Several industry updates that affect manufactured housing either take effect October 1, 2020, or will be unveiled sometime later this month. Detailed below is a summary of recent developments.
Maryland Introduces Consumer Protections for Manufactured Home Financing
On May 8, 2020, the Maryland Legislature enacted Senate Bill 155 (SB 155), with an October 1, 2020, effective date. (SB 155 was cross-filed with House Bill 93, companion legislation in the House of Delegates.) The legislation introduces several consumer protections in connection with manufactured home financing, including a requirement that lenders must generally serve written notice on a borrower at least 30 days before repossession of a home and an obligation of good faith and fair dealing when retail sellers provide financial information to a prospective consumer borrower.
Other highlights of SB 155:
- Amends the definition of “mortgage loan originator” to exempt manufactured home retail sellers as long as they do not receive compensation or gain for engaging in loan origination activity in excess of compensation or gain received in a comparable cash transaction. (This change more closely aligns state law with changes at the federal level as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.)
- Effectively creates a mini-consumer Bill of Rights that says manufactured home retail sellers:
- Have a duty of good faith and fair dealing when providing financial information to a prospective consumer borrower;
- May not steer a consumer borrower to a financing product that offers less a favorable terms; and
- Must provide a written statement describing any corporate affiliation between the retailer and a financing source, if such a relationship exists.
- Amends the definition of “mobile home” to align more closely with the federal definition under the Manufactured Home Construction and Safety Standards Act.
- Codifies the definition of “dwelling,” instead of cross-referencing the federal definition in the Truth in Lending Act.
This legislation was originally introduced during the Maryland Legislature’s 2019 Session as part of Senate Bill 786 (SB 786), the Financial Consumer Protection Act of 2019—a much larger bill focused on creating a state-level CFPB. SB 786 ultimately died in Committee. However, during the 2020 Session, the consumer protection components of SB 786 applicable to manufactured housing were repackaged as SB 155, which was introduced earlier this year.
HUD OMHP Assumes Responsibility for Pennsylvania’s Installation Program
On October 1, 2020, the U.S. Department of Housing and Urban Development’s (HUD) Office of Manufactured Housing Programs (OMHP) assumed responsibility for the installation of manufactured homes in Pennsylvania. Last September, in response to budget concerns, the Pennsylvania Department of Community and Economic Development (DCED) first announced plans to modify the state’s installation program.
The transition to HUD’s Manufactured Home Installation Program began last October. Since then, the DECD has stopped offering installer training and discontinued its state certification program for home installers. Current Pennsylvania Manufactured Home Installers Certifications will remain in effect until the expiration date indicated on the certificate. However, persons interested in installing (or continuing to install) homes in Pennsylvania must now comply with the federal program as administered by HUD. This requires completion of a HUD-approved training course and the HUD Manufactured Home Installer License Application (see Form HUD-307).
New homes sited in Pennsylvania must still be installed to the manufacturer’s installation instructions and meet the HUD Code’s minimum standards. However, beginning October 1, 2020, installers must report to HUD every home installed and must certify that the installation was inspected by a HUD-certified inspector (see Form HUD-309). Likewise, retailers will begin submitting monthly reports to HUD summarizing the number of homes sold and installed (see Forms HUD-305 and HUD-306). Retailers must also update any required disclosures to now reference the HUD Manufactured Home Installation Program.
Keep in mind these program changes generally do not affect the relocation of existing construction in Pennsylvania. HUD does not regulate the relocation of manufactured homes, so any relevant state requirements still apply.
ICC Finalizes 2021 I-Code Updates
Later this month, the International Code Council (ICC) will release the 2021 edition of its International Codes (I-Codes), including updates to the International Building Code, the International Residential Code (which includes Appendix E “Manufactured Housing Used as Dwellings”), and the International Energy Conservation Code, as well as updates to the fire and plumbing codes. Altogether, the ICC’s 2021 update includes revisions to 14 different code standards with an overall focus on energy efficiency, conservation of resources, and the impact of energy usage on the environment. Unsurprisingly, for energy advocates, several updates did not go far enough, while homebuilders are concerned the revisions are too restrictive and will affect affordability.
Understanding how the I-Codes affect state and local code requirements is critical for manufactured home builders. The ICC and its committees update the I-Codes on three-year cycles, with adoption by state and local jurisdictions usually trailing a few code cycles behind. While the I-Codes are only models and not legally binding, eventually most U.S. jurisdictions at the state and local levels will either adopt the codes as written or with amendments. As a result, the I-Codes are a reliable tool for gauging future home building and manufacturing requirements.
Because federal preemption is a cornerstone of the Manufactured Home Construction and Safety Standards Act (as implemented through the HUD Code), manufactured housing is exempt from state and local code enforcement. However, preemption is exclusive to the HUD Code’s Construction and Safety Standards, not the Installation Standards. Further, when certain aspects of construction are completed on-site or when the HUD Code is silent on a particular issue, state and local requirements may come into play. It is also not uncommon for the Manufactured Housing Consensus Committee, the federal advisory body that provides recommendations to HUD for revising and interpreting the HUD Code, to reference the I-Codes where appropriate.