manufacturedhomelivingnews.com Manufactured Home Living News
“Facts are stubborn things.”
– Mark Weiss, J.D.,
President and CEO of the
Manufactured Housing Association for Regulatory Reform (MHARR).
Near the epicenter of what could become a cosmic clash in the year 2020 are events that have their origin approaching 2 decades ago. Much more recently, Congressional Representative Maxine Waters (CA-D) signed a letter with some of her House colleagues that took dead aim at Warren Buffett led Berkshire Hathaway’s brands in manufactured housing. She named names and cited sources with specific allegations of wrongdoing in the form of predatory behavior toward many, with particular bias against minorities.
That letter with her signature is found linked as a download further below. Other relevant documents from current House Financial Services Committee Chair Waters are also included herein.
The U.S. Department of Housing and Urban Development (HUD) recently released a new report that reflects a rise in homelessness nationally largely because of the increase among the homeless in California. That report is linked here as a download.
From that new HUD report is this quote.
“As we look across our nation, we see great progress, but we’re also seeing a continued increase in street homelessness along our West Coast where the cost of housing is extremely high,” said HUD Secretary Ben Carson. “In fact, homelessness in California is at a crisis level and needs to be addressed by local and state leaders with crisis-like urgency. Addressing these challenges will require a broader, community-wide response that engages every level of government to compassionately house our fellow citizens who call the streets their home.”
The video below is from ABC News, during HUD’s Innovative Housing Showcase in early June 2019 and relates to contemporary solutions to this issue. While they come at it from different perspectives, Dr. Carson and Chair Waters are in at least technical agreement on several points.
As what follows will reflect, few people in Congress today are in as good a place to influence the direction of federal policies about housing affordability and the related financing issues as Maxine Waters. Waters signed onto two pieces of widely bipartisan legislation. One bill was signed into law by Presidents William Jefferson ‘Bill’ Clinton (D) and the other was signed by George Walker Bush (R).
Key provisions from those two pieces of legislation will be described below that includes Water’s unique insights and stances.
Those provisions of the law stand in apparent odds with the unstated but apparent desires of Chairman Buffett led Berkshire Hathaway. That Omaha-based conglomerate owns Clayton Homes, 21st Mortgage Corp (21st), Vanderbilt Mortgage and Finance (VMF). Those businesses and other Berkshire brands carry an outsized influence at the Arlington, VA based Manufactured Housing Institute (MHI).
Chair Waters well knows that MHI is dominated by those Berkshire brands through years of experience, reflected in a document linked from this report. But for the sake of newer readers, two pieces of information shed light on how those Berkshire brands of 21st and VMF, which are sister companies to Clayton Homes, are arguably de facto in charge at MHI. Board positions (see below), dues revenues, and financing – wholesale, retail and commercial – plus products and services used by communities and retailers give Clayton, 21st and VMF a hefty role at MHI. Given that there is an MHI PAC – Political Action Committee – it doesn’t take a rocket scientist to realize that the Berkshire-brands in MHVille have a strong say in how their PAC dollars are used too.
It is the intersection of money, politics and (often mis-) information that this report will begin to unpack. In doing so, the challenges of affordable housing and manufactured homes and communities role in that struggle will come into a new and sharper fact-based focus.
Democrats and the Intersection of Housing, Finance and Monopolies
A recurring theme for Manufactured Home Living News (MHLivingNews) and our Manufactured Home Pro News (MHProNews) sister site is this. If good provisions in existing laws were enforced, numbers of vexing problems in America would begin to be corrected. We don’t have to wait for more research. The U.S. doesn’t need more legislation to address these issues. While investigations of why these laws have been thwarted makes sense, in essence, enforcing those laws based is a key. Those bills were based upon and continue to be supported by decades of research from the late 1990s through 2018 that repeatedly came to the same conclusions.
It was due in part to the clarity of third-party research that motivated the passage of laws that Rep. Waters supported in 2000 and 2008. Those laws are not being properly used, as Waters’ herself said, and that will be discerned herein below.
In her current role as chair for the powerful House Financial Services Committee (FSC), Waters has the clout to do something about these issues. For the benefit of the public, researchers, investors, media and Congressional staffers that may not be as familiar with these facts, relevant history and issues, this report will walk step-by-step through key highlights. Other reports will be linked herein that provided added related details. Those added linked reports should be construed as part of this documentation of the headline issues.
Because the logic of the matter is simple. There is either a clash between Chair Waters and Berkshire Hathaway’s chair Buffett ahead, or some giant disconnect will be evidenced just over the horizon. How so?
Chair Waters undoubtedly knows all of the following.
- Democrats have for some time made antitrust enforcement an issue. Antitrust aims at correcting the problems caused by monopolization. Antitrust enforcement is part of their party’s platform (see illustration below).
- Those 2 good laws that Presidents Clinton and Bush 43 signed that will be examined underneath were voted for by Waters.
- Taken as a trio, those laws arguably come into conflict with the interests of Buffett and other “big boy” players at MHI. If they are indeed in opposing corners, with housing unaffordability and homelessness rising, it will be difficult to square the two competing narratives if there isn’t a coming conflict between Waters, those in Congress who see these issues in a like manner and Buffett led-Berkshire’s interests.
From the media release of her Congressional letter to federal officials is this headline. “Waters and Senior House Democrats Call for Federal Investigation of Warren Buffett’s Manufactured Housing Conglomerate.”
“I was appalled by some of the findings in the recent [Seattle Times/BuzzFeed] articles,” said Waters. “There is no place for these kinds of sleazy and deceptive practices. I was further taken aback by Mr. Buffett’s defense of Clayton’s lending practices given the concerns that were raised by the articles earlier last year.”
The top Democrat further noted her fierce opposition to H.R. 650 the “Preserving Access to Manufactured Housing Act,” in 2015 due to concerns raised by the articles. Preserving Access was promoted the Manufactured Housing Institute (MHI), which for several years was under the chairmanship of Tim Williams, the president and CEO of Berkshire-owned 21st Mortgage.
Her release said specifically pointed to consumer abuses and harmful lending practices in connection with Clayton and its financing subsidiaries. “I opposed H.R. 650 in part because of the allegations that were raised in the investigative series last year. These allegations further underscore the shortsightedness of harmful proposals like H.R. 650 – a measure that would roll back key consumer protections established in Dodd-Frank.”
It added, “The CFPB was established to protect consumers from the kind of misconduct alleged in the investigative series and to hold bad actors accountable for dishonest, predatory practices. These disturbing allegations must be addressed immediately by the CFPB and the Department of Justice.”
Also from their letter to the CFPB and the Department of Justice (DOJ) is this. “As the investigation [Seattle Times, et al] makes clear, Clayton is the nation’s largest manufactured housing company and has a “near monopolistic” grip on lending to minority borrowers seeking financing for manufactured housing reaching nearly 72% of African-American borrowers, 56% of Latino borrowers, and 53% of Native American borrowers.[5] Given Clayton’s uniquely broad control of the manufacture, sale, and financing of manufactured homes, it is imperative that their business practices comply with federal law in order to ensure affordable housing for low-and-moderate income buyers. Surely, if news outlets can launch an investigation into potential violations of federal fair lending and consumer protection laws, agencies charged with protecting the nation’s consumers should be able to investigate these allegations, and, to pursue appropriate enforcement actions.
The entire press release and letter by Waters and her colleagues to the CFPB and DOJ is linked here as a download.
That phrase, “near monopolistic” makes the point that antitrust should be part of the issues begging to be addressed. As noted above, antitrust interest has grown among both Democrats and Republicans in recent years. President Trump and his administration has raised that issue too.
What happened to that call for federal investigations filed in the final full year of President Barack Obama’s Administration? Hold that inquiry for later.
But keep in mind that just a few months ago, the Minneapolis Federal Reserve commissioned research that is linked here which also pointed to those same issues of problematic lending practices, higher interest rates, and pointed to the investigations of Berkshire’s Clayton, 21st and VMF. So this is an ongoing issue, with a variety of sources – including this trade platform – pointing toward the same purported culprits.
From this report linked below, one can see that Clayton’s market share jumped after an alleged prima facie example of market manipulation, violations of other federal laws is described in systematic fashion, showing the specific evidence. That purported prima facie or self-evident antitrust law, RICO and other legal violations ought to be front and center in Democratic and Republican discussions and 2020 campaigns on these issues.
Rep Waters, Affordable Housing and the Manufactured Housing Improvement Act of 2000
The Manufactured Housing Improvement Act (MHIA) of 2000 specifically said the following.
Per Congress, “manufactured housing plays a vital role in meeting the housing needs of the nation” and that “manufactured homes provide a significant resource for affordable home ownership.” The MHIA includes protecting the “affordability of manufactured homes,” and “facilitating the availability of affordable manufactured homes and to increase homeownership for all Americans.”
The MHIA included consumer safeguards not commonly found in higher priced conventional housing, which includes, but is not limited to third party inspections of HUD Code manufactured homes during construction. It also includes a dispute resolution process that consumers can avail themselves of if the factory, retailer and installation team are unable to resolve an issue about a consumer complaint. MHARR has pointed to that dispute resolution process and the surprising scarcity of its use to underscore the overall quality of HUD Code manufactured housing, even the very most affordable models. A prior Office of Manufactured Housing Programs (OMHP) administrator, Pam Danner, J.D., was likewise surprised by the low numbers of complaints nationally. So much so that she led the charge to promote a wider knowledge of the process. Even after that promotion initiated by Danner, the numbers of consumers who filed a complaint were a tiny sliver of a fraction of 1 percent.
But among the most important items under the MHIA, per another OMHP administrator, William ‘Bill’ Matchneer, was its enhanced preemption language. Matchneer recently told MHLivingNews the following.
MHARR’s CEO Weiss, an attorney involved in drafting the language of the MHIA and enhanced preemption, explained its importance with these words.
As a recent news tip to MHLivingNews from a source directly tied to MHI was this recent historic insight.
All of the dovetails with what Maxine Waters and her colleagues wrote in 2003 to then HUD Secretary Mel Martinez.
In a letter dated November 13, 2003 on Congressional letterhead, what follows is the text of the letter which Waters and other lawmakers signed.
Honorable Mel Martinez
Secretary
Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410
Dear Secretary Martinez:
We are writing to express our deep disappointment in HUD’s July 17 rejection of the Manufactured Housing Consensus Committee recommendation, which addresses the problem in the siting of manufactured homes. We ask HUD to use its expanded authority under the “Manufactured Housing Improvement Act of 2000” to address this growing problem, which is undermining homeownership opportunities for low-income and minority Americans.
The Millennial Housing Commission concluded that “During the 1990s, manufactured housing placements accounted for one quarter of all housing starts and, from 1997 to 1999, 72 percent of new units affordable to low income homebuyers.” Unfortunately, discrimination in the siting of manufactured homes continues to undermine its full potential to meet the needs of low-income homebuyers. A September 2002 Ford Foundation study on manufactured housing noted that “zoning and code rules continue to be a major barrier,” and that “the vast majority of local governments continue to discriminate against manufactured housing, thereby limiting its potential to meet the needs for affordable housing.”
You have made homeownership a top Administration priority, emphasizing opportunities for low-income Americans. You have also made reducing local barriers to affordable home ownership a top priority announcing on June 10th a Department-wide effort to break down such barriers, in order to create “an environment to increase minority homeownership.”
The very first recommendation of the Manufactured Housing Consensus Committee addressed the problem of discrimination against localities enforcing discriminatory covenants made by private landowners. We believe HUD’s summary rejection of this proposal is inconsistent with HUD’s stated priority of removing barriers to affordable low-income homeownership opportunities.
We understand that HUD may have concerns about its legal authority to implement this particular proposal. But, we believe that HUD should have taken this opportunity to use its expanded legal preemption authority under the 2000 Act to develop a Policy Statement or regulation to make it clear that localities may not engage in discriminatory practices that unfairly inhibit or prohibit development and placement of manufactured housing. We understand that some in the industry have asked HUD to take action and we urge HUD to be responsive to this request.
Page Two
We are also troubled by the legal analysis HUD used in its July 17th rejection of the Consensus Committee recommendation. HUD’s analysis relies on rulings in cases that predated the 2000 Act amendments, which render such rulings obsolete. Moreover, HUD’s legal analysis states that the 2000 Act amendments “did not modify the basic substance of the statutory preemption provision.” Such a statement ignores the plain language of the 2000 Act changes.
Prior to the 2000 Act changes, the statute merely prohibited states and localities from establishing any standard regarding construction or safety “applicable to the same aspect of performance of such manufactured home which is not identical to the Federal manufactured home construction and safety standard.” The 2000 Act broadened this provision to add that: “Federal Preemption under this subsection shall be broadly and liberally construed to ensure that disparate State or local requirements or standards do not affect the uniformity and comprehensiveness of the standards promulgated under this section nor the Federal superintendence of the manufactured housing industry established by this title.” [italics added].
The 2000 Act amendments also expanded the findings and purposes of the Act. Prior to 2000, the statutory findings declared it necessary to establish construction and safety standards merely to “reduce the injuries, deaths, insurance and property damage,” and “to improve the quality and durability of manufactured homes.” The 2000 Act amendments introduced the new findings that “manufactured housing plays a vital role in meeting the housing needs of the nation” and that “manufactured homes provide a significant resource for affordable home ownership.” New purposes were also introduced by the 2000 Act, which includes protecting the “affordability of manufactured homes,” and “facilitating the availability of affordable manufactured homes and to increase homeownership for all Americans.”
Thus, the 2000 Act expressly provides, for the first time, for “Federal preemption,” and states that this should be “broadly and liberally construed” to ensure that local “requirements” do not affect “Federal superintendence of the manufactured housing industry.” Combined with the expansion of the findings and purposes of the Act to include for the first time the “availability of affordable manufactured homes,’ the 2000 Act changes have transformed the Act from solely being a consumer protection law to also being an affordable housing law.
More specifically, these combined changes have given HUD the legal authority to preempt local requirements or restrictions which discriminate against the siting of manufactured homes (compared to other single family housing) simply because they are HUD-code homes. We ask that HUD use this authority to develop a Policy Statement or regulation to address this issue, and we offer to work with you to ensure that it comports with Congressional intent.
Sincerely,
A PDF copy of that document is found linked here.
To sum up this segment, the MHIA’s “enhanced preemption” provision made more affordable housing with specific consumer protections the law. To insure that it wasn’t ignored or thwarted at the local or state levels, Congress – including Rep Waters – wanted “enhanced preemption” to be so understood as to override local attempts to thwart the placement of HUD Code manufactured homes.
Consider that position vs. the sobering facts HUD’s current Secretary Carson reported, as was referenced above. Affordable housing is being thwarted, and it is contributing to increased housing unaffordability and even increasing homelessness.
Note that the letter makes some of the same points from the Bush Administration era about overcoming local barriers to affordable housing as the current Trump Administration White House Council on Affordable Housing makes, which is chaired by Secretary Carson.
Some 16 years have elapsed. Housing unaffordability is growing as is homelessness.
The causes and the cures are known.
There are people in the Trump Administration who know these facts, per our sources, include, but not limited to:
- Brian Montgomery, J.D., current Assistant Secretary of Housing and Urban Development for Housing, also known as the commissioner of the Federal Housing Administration. He was nominated in September to become the HUD deputy secretary, the second most senior official at HUD. For reasons that will become plain, as a segue and disclosure, Montgomery’s nomination is one that we editorially oppose.
- Teresa Payne,D. currently the administrator for the Office of Manufactured Housing Programs (OMHP). For reasons that will become increasingly obvious, as a segue and disclosure, we believe that Montgomery and Payne should both be asked to resign or terminated for dereliction in the respective duties of their office.
- It should be noted that Secretary Carson may or may not know about this provision of the law, per our sources. That said, Dr. Carson should be asked to testify to Congress on this matter. If he and others know about this provision, and Carson himself is touting the value of manufactured homes, where is the logic in not calling for a robust enforcement of the MHIA act and enhanced preemption?
- To be objective and nonpartisan, the same query could be made for others who previously held this role and related positions of authority since the MHIA became law.
As now Chair Waters and her colleagues then put it, “Combined with the expansion of the findings and purposes of the Act to include for the first time the “availability of affordable manufactured homes,’ the 2000 Act changes have transformed the [MHIA] Act from solely being a consumer protection law to also being an affordable housing law.”
The highlighting was added to underscore a key point of Waters and her House colleagues. That point relates to the thesis of this report, namely, that laws have already been enacted to deal with the issues that are still be faced today. A key reason? Failure to routinely and properly enforce good aspects of existing laws.
That’s should be a bombshell to numbers in DC, states around the nation, and the powers that be in manufactured housing in what MHLivingNews dubs the Omaha-Knoxville-Arlington axis. Because MHI and Berkshire clearly have had access to these officials for years. MHI testified in 2012 in favor of enforcement of enhanced preemption, and restated that in a 2019 letter to Secretary Carson.
If they sincerely hold that view, then why doesn’t MHI have those two key words on their own website on this date? Are they posturing support for the law? MHLivingNews has repeatedly brought that to their attention, that of key members of MHI, and their inside and outside attorneys. There is no excuse for this not to be on their website.
Who benefits from that absence? Could it be that MHI is de facto working for the consolidation of the industry into ever fewer hands, including those of Berkshire Hathaway owned brands?
Hold that thought, as we press on to the third bullet for this report and analysis.
Affordable Housing and Financing
As then ranking member Water’s letter to the CFPB and DOJ made clear in 2016, affordable financing is a key part of affordable housing.
There are laws that already exist that are supposed to promote affordable home buying opportunities. The 5-page PowerPoint linked here outlines how the Duty to Serve (DTS) manufactured housing mandated by the Housing and Economic Recovery Act (HERA) of 2008 signed by President G.W. Bush was supposed to compliment other financing provisions supported by federal law. That would include, but isn’t necessarily limited to, FHA Title I, FHA Title II, VA and USDA (Rural Development) lending programs that support manufactured housing too.
To keep this segment briefer, see the related report below.
Waters and her House colleagues could readily hold hearings, which have already been requested by consumers, MHARR and this publication’s management – among others – that digs into why good laws are going underenforced.
In that context, we editorially believe that Jim Gray at FHFA should be appropriately investigated, and once his purported failure to do his assigned job is manifest, he should then be asked to resign or be terminated for failure to do his duty under the law. See more on that in the report linked here.
Who Benefits?
Who benefits from this pattern of laws passed that are not being properly enforced? The short answer appears to be consolidators in the manufactured housing industry. Those consolidators are routinely members of MHI. Coincidence?
Who is harmed by this pattern? Consumers and smaller businesses. Who says? Again, consumers and the applied logic of experts like Carol Roth, who said the following pull quote cited on Fox Business.
Secretary Carson said repeatedly that this is a problem of supply and demand. The demand is there, but the supply is lacking. It is ironically Carson’s own department that has some sway over these issues. Properly understood, the immediate responsibility – per the organizational chart at HUD – lies with Ms. Payne and Mr. Montgomery. They know the law, are aware of it and are failing to enforce it. Dr. Carson may or may not have as possible cover a lack of knowledge of the law. But Montgomery and Payne, per our sources, absolutely know.
Thus, our call for investigations and proper accountability and of those officials and possibly others.
That said, the ultimate scoundrel may be Buffett and his strategic moat. The featured image at the top of this article comes from the Financial Times. They said that Buffett is responsible for breaking capitalism. Ouch.
They are not alone.
- The Nation – Feb 15, 2018 – Special Investigation: The Dirty Secret Behind Warren Buffett’s Billions ….. Berkshire Hathaway subsidiaries Clayton Homes…,
- Forbes – Warren Buffett’s Exploitative Mobile Home Investment (note the terminology is in error, but the points are to be taken seriously),
- Seattle Times – Federal officials investigating practices of Warren Buffett’s lending practices at Clayton Homes…,
- The Atlantic,
- Jacksonville Florida Times Union – John Oliver’s recent video slamming predatory businesses…involving Clayton Homes…MHI members…,
- GuruFocus – Warren Buffett Can’t Escape Unethical Strategic ‘Moats‘…Clayton Homes…,
- antitrust-focused Open Markets,
- plus the ‘smoking gun’ evidence of purported prima facie antitrust against Buffett, Kevin Clayton, Clayton Homes, 21st and related RICO concerns linked here,
are among the sources that have specifically named Clayton Homes and the Berkshire brands in their reports and commentaries on these issues.
Private citizens and other association leaders have made similar points.
The point? There is ample evidence to support House Financial Services Committee Chair Water’s concerns, and others in MHVille that share a similar view as her’s. That should set up a confrontation between federal elected and appointed officials and those involved in Buffett’s empire that are lining their pockets by arguably violating several laws, harming tens of millions in the process.
MHI officials might have pled ignorance at some point. But their purportedly paltering behavior prevents that now. Their knowledge is made plain by the fact that they too last summer addressed HUD Secretary Carson on this same issue of enhanced preemption.
Maxine Waters, Federal Officials and the Bottom Lines?
While this may seem like a lot to digest for newcomers, this is standard fare for lawmakers and their staffers. Chair Waters ought to use her authority, along with Democratic and Republican or other lawmakers to apply the bipartisan logic found in the report linked below.
- There is no need for more studies.
- There is no need for more laws.
- Existing laws should be robustly enforced.
We hereby call on lawmakers and public officials from both major parties, as well as the White House and key Trump Administration officials, to do what the law requires. Doing so will solve the very issues that both major parties have asserted they wanted to do for the past 2 decades.
3.8 update: Here are the consequences of the “the Moat” that Kevin Clayton described in the video and transcript found here.
To fail to do so is to foster more avoidable stress for the millions who seek more affordable housing.
By contrast, if people of good will of whatever background or political persuasion on they do so, expect an epic confrontation with Warren Buffett and the allies in the Omaha-Knoxville Arlington axis.
To drain the swamp, one must break the ties between so-called crony and vulture capitalists and public officials who by accident or design have allowed a few favored companies to profit while millions of potential and current consumers and often more ethical smaller businesses have suffered.
That’s sufficient for this report to make the case in the headline, isn’t it? “We Provide, You Decide.” © (Affordable housing, manufactured homes, lifestyle news, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.)
(See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHLivingNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Related References:
The text/image boxes below are linked to other reports, which can be accessed by clicking on them.
