading down the line. MHI Director, Chris Stinebert said that this industry is totally unique in this aspect and the Journal agreed

This legislation is needed to require installation standards by each State or by HUD

Every state has the authority, concurrent with HUD to enforce the HUD-Code, The Manufactured Home Construction and Safety Standards. The Act and regulations have always provided that no home may be sold, offered for sale or delivered if it did not in every aspect conform to the federal standards. The sale is not complete until the goods and services, including setup or onsite completion if it was part of the contract and it normally is, are delivered. Each SAA State has the right of opting out of enforcing the federal standards on-site, HUD does not! The Pennsylvania plan to enforce the standards on site concurrent with HUD was approved by HUD. Every State has the option to use this approach and regardless of whether or not they do, No State law can violate the Federal law. The HUD-code has always required that a home meets the standards at the completion of the sale to the first purchaser and therefor HUD has always been responsible. Both HUD and the industry have purposely ignored this tenet over the years. Some in the industry have actively sought to undo the Pennsylvania approach because of its obvious implications for easy enforcement of the standards and the industry’s desire to remove responsibility from self for the product that it produces. There has always been a NATIONAL SETUP STANDARD, it has just has been ignored.

The code needs to be modernized

The HUD code is a performance code and this is clearly stated in the ACT where it says SEEKS TO THE MAXIMUM EXTENT POSSIBLE TO ESTABLISH PERFORMANCE STANDARDS. This is tied to another section of the ACT with ASSESMENT OF PERFORMANCE under manufacturer record keeping. What defines a failure to conform to the standards is a home that has a defect in the performance of the home, or any part thereof so as not to be fit for the ordinary use for which it was intended. How do you modernize this, I don’t know? The only problem that most of us have experienced is getting anyone to enforce the regulations and this is not the fault of the code. The current ACT provides the necessary tools to insure that a homebuyer at the completion of the sale has a home, including delivery and setup that conforms to the standards.

This legislation should require warranties.

This is assuming the industry will honor warranties, to this date they do everything in their power to void the warranty through a variety of deceptive acts, which includes the use of State generic standards for the installation of a manufactured home. You would also have to assume that a manufacturer that allows homes to leave the plant with obvious defects would be willing to repair these defects at a later date when it is more expensive to repair. You will also have to assume that the consumer has Xray vision and various degrees in Engineering so that they can visually detect defects hidden behind cosmetic enclosures and determine if such is actually a defect of a serious nature. A homeowner will not recognize most defects of a structural or electrical nature as a serious problem until long after the warranty has expired. This in combination with the industry efforts to void warranties through a variety of techniques makes warranties less than favorable for consideration as part of the solution to assuring that the consumer gets a home that meets the Federal Standards. However under the conditions of this proposed legislation should it pass this would be the SINGLE consumer protection offered in this legislation and would be better than none at all.

The performance nature of the code and the requirement for manufacturer to forever assess and make determination with regard to notification and or correction should allow warranties to be a sales incentive and not a requirement. The assessment by the manufactures is almost non-existent and the enforcement by HUD and many SAA’s has been lacking. The assessment process has been targeted by the industry to be eliminated once the NEW consensus process deals with the procedural and enforcement regulations. The mechanisms in-place today can work better than warranties if the industry would stop undermining the program and the Government would enforce the Standards. There are no provisions contained in the final mark-up of this legislation that will require warranties to be provided to the consumer by the manufacturer, retailer, or installer. Compliance with warranties will remain at the option of the manufacturer, retailer, and installer and there will be no consequences under the Federal Program for failure to honor warranties.

There is a need for dispute resolution

This sounds good except for one thing, if the code was followed by the industry and enforced by HUD and the SAA you would not have disputes that need settling. The industry will use this as an opportunity to incorporate an arbitration process similar to the private sector into this government program. Arbitration Agreements currently used are under constant legal challenge and the industry is unable to rely on them in the long term to prevent homebuyers from taking legal action against the manufacturer. Under the Pennsylvania plan there is no disputes since the manufacturer is primarily and ultimately responsible for the home it manufactures, designs and certifies as conforming to the federal standards.

This product has been misrepresented to the American home buying public. The program lacks accountability and effectiveness and has resulted in few consequences for HUD, State or industry and has resulted in many negative consequences for the people who purchase this housing. If the durability and ease of maintenance and use are not considered in the equation for affordability over time, the consumer of this product will and does end up with a home that is more expensive per month than any other type of housing.

The following language contained in the proposed Act under Dispute Resolution could easily be used to limit warranties regardless of the purpose to a period not to exceed 1 year. "Disputes between manufacturers, retailers, and installers of manufactured homes regarding responsibility for the correction or repair of defects in manufactured homes that are reported during the 1-year period beginning on the date of installation".

This legislation will weaken the Program and this is the industry’s intent and undermining of the current law was part of the industry’s long running plan to make this program ineffective and pave the way for allowing the industry drafted version of this Act to be passed into law. This industry plan has caused grave emotional and financial damage to many manufactured homeowners for no other reason than their desire to take control of the federal program and if this bill is passed into law things will get even worse for consumers and this abuse will be legitimized.

TITLE

To MODERNIZE assumes that the ACT is out of date. This is a performance code and would be difficult to modernize. Maybe what is meant by modernize is that the program is designed with too much emphasis on consumer safety and the durability of product. It would be better if the program has too much emphasis on the industry’s objective to maximize profits at all costs no matter what devastation it causes to the consumer of its product. The HUD-code program fails the consumer not because it is out of date, with respect to structure, standard, law, or regulation, but because of government’s inability to carry out the ACT as envisioned by Congress in 1974. The industry has used its strength to resist and exert pressure on the political process. This legislation will only legitimize the current state of affairs. This legislation does nothing to fix what is broken and the problems will only get worse for the consumers of this product if it passes.

The consensus process outlined in the bill is not balanced, even though the bill makes it appear that it is. This process has been tied to the AFFORDABILITY as the main purpose and ties HUD’s hands from being able to enforce the regulations. This may sound good on the surface where HUD is concerned but the truth is that if we forever tie HUD’s hands and a Secretary is appointed that would have enforced the standards and laws, they will be unable to do so because of this consensus process. HUD will have to allow the consensus/code committee to interpret the standards and it is unheard of to allow an outside body to interpret the code/regulations.

The Title does not accurately describe the scope of this legislation. Not only does this legislation address development, revision and interpretation of Federal Construction and Safety Standards but it also and most significantly has the same coverage regarding the procedural and enforcement of regulations and any statement of policies or implementation of the program. You might as well call HUD a figurehead under this proposed legislation and this legislation will be used to legitimize the delays in a program that already in late in most of its efforts.

The short title Manufactured Housing Improvement Act only describes the effect that this bill will have for the industry and may even be somewhat better for HUD but it is anything but an improvement for homebuyers. This legislation restricts, diverts, deletes and controls by a series of definitions, omissions and clever intricate procedures, which will hinder any reasonable attempts to regulate and seizes government discretion unnecessarily. Part of HUD’s problem is a shortage of staff but it is not the place of a legislative branch to undermine executive agency control over what is appropriate staffing. While it is true that HUD is slow to react this is not entirely HUD’s fault. Every meaningful initiative by HUD has been met with stiff industry opposition causing delays in these initiatives, which included the 1994 HUD initiatives for revising the wind standards and energy standards.

FINDINGS AND PURPOSE

The current purpose of the Act speaks to public exigency and the effort to improve the quality and durability of manufactured homes. This is the public purpose, which supports the notion of a national preemptive construction code that binds every local official in America and its territories. Even though those words are still mentioned the context has been radically changed and diluted by FACILITATION, ACCEPTANCE, AND AFFORDABILITY. There remains of need to improve the quality and durability. To promote manufactured housing within HUD or to the public generally by HUD or by Congress is an inappropriate government incursion into the market place. The current standards seek to the maximum extent possible to establish performance requirements. This legislation would weaken the requirement by providing for PRACTICAL and to the EXTENT POSSIBLE performance based standards. Finally regulators would be bound in their enforcement actions to ensure the public interest and need for AFFORDABLE manufactured housing is duly considered. Does this mean if it costs something to assure a home conforms to the Federal Standards they may not have the authority of enforce? If AFFORDABILITY is to be a criteria to judge the adequacy of a standard then it must be defined. It should include not only first cost but assure that a consumer is getting a home that is durable and has a low operating and maintenance cost, not to mention costs of financing and lot rental. The fact is that many homeowners find themselves strapped to a home that is the LEAST AFFORDABLE HOUSING because of high maintenance and operating costs.

DEFINITIONS

The UNITARY consensus standards body/process language "which functions as a SINGLE COMMITTEE" seems aimed at eliminating the work and preferred status of NFPA that has been operating as a balanced, but tiered structure-HUD-sanctioned standards development body since 1994. This seems without merit and counterproductive.

Defining PRIMARY INSPECTION AGENCY, DESIGN APPROVAL PRIMARY INSPECTION AGENCY and PRODUCTION INSPECTION PRIMARY INSPECTION AGENCY in this Act without further reference to them in the Act seems to defy reasoning and purpose. This is the only legislation that I have reviewed that defines any term without using them no where else within the legislation. These are currently defined in the Act because they are used elsewhere in the Act. The definition of Production Inspection Primary Inspection agency proposed is change significantly from the current definition in the regulation deleting AND PROVIDES ON GOING SURVEILLANCE OF THE MANUFACTURING PROCESS. This is currently a major and important function. Why is it deleted?

MONITORING is not currently defined in the Act or the regulations and has been used in a broad sense by HUD and State oversight activities in all areas of enforcement of the federal standards. This includes all primary inspection agencies, design and production inspection, manufacturers for record keeping and remedial action, retailers for transit damage, seal tampering and dealer performance in general and at any time to follow-up investigations, all parties for installation of homes, and finally HUD monitoring of States (SAAs).

The definition of MONITORING in this bill severely restricts the reach of MONITORING as it is currently done. First it deletes monitoring of manufacturers for record keeping (Subpart I and remedial actions) which is the measurement of performance in this performance code. Without monitoring Subpart I, the program could not exist and the legitimacy of the HUD-code is compromised and performance of the home will go unconfirmed. THIS WILL BE A SERIOUS DEGREDATION OF CONSUMER PROTECTION. It is however one of three written national industry (MHARR/Coalition) objectives to lessen the impact of record keeping to asses home performance. This legislation will accomplish this objective.

Second, this definition will be used to set conditions for monitoring of the primary inspection agencies by REGULATIONS TO BE RECOMMENDED BY THE (proposed) CONSENSUS COMMITTEE and promulgated by the NEW section 604(b). Everything in this bill is further to take effect on the date of enactment of this Act. These provisions could effectively stop monitoring of primary inspection agencies by States (Pennsylvania is currently the only state to have chosen to do this in their state plan) and by HUD until the new process can recommend new regulations to be established by the new process. This will severely undermine consumer protection and the ability of these agencies to assure conforming homes for consumers. The use of the word PERIODIC opens the way to less monitoring than the current process, which allows whatever, is necessary to accomplish effective enforcement of the federal standards. This definition could easily be used to omit inspections of retail l ocations as part of an investigation of a particular manufacturer or defect.

The most significant effect of this definition is to exclude reference to MOITORING OF PROPER INSTALLATION/ON-SITE COMPLETION as stated in the current regulations. Pennsylvania adopted this approach under their State plan to enforce the standards through completion of the sale to the first purchaser. This in 2 of 3 of the written national industry (MHARR/Coalition) objects to stop the Pennsylvania approach to monitoring on-site completion consistent with the federal standards. This definition in itself may not accomplish this objective but other aspects of this legislation when combined with this definition will surely stop this innovative and practical plan to enforce the federal standards through the completion of the sale to the first purchaser.

Current monitoring of SAAs by HUD in not included in this definition, which begs direction for the future of the federal/state partnership.

FEDERAL STANDARDS/DEVELOPMENT PROCESS

The current Act requires that federal standards meet the HIGHEST standards of protection taking into account existing State and local laws related to manufactured housing home SAFETY and construction. This has been changed to meet HIGH standards of protection consistent with the enumerated purpose of this title (this means that only what is spelled out in the title applies and excludes state or local laws that relate to the safety and construction of manufactured housing).

The current language is at the heart of the justification for national preemption. The courts have referred to this section to conclude that there is no room left for State or Local standard addressing the same problem. This change will weaken national preemption because it will leave room (the difference between highest and high) and it drops the connection to State and local laws. The new language also ties the adequacy of the federal standards to the Purposes of this Title discussed under number 2. Given those conditions this proposed Act could easily gravitate to the AFFORDABILITY side of the equation leaving safety, durability, and quality secondary to affordability.

The current standards seek to THE MAXIMUM EXTENT POSSIBLE to establish performance requirements. This coupled with assessment of performance under manufacturer record keeping/subpart I has been the consumer’s main guarantee of receiving a conforming home. The new language is modified in 2. Purpose TO THE EXTENT POSSIBLE PERFORMANCE BASED. This is a purposeful withdrawal from the maximum emphasis on performance. The new interim and competitively procured consensus agency will interpret the procedural and enforcement regulations and the PERMISSIBLE SCOPE AND CONDUCT OF MONITORING. This will be a severe restriction of government regulatory authority and will change everything. The major objective of this legislation seems to be aimed at restricting and defining monitoring. No State or Local code enforcement authority nationally relinquishes their rule of enforcement of regulations and interpretation to an outside agency. Such a policy violates all known perceptions of responsible government.

CONSENSUS COMMITTEE COMPOSITION

The proposed 5 interest categories will NOT achieve a BALANCED composition. The industry is always the strongest most informed and most influential group on this subject. ANSI interest categories have been substantially MODIFIED. The industry interest will surely dominate this committee.

SIGNIFICANT financial interest/relationship with reference to industry is NOT DEFINED. No relationship or financial interest would be more appropriate especially in light of the inapplicability of the ETHIC IN GOVERNMENT ACT and THE ADVISORY COUNCIL ACT. The proposed amendment by Committee mark-up significantly improves the composition but not completely

STANDARDS, REGULATIONS, REVISION AND PROMULGATION PROCESS

While it is true that HUD will have the final say this process is comparable to HUD being bound and gagged, but able to nod their head for concurrence or rejection. The process has unrealistic time frames for HUD review and is bias in favor of movement at all costs severely limits HUD’s discretion and initiative, and puts the consensus committee in the DRIVERS SEAT. Taken literally this process is an indictment of HUD as being incapable and incompetent to perform any meaningful function as the federal agency charged to carry out this Program? It is not HUD as an agency that makes this program ineffective but a combination of industry influence and the current administration of HUD willingness to go along with the industry objectives and an unwillingness to enforce the laws that cause this program to be ineffective. Until recent years HUD has performed its function as superintendent in an adequate fashion. This legislation would reduce HUD’s role to ceremonial and stops short of solutions. The proposed process will reduce HUD to a FIGURE HEAD status and destroy the Federal/State partnership envisioned by Congress in 1974.

Allowing the Consensus Committee process that will surely be dominated by the industry to deal with and formulate the procedural and enforcement regulations, permissible scope and conduct of monitoring and CHANGES and reducing HUD’s role in this process to a nothing more than a figure head status is unconscionable and should be the largest RED FLAG of this debate. This also just happens to be number 3 of 3 national industry (MHARR/Coalition) objectives TO RESTRICT HUD’s ABILITY TO DO ANYTHING IN THE PROGRAM SHORT OF RULE MAKING.

NATIONAL PREEMPTION

Even though this legislation decrees that federal preemption shall be broadly and liberally construed, it will have no effect in local governments nationwide without significant improvement in home performance. The legal concept of National Preemption is already strong. It will take more involvement of States to advance the concept, but in reality this product will continue to be rejected locally until the Program can more consistently assure that each new home performs to federal standards. As mentioned earlier this legislation will actually weaken National Preemption by first diluting the public necessity purpose of this program with AFFORDABILITY (NOT DEFINED) and ACCEPTANCE and by dropping the requirement for standards to meet from the HIGHEST standards of protection, taking into account existing State and local laws relating to manufactured home safety and construction. Until these homes consistently meet federal standards for construction and PERFORMANCE to meet the needs of the public including the need for quality, durability, and safety, National Preemption will be ignored and challenged by many.

INSTALLATION STANDARDS

The RESERVED TO EACH STATE approach on installation effectively precludes any federal involvement/authority in this matter and could cloud the enforcement of the federal standards under the state plan link to the federal program. This meets 1 of 3 top national industry (MHARR/Coalition) objectives, to stop the Pennsylvania approach. The current program assures the first purchaser of a new manufactured home, that the home will perform to the federal construction and safety standards (24 CFR 3280), many which can not be made to conform until the home is completed on-site. INSTALLATION per se is not defined in the Act or the procedural regulations. HUD approved Pennsylvania’s State Plan Amendment to monitor installation/on-site completion consistent with the federal standards in November 1997. In their approval letter, HUD acknowledged that Pennsylvania has concurrent jurisdiction with HUD to enforce such standards (24 CFR 3280 relating to performance, design, and construction. Different States have taken their own unique approach to assure a conforming home as completed on-site. There is no right way to do it, however no state or local program regarding installation can violate the federal standards, or the manufacturer’s design which the manufacturer has certified meets the federal standards. There is no need to restate the obvious. It is inappropriate however to preclude federal intervention in a nationally preemptive program of unique status if States fail to act. The current mark-up of the bill appears to address this issue but it is largely unnecessary and diversionary given what HUD already has acknowledged. HUD has acknowledged their concurrent authority with the States to enforce the federal construction standards through completion of the sale of a new home to the first purchaser. It will be next to impossible to build a model one size fits all national installation program and extremely impractical to enforce from Washington D.C. To entertain making the manufacturer’s installation instructions the standard is dangerous and circumvents the overriding performance standard. Manufacturer i nstructions vary from good to bad and often error on the side of market position with the retailer community and overall liability. We should enforce the current standards nationwide, HUD and SAA States already have the authority and should exercise this authority before any more consumers are hurt by this industry’s failure to comply with the law. We do not need this legislation, what we need is enforcement of the current laws. This industry knowingly violates the federal manufactured construction and safety standards as part of their standard operating procedure. The government agencies that are charged with enforcing the law and regulations have failed to enforce the laws and its regulations. This legislation will legitimize the industry’s failure to comply with the law and government agencies failure to enforce the law and has NO consumer benefit or will it do anything to fix the current state of affairs and will only legitimize the current state of affairs.

ADVISORY COUNCIL

The plan to abolish the Advisory Council is based on the notion that balanced representation will exist on the consensus committee. This has already been achieved with the NFPA Consensus Committee and will more closely be achieved in the mark up proposed by the Senate committee v ersion of the bill. HUD has been reluctant to convene the Advisory Council in recent years supposedly due to funding restrictions. Since the Act clearly allows the use of monitoring inspection/labeling fees funds for the proliferation of standards, HUD interpretation has been unduly restrictive.

PROMOTION OF MANUFACTURED HOUSING

To say the HUD should have no policy, practices or procedures, which restrict or discriminate against manufactured housing, would be one thing. To actively promote the product in a federal agency without equal treatment of other types of housing seems to be inadvisable incursion by Congress into the marketplace in a less than all-inclusive manner. This legislation will legitimize what HUD has already been doing on behalf of the industry under the cover of the PATH program. This program has used funds that could have been used to provide for the additional staff that HUD has characterized as one of the reasons that HUD is unable to perform its function adequately. Instead the funds were used to develop manufactured home development layouts, landscaping schemes and new innovative floor plans for the industry. This is a clear abuse of governmental authority and should be under Senate investigation and NOT legitimized by this legislation.

AUTHORITY TO COLLECT FEES / SECTION 620 & 623

Although authority given to State SAAs approved under Section 623 of the Act is unchanged the changes in Section 620 is the most serious federalism issue in this legislation. If FOLLOW THE MONEY is a good guide to where the power lies, today, because of an exception clause in Section 620, all monitoring inspection/label fees imposed upon manufacturers in SAA States (90%) are collected UNDER STATE AUTHORITY. HUD’s own legal opinion in 1997 says that the money belongs to the states collectively to enforce the federal construction standards and generally carry out the program. This has been a dilemma for HUD in the beginning of the program and in recent years as COSAA pushed for an explanation. HUD’s only defense for expending State Funds has been the NCSBCS mechanism as the States Organization acting as HUD’s monitoring agent. HUD has confirmed their intent to break up the contract with NCSBCS. This change partially explains HUD’s inclination to go along with this legislation at the highest level to get control of the funds and free-up their ability to split-up the contract with the States Organizations. Senate bill S.1452 would make all monitoring inspection label fees federally imposed in SAA States. States would become beholding to HUD to use some of HUD’s funds to carry out the program. The dynamics of this national program would change to a more FEDERALIZED perspective. In addition HUD is further restricted from imposing fees on distributors and dealers as they now have the authority to do. To relinquish this authority in light of installation considerations in this legislation seems less than prudent and should be an indicator that additional problems lie ahead for consumers.

The national industry’s (MHARR/coalition) longstanding intolerance against NCSBCS acting as HUD’s monitoring agent is evident in the restrictive provisions regarding assistance to States under cooperative agreement and in the CONTRACTORS section which legislatively dictates administrative procedure to ensure SEPARATE AND INDEPENDENT CONCTRACTORS. If it had not been for the continuity and integrity provided by NCSBCS for the last 20 years as HUD’s contractor representing the States interest, the program would have succumbed to public pressure due to lack of effectiveness. It appears that CONTROL is the priority here and not the effectiveness. While the provisions of this section appear to be broadening they actually restrict, except for authorized expenditures to promote the product within the Department. NOTHING ELSE THAT IS PERMITTED IS NOT ALLOWED UNDER THE CURRENT ACT. HUD legal interpretations may say otherwise but they have not met legitimate challenge. Monitoring and label fees can now be modified by publication in the federal register with justification and are expended as needed in a roll over fashion. This legislation would require advanced authorization for expenditure through the annual appropriations act and rulemaking to change the fee. This could produce some disastrous timing issues for HUD/States given federal budget history.

ELIMINATION OF THE REPORTS TO CONGRESS

This is currently the only information available publicly to the consumer regarding the level of compliance with the federal standards, enforcement actions, settlements, defect notifications and pending litigation. It is also HUD’s opportunity to recommend additional or revised legislation to improve and strengthen the program. No such recommendations have been made in recent years and recent reports contained little home performance related information. This industry-sponsored legislation is being advanced once again without the benefit of such data. I’m sure that the industry would like nothing better than to make the collection of data by consumer organizations, government, etc. concerning this industry’s performance, a task that without this report could only be characterized as impossible given the nature of this industry. This is likely the main reason that industry seeks to delete this requirement.

EFFECTIVE DATE

This legislation will have immediate and significant effects on everyone as it takes effect on the date of enactment of the Act. This will cause an immediate disruption of the regulatory process and while this may be viewed favorably by the industry it will place consumers at an elevated high risk.

CONTRACTS

In order to insure the quick demise of NCSBCS this legislation ends all contracts under this program in 2 years from inception OR THE REMAINDER OF THE CONTRACT TERM, WHICHEVER IS SHORTER. Conveniently HUD has renewed the NCSBCS contract since last October for SIX-MONTH INCREMENTS. Given the HUD RFP process, this could mean some time without any monitoring contractor and many months and years of ramp up time and coordination of multiple contracts. While this may not be of particular concern to the regulated it is alarming for consumers and those who try to enforce the regulations. Given this current poor financial condition of the industry in general, which is a creation of their own making, this will create an EXTREMELY DANGEROUS ENVIROMENT for consumers of this product. This legislation can use this un-monitored period to maximize its profits by cutting corners without any fear of government recourse and therefor restore their investor confidence.

CONTRADICTIONS IN HUD AND INDUSTRY ASSERTIONS

The questions that Senators should be asking in light of the industry’s and HUD’s contention that there are few complaints from consumers regarding this product is why the need for this legislation? From the industries and HUD’s assertion this current Federal Program should be considered an overwhelming success. Is it possible that the industry and HUD have been less than forthcoming to lawmakers about the true extent of the problems that this product is causing for consumers? If this is the case then lawmakers should be asking what is the true intent of this industry written legislation and why is HUD supporting this legislation? This legislation is a serious overhaul of the Federal Manufactured Housing program in which the industry and HUD claim is a success. This is evidenced by the extremely low numbers of consumer problems that this industry and HUD hold out as proof that they are doing their job. There are way too many contradictions for this legislation to be considered for passage by the Senate. It should be rejected until these kinds of questions can be answered by a thorough investigation by the Senate into the true cause of the failure of this program to perform as directed by Congress in 1974. It incomprehensible that lawmakers would consider passage of this bill without knowing to true nature of the problems experienced by the consumers of this product. Senators can not trust the information provided by HUD or the industry in making this determination in light of the obvious contradictions of the current justification for overhauling/modernizing this program by the industry and HUD.

FINANCIAL UPHEAVAL IN THE INDUSTRY

In addition to these questions or contradictions it is imperative that lawmakers be aware that the industry is currently in a financial upheaval of their own making. This in combination with the potential for long periods of time of being unmonitored WILL LEAD to widespread abuse of consumers as many manufacturers seek to maximize their profits on each sell. And last, after extensive conversations with investors in this product and industry insiders it is the conclusion that this industry has NO expectations of repeat business. Therefor contrary to the contention that they care what the consumers think about the product delivered and that they are happy with their product, this admission in itself should tell you that this could not possibly at the forefront of industry concerns. With this legislation the Industry will have the government promoting their product to the public as being of high quality and safe so why should they care if it really is or not. Their liability will be reduced to a manageable status by the program developed under this legislation. The fact that the government promoted it as such and that they only disseminated the government assertion of this fact to the public is all they need to limit their liability.