Response To Article On Manufactured Housing

Dear Mr. Gendler,

Regarding your article on mobile homes (a.k.a. manufactured homes), while it may be true that the appearance, bells, and whistles in mobile homes have improved over the years, the buck stops there.

This is not intended to chastise you for your article, but to broaden your understanding of mobile (a.k.a. manufactured) homes, its producers and regulators. Once the true nature and objectives of the individuals is better understood, it raises serious questions as to whether the producers and regulators for this product can deliver what they allege to be affordable housing.

Your and Mr. Karvel’s passion for affordable housing solutions, as conveyed in your article, lends itself to this industry’s marketing and public relations campaigns, which have been designed specifically to exploit this particular passion or weakness. By exploiting this weakness, the industry at large has been very successful at portraying its merchandise as an affordable housing option for low-income families.

It should be noted that what follows is not a blanket indictment of the entire manufactured housing industry. A small minority in this industry has a different vision for the future of manufactured housing than the one held by the rest.

Mr. Tyrie’s statement in your article conveyed the message that singlewides differed from doublewides. Single and doublewide MANUFACTURED homes are designed and constructed to the same building code and this building code does not impose differing performance criteria for the design and construction of singlewides. The fundamental difference between the two in the article, as restated by you, was that one was with (doublewide), and the other was without (singlewide), a permanent foundation (land improvement). Hence, if a doublewide will appreciate on a permanent foundation, then so should a singlewide, provided there is no significant disparity in the performance of their respective foundation systems (emphasis added).

Additionally, Wells Fargo recently funded a 3.5 million dollar refinancing deal for a manufactured home community in the suburbs of Minneapolis—it is safe to presume that it would not be in the lender’s best financial interest to convey a negative image of manufactured homes or manufactured home community living.

"Mobile homes" and "manufactured homes" are the same thing. The 1980 amendment to Public Law 93-383 (The Mobile Home Construction and Safety Standards Act of 1974), "requiring the substitution of ''manufactured home'' for ''mobile home'' wherever appearing", hardly represents the kind of ‘due process’ that would be needed by Congress to allow the manufacturers of [Mobile Homes], to construct anything other than [Mobile Homes] to the Federal [Mobile Home Construction and Safety Standards] (emphasis added). Without delving into a long essay on the reasons, suffice to say that the Constitution of the U.S. reserves to the States or any political subdivision thereof, the power to regulate the construction of ALL other types of housing. Public Law 93-383 was known in 1980 as "The [Mobile] Home Construction and Safety Standards (MHCSS) of 1974", and thereafter, as "The [Manufactured] Home Construction and Safety Standards Act of 1974". The retention of the enactment date in the title should alone tell you, that the scope of the amendment promulgated by the 96^th Congress was limited to a simple nomenclature change.

It is contrary to the manufacturers’ philosophy of "cheap and dangerous" [Ref: page 8] to manufacture a product that meets a reasonable standard for durability, safety, and livability (all related to post purchase performance). While the MHCSS Act of 1974 should have put an end to the manufacturers’ "cheap and dangerous" philosophy, with the exception of promulgating standards for use as a preemptive tool, HUD has done nothing in 27 years to discourage, must less end the manufacturers’ "cheap and dangerous" philosophy.

It could be argued that HUD’s administration has made things worse by contriving the MHCSS Act to provide a shield from legal liabilities that would by their nature, discourage the manufacturers’ "cheap and dangerous" philosophy. It was the intent of the 93^rd Congress to assure that the manufacturers would no longer be able to shift their liability for the performance [1] of their product onto others, and HUD officials have with forethought and utter disregard, put their own political (in some cases, financial) interests ahead of the health and welfare of manufactured home purchasers and the public.

The effectiveness of any Quality Assurance Program is limited by the business philosophy under which it is subrogated, for this is the nature of the beast. Having a quality assurance program on paper that gives the appearance that durable, safe, and livable housing is the goal in no way means in practice, that this is the goal. Any auditing process can be defeated by [don’t do it and say we did]. For such a program to be effective towards this end, the program would have to be driven by a business philosophy aimed towards this end. To the degree that a quality assurance is not driven by a commitment towards this end, having a quality assurance program does assure that the manufacturer’s product will be durable, safe, and livable housing.

¹ "Federal manufactured home construction and safety standard" means a reasonable standard for the ...performance of a manufactured home [42 USC §5402(7)]. To explain, when you push your car's brake pedal and the CAR stops as intended or without serious consequence, this is performance. Hence, the merchandise does not perform until in use for its intended purpose.

Learning this Industry’s Vision for the Future from Their History

The industry drafted, and funded the passage of the MHI Act with significant and widespread campaign contributions (See FEC records, 1999 & 2000). To paraphrase an industry leader named Danny Ghorbani (President - MHARR), [the MHI Act of 2000 is the industry’s law].

The MHI Act announced the ‘affordability’ of manufactured housing as the sole [public] exigency purpose for the MHCSS. As for the durability, quality, and safety of manufactured housing, the [public] has no interest in these, so said the 106^th Congress by segregating these essential qualities of what makes something affordable, from the public exigency purpose of the MHCSS Act.

With this, any MHCSS promulgated to improve the durability, quality, or safety of manufactured homes that would increase whatsoever, the manufacturing cost, and thereby, a cost that could be passed to the public (potential future purchasers), would likely be undoable, if the manufacturers so chose to challenge such a rule. Hence, at large, the manufacturers, by the threat of cost increases to the public, dominate the standards setting process.

The manufacturers also succeeded with the MHI Act in subordinating enforcement related activities to affordability. Enforcement related activities are paid for by way of fees charged to the manufacturer, which can be passed to the public. With this, they now have the means to prevent any increases in enforcement related activities that the enforcement jurisdiction may deem necessary to ensure manufacturer compliance with the MHCSS.

The MHI Act also limited by definition, the frequency of inspections (periodic) by the enforcement jurisdiction, thereby eliminating unscheduled inspections; hence, the manufacturers and/or any agents thereof will know on what day audits (inspections) will occur to determine if the manufacturers and/or any agents thereof are complying with the MHCSS. What do you suppose the chances are that such audits or inspections will discover anything of significance? (Read paragraph 3, page 3 again)

Finally, the manufacturers succeeded with the MHI Act in segregating the on-site construction of the manufactured home from the MHCSS. With this, whether a manufactured home provides durable, safe, and livable housing (related to post purchase performance), to the purchaser [2] is irrelevant to the objective of the MHCSS, and thereby, largely irrelevant to the manufacturers.

There is simply no meaningful incentive for the manufacturers of this product to incur the manufacturing cost associated with producing a product that provides the purchaser with a product that is durable, safe, and livable, when these qualities can simply be claimed verbally. The danger of making such false claim is, and has been, significantly diluted by the parallel and unsupported claims of a certain Federal agency (HUD) and those seeking to appease their Federal Master (HUD).

There is no evidence from outside of the industry’s inner circle [3] that concludes that durability, quality, and safety of mobile homes have improved, since the beginning of the 1980’s. In fact, some evidence suggests that beyond appearance, bells, and whistles (Marketing gimmicks) things have deteriorated.

²"Purchaser" means the first person purchasing a manufactured home in good faith for purposes other than resale [42 USC §5402(10)]. Hence, under the MHCSS Act, the dealer/retailer or distributor cannot legally be the purchaser of the manufacturer's manufactured home.

³Manufactured housing serves HUD politically (affordable housing), and it would therefore not serve this agency best interest to torpedo, that which serves its political interest. Additionally, HUD is the Building Code and Enforcement Jurisdiction for this industry and its product. As such, it is unrealistic to believe that HUD would reveal any information that conveyed to the public that HUD was remiss in its public duty as a building code jurisdiction. For these reasons, HUD has a very real conflict of interest with this industry, and should therefore, be considered a part of this industry's inner circle.

The following excerpts are from reports promulgated outside of the industry’s inner circle, and in part, may explain why the affordable housing entities and advocates that Mr. Karvel speaks sharply of do not look to manufactured housing as an affordable housing option.

Windstorm

A Brief History of Deaths from Tornadoes in the United States

NOAA/National Severe Storms Laboratory         January 2001

"The mean (median) annual death rate from 1975-2000 in mobile homes was 1.23 (1.19) per million per year, while the mean (median) rate from 1985-2000 in permanent housing was 0.06 (0.04) per million per year. In short, the death rate is approximately 20 times as high in mobile homes compared to in permanent homes, and the mobile home rate is about 70% of the rate for the total U.S. population prior to 1925."

"The effect of the increasing population in mobile homes is important for the number of deaths in tornadoes nationally and may be especially serious in the future…The mobile home rate is approaching the long-term overall trend and, in fact, will soon pass it…Thus, the increase in mobile home residency may have reversed the approximately 70-year long trend of decreasing death rates in tornadoes."

Fire

Manufactured Home Fires in the U.S.
Fire Analysis & Research Division
National Fire Protection Association         December 1999

"Manufactured homes have a fire death rate per 100,000 housing units that is 66-85% higher than the death rate for other dwellings. The difference is driven by a more than 2 ½-to-1 difference in the rate of fire deaths per 100 fires. More disturbing is the fact that the fire death rate per 100 fires for all manufactured homes has shown a net trend upward from the early 1980s to the most recent years of reported fire experience." [4]

⁴It was pointed out in the report that there has been a steady shift from pre to post standard manufactured homes since the early 1980's, making it hard to understand why the fire death rate is increasing. Products designed and constructed with "cheap and dangerous" in mind may provide some insight into this phenomenon.

The single fact that the industry and their HUD agents spin to obscure the above fact are that the number of fires and fire related injuries has actually decreased. They let the recipient of the fire and fire injury data mistakenly assume that the death rate followed.

Warranties

The AARP 1999 survey disclosed only about 35% of mobile home owners were able to obtain repairs under the warranties provided by this industry. In 1973, the State of Wisconsin performed a similar survey concerning warranties, which found that out of 85% of those who experienced defects in their mobile homes; only about 50% were able to obtain repairs under the warranties provided by this industry. It is apparent that since the federal government began its alleged supervision of this industry, this industry’s failure to honor their warranties has increased.

When information comes from those who were not involved in undermining the law (MHCSS Act), it paints an entirely different picture than the one painted by those who with forethought purposely undermined the MHCSS Act of 1974. Would it be realistic to expect those responsible for such unlawful behavior to shine light upon their unlawful behavior?

Affordability

What does affordability mean? Webster’s defines it this way, "To have enough or the means for; bear the cost without serious consequence". If the means to bear the cost without serious consequence were limited to initial cost, by the nature of the free market, there would be no deterrent against inflating the initial cost to use up that which the purchaser could bear without serious consequence. Reflect on this and this industry’s current financial chaos. Limiting the scope of affordability to initial cost would be arbitrary and capricious at best, yet this is the core of the manufacturers’ "cheap and dangerous" philosophy.

The manufacturers of this product revealed their philosophy on the Federal Court record for what is affordable housing for low-income families.

United States Court of Appeals, Eleventh Circuit [No. 94-2307], June 12, 1995.

The fourth such criterion directs HUD to "consider the probable effect of such standard[s] on the cost of the manufactured home to the public." The manufacturers argue that this factor refers solely to the consumer purchase price of manufactured homes...

The manufacturers … argue that HUD as a matter of law should not subsume consumer costs into a general analysis of societal costs and benefits.

The manufacturers assert … because the new standards foreclose the cheap and dangerous option, they are arbitrary and capricious, the argument goes.

What the manufacturers propose would … sacrifice the safety of innocent people who would be given no choice in the matter.

The 11^th Circuit Court of Appeals shot down every argument put forth by the manufacturers in the above-cited case. The manufacturers responded not long after with the Manufactured Housing Improvement (for whom) Act [5], which they finally gained the passage thereof in the year 2000. This alleged improvement Act in fact eliminated from the MHCSS Act, and added to it the verbiage necessary to overcome, every legal obstacle that stood in the way of the arguments the manufacturers put forth in this case.

Given the manufacturers’ representatives drafted, funded with industry dollars, and otherwise lobbied for the passage of the MHI Act of 2000, the gist of the manufacturers’ arguments in the above-cited case clearly demonstrate where the manufacturers are headed in the future.

⁵United States Court of Appeals, Eleventh Circuit [No. 94-2307], June 12, 1995—"Allowing consumers to knowingly assume the risk of unsafe housing may or may not be a good idea, but it is not one Congress included in the statutory scheme. If the manufacturers want the statutory criteria for promulgating manufactured home standards changed, they should direct their arguments to Congress."

Structural stability is only one part of the equation (although it is a large part), and this being a given, a permanent foundation can only be one part of the solution; provided it was not designed and constructed by, someone entrenched in the "cheap and dangerous" philosophy. The question that begs to be answered in light of the manufacturers’ philosophy of "cheap and dangerous", to what degree does placing their product on a permanent foundation have on the over-all performance of a manufactured home. It should be noted that it is highly unlikely that a foundation designed and constructed with "cheap and dangerous" in mind will assure adequate long-term structural performance of a manufactured home.

Mr. Tyrie made an important point; that a manufactured home on a site built permanent foundation would perform equivalently to site built housing. The number of manufactured homes completed on permanent foundations is but a small fraction of the total number sold each year in the U.S. If Mr. Tyrie has evidence to support that 80% in Minnesota (outside of Minneapolis area) are placed on permanent foundations on occupant owned real estate, then Minnesota is atypical. In short, if Mr. Tyrie’s statement was accurate, the greater majority [will NOT perform comparably to site built housing]. Mr. Tyrie’s statement is backed by HUD’s own work product.

HUD-007487
" Permanent Foundations Guide for Manufactured Homes"

Forward
"Its current technical information, recommendations, and tables of analytical data will meet the support and anchorage requirements that are NECESSARY TO MINIMIZE manufactured home damage during high winds or earthquakes"…

Executive Summary
"The handbook has become a logically organized and easy to use reference in the permanent foundation selection process and in the anchorage design to ASSURE ADEQUATE structural performance for manufactured homes…

Acknowledgments
"A special thanks to HUD’s manufactured housing division for providing…insights on the MINIIMUM PROPERTY STANDARDS REQUIREMENTS that influenced this handbook"…

Introductory Comments
"Permanent foundations are those that have been engineered for SAFETY AND LONG-TERM SATISFACTORY performance…

Definitions
"Anchorage DOES NOT refer to any type of soil anchor."

Given the above statements from HUD’s own work product, the following can be concluded regarding manufactured homes completed using the industry standard foundation and anchoring system [6].

1. The industry standard support and stabilization systems are incapable of minimizing windstorm or earthquake damage to manufactured homes
2. The industry standard support and stabilization systems are incapable of assuring adequate structural performance for manufactured homes.
3. The industry standard support and stabilization systems do not provide for homes when completed that meet HUD’s minimum property standards.

If these conclusions were not accurate, then there would be no need for permanent foundations to achieve the kind of performance characteristics being sought by HUD for manufactured homes in which HUD will have a financial interest in the property (EMPHASIS ADDED).

Note: The industry standard anchoring system is the same anchoring system that HUD has, and continues to allow the manufacturers to incorporate in their designs to as proof that the manufacturer’s MANUFACTURED HOME will not slide and/or overturn (related to public and occupant safety) when the wind loads specified in the MHCSS are met or exceeded.

⁶ It should be noted that in the majority of States, the industry has been very successful at gaining State adoption of the industry-promulgated standard for support and stabilization, hence, the State governments are prescribing to the industry, substandard support and stabilization criteria (huge liability shield).

One should wonder what HUD knows about this type of anchoring system to prohibit its use on manufactured homes in which HUD will have a financial interest.

The Industry and its HUD partners will claim that HUD does not (or did not) have the authority to regulate the on-site completion of the home. This claim is utterly false; the 93^rd Congress expressly stated that the scope of the MHCSS would include the setup of manufactured homes. When HUD will have a financial interest in the property, they mysteriously have preemptive authority (emphasis added) to prescribe minimum criteria for the setup of manufactured homes. When the manufacturers desire HUD’s interference with rights historically reserved to the States, HUD issues an Alternative Construction letter that mysteriously extends the preemptive coverage of the MHCSS to include the home site. The manufacturers and their HUD agents simply turn preemption on and off, depending on which serves their financial and/or political self-interests.

CODE COMPARISON SUMMARY

University of Illinois at Urbana-Champaign School of Architecture-Building Research Council

December 1997

This summary is based on a comprehensive comparison of the 1995 CABO One and Two Family Dwelling Code, the 1995 Model Energy Code, and the federal Manufactured Home Construction and Safety Standards (MCHSS)… On balance, the codes are comparable.

Does this imply that site built homes designed and constructed to the CABO code [7] do not meet HUD’s minimum property standards, or does it mean that manufactured homes designed and constructed to the MHCSS should meet HUD’s minimum property standards?

⁷Note: The CABO code is developed in large part, through a consensus process dominated by the home building industry. Hence, the CABO code is rarely adopted by a given building code jurisdiction without modification. The MHCSS are preemptive; hence, they cannot be modified by any State or Local building code jurisdiction.

The manufacturer’s certifies that, "All construction methods shall be in conformance with accepted engineering practices to insure durable, safe, and livable housing" [24 CFR 3280.303(b)].

Why does HUD refuse to take a financial interest in manufactured homes that the manufacturers certify with HUD’s oversight (emphasis added), to be constructed to a code that is comparable to the CABO building code or to "accepted engineering practices to insure durable, safe, and livable housing"?

On one hand, HUD claims in parallel with the manufacturers, that a mobile (manufactured) home constructed to the MHCSS will perform comparably to site built housing, while on the other hand, HUD’s own work product reveals that this "is false or misleading in a material respect" [8] unless, the manufactured home is completed on a site built permanent foundation (EMPHASIS ADDED).

Something just does not add up; what can it be. It is liability for code officials. While the manufacturers are responsible for assuring that their merchandise complies with the MHCSS, HUD has and continues to allow the manufacturers to blame whomever for products that do not perform as intended when delivered to the purchasers of their products (shift liability). In most all States HUD permits the manufacturers to employ (and fire without justification) those who inspect their designs and construction for compliance with the MHCSS. HUD also permits such entities or persons to disclaim all legal responsibility for approving designs and construction that do not comply with the MHCSS (no liability). Not to forget HUD; HUD officials are provided with immunity under the MHCSS Act for taking the "no action approach" to carrying out the MHCSS Act (no liability).

⁸[42 USC §5409(a)(4)] issue a certification required by section 5415 of this title, or issue a certification to the effect that a manufactured home conforms to all applicable Federal manufactured home construction and safety standards, if such person in the exercise of due care has reason to know that such certification is false or misleading in a material respect.

This HUD policy is largely responsible for the standard response from HUD, HUD’s State Administrative Agencies (SAA), and the Industry, to consumers who file complaints regarding defective new manufactured homes—there is nothing we can do for you (the purchaser). To put this into words that bring the absurdity of this response into the light—when it rolled away from the factory at 50 mph or more, in pieces (double wide / multi-sectional), with no electricity, water, sewer, heating, air-conditioning, support, and anchorage, it was certified by the manufacturer to be fit for the ordinary use for which it was intended (emphasis added), or restated, free of defects that made it uninhabitable. Thereby, it is not their fault or problem if what arrived at the home site is not in the same condition it was when it exited the back door of the factory.

Without affirmative action by the manufacturer to remedy the extensive defects that render their product unfit for habitation until it is completed at the home site, the manufacturer’s certification is false or misleading in a material respect.

Without liability to check greed, there is simply no end to the ferocity of the appetite for boundless opulence.

At best, buying a manufactured home is a game of chance. As with any game of chance, there will always be some winners. In the Minnesota bubble, the odds are better for the purchaser, but this is in large part due to a State official named Randy Vogt; the odds of the purchaser winning in Minnesota will likely decline once he departs public service.

On a parting note;

United States Court of Appeals, Eleventh Circuit [No. 94-2307], June 12, 1995.

"HUD's explanation included the fact that even though manufactured houses have a lower value on average than other housing, manufactured houses generally suffer a higher level of damage... In promoting homeownership opportunities for lower-income persons, the Department strongly believes that such housing must also be safe."

The MHI Act of 2000 eliminated the HUD Secretary’s mandate to consult with the Consumer Products Safety Commissioner before establishing, amending, or repealing any MHCSS, and HUD lent its support to the MHI Act. It can be safely presumed that HUD no longer "believes that such housing must also be safe" to be affordable, or believes that homes that suffer "a higher level of damage" than any other housing will burden those in society least able to recover from such accidents or natural catastrophes.

Alas, durability and safety are directly related to a product’s performance, and a product does not perform its intended purpose until in use for its intended purpose (post purchase), hence, durability and safety is not included in the manufacturer’s one dimensional formula for affordability.

Best regards,

John Taylor