INDUSTRY NEWS AND ITEMS OF INTEREST - JANUARY 15, 2014
Home sales in Maine have climbed steadily since the depths of the recession, but they are starting to level off. Part of this levelling off can be attributed to the steady rise in interest rates from a level of approximately 3.5% in May to around 4.25% or a little higher currently. Selling prices are somewhat stable in most areas. One of the factors keeping prices from rising significantly has been the shedding of foreclosures and short sales, but they are starting to level off, that is, foreclosures entering the market are not as many as those going off the market. For those businesses in the HUD Code market, November sales in 2013 nationally were 13.2% ahead of those in November of 2012.
Another item that will factor into the home sales market is the regulatory burden that has been placed on lenders in the mortgage market. Effective this past January 10, some new regulations took effect, among them refining what is defined as a "Qualified Mortgage" as it pertains to Debt to Income ratios and a cap on points that may be charged on such a mortgage. The National Association of Realtors, as well as industry representatives in Washington D.C. have appealed that some of the regulations unfairly affect low amount mortgages (which many of our loans are), and that exceptions should be made. Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB) has denied the requests, although there is some hope that may be reversed as there is considerable pressure from parts of Congress to do so. The key component of these regulations is to stress the "ability to repay" rule, with complicated requirements and documentation to ensure that the regulations are adhered to. Many lenders have expressed some apprehension about being found at fault for noncompliance regarding some obscure and vague portions of the law, so that will probably mean paying closer scrutiny to all of the paperwork and hence a longer and more expensive mortgage process. There are some indications that the Director may agree to exempt lenders with less than $2 billion in assets who do fewer than 500 mortgages per year from the Debt to Income Ratios if the lenders hold the mortgages in-house. The CFPB has put out a guide for mortgages that can be found on its website at CFPB_TitleXIVRules@cfpb.gov.
Flood Insurance is another issue that may have consequences for many of us. The 2012 Biggert-Waters Act re-authorized the National Flood Insurance Program for 5 years. Some areas that had not previously been located in a designated Flood Zone would have become included with the re-drawing of Flood Maps and hence would have faced substantial flood insurance increases. After much wrangling, Congress has agreed to delay the implementation of the law for a short while. This is an issue that will require ongoing monitoring.
Another issue that has just arisen has to do with the safety of modular carriers. Very recently, federal officials pulled an inspection of carriers at a modular home plant in Pennsylvania and found that of all the carriers at the plant, only two passed inspection. They are looking particularly at safety of the tires and axles, and the reports are that the inspectors have determined that this issue is one that they will pursue. If you are expecting a modular shipment and experiencing a delay in its delivery, this may very well be one of the reasons as transporters will be working to bring their carriers into compliance.
The Manufactured Housing Association of Maine (MHAM) is a non-profit trade and professional association whose member companies build, sell, site, and finance manufactured and modular housing and develop and operate manufactured housing communities and developments.
Established in 1986, the Manufactured Housing Association of Maine is dedicated to the protection and promotion of the state's manufactured home industry through legislative representation, continuing industry education, public relations and communications efforts.