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MANUFACTURED HOUSING IN NONMETROPOLITAN AREAS:
A DATA REVIEW

© Housing Assistance Council, 1996

Permission is granted ONLY to nonprofit community-based organizations to reproduce and/or adapt this document, and only for their own use.

APPENDIX C:
THE REGULATORY SYSTEM FOR MANUFACTURED HOUSING

The regulatory system applicable to manufactured homes is different than that for site-built homes, but is generally the same in rural/nonmetro areas as in urban/metro places. Manufactured housing is the only type of housing subject to a federal building code and a federally controlled enforcement system. In contrast, site-built housing -- including housing constructed of factory-built modular components -- is subject to building codes promulgated by state and local governments, usually based on national standards developed by the Building Officials and Code Administrators (BOCA) or the American National Standards Institute (ANSI). State or local standards cannot be applied to manufactured housing, however, even if they are stricter than the HUD Code.

Amendments or additions to the HUD Code must be made through the standard federal regulatory process involving publication of a notice in the Federal Register for public comment, a process the National Commission on Manufactured Housing complained typically takes two to three years.⁵⁷  HUD has been subject to criticism from the Commission, the American Association of Retired Persons (AARP), and others for not updating the Code often enough to keep up with technological changes. Major changes have been made in only four HUD Code standards since the Code was first developed in 1976. From 1976 through late 1993 the only major changes were in fire safety and formaldehyde criteria. Then, 

in October 1993, HUD published revised energy standards and met a Congressional deadline, after which the States would have been allowed to enforce their own energy standards. . . . More recently, HUD issued a final rule revising the wind resistance standards in January, 1994, to take effect on July 13, 1994 [for high-risk hurricane areas].⁵⁸

The HUD Code does not cover transportation, storage, or installation of manufactured homes -- except that approved designs must include manufacturer's instructions on how those activities should be performed. As HUD interprets the 1974 Act, it has no authority to enforce standards for installation. Thirty-one states have codes governing installation, some of which are based on a national voluntary standard developed by ANSI. The content and enforcement of these state codes is not consistent between states, and at least some of the state codes apply to installation of new homes only, not used homes. Installation can be an important issue: the Commission heard testimony that 50 to 75 percent of all complaints about manufactured homes are related to their installation. 

In contrast, the proportion of problems caused by transportation is unknown. The Commission received conflicting testimony on this point, and noted in its final report that it is difficult to determine whether transport actually caused specific damage to a given home, particularly if the problem is not discovered for years, as may be the case with structural problems.

The system for enforcing the HUD Code and other provisions of the 1974 Act is complex. Enforcement activities occur in three general areas: pre-production design approval, production surveillance, and post-production consumer complaint handling. For the first phase, HUD approves independent third-party Design Approval Primary Inspection Agencies (DAPIAs), which are then hired by manufacturers to review and approve manufacturers' designs and quality control manuals. Eight private organizations and one state agency are approved DAPIAs. 

The production surveillance phase is carried out by a separate set of HUD-approved independent third parties known as Production Inspection Primary Inspection Agencies (IPIAs), also hired by manufacturers. These agencies conduct plant certification inspections and inspect every home in at least one stage of production to ensure that homes comply with the DAPIA-approved designs, quality assurance manuals, and the HUD Code standards. Fourteen state agencies and seven private organizations are approved IPIAs. The National Conference of States on Building Codes and Standards (NCSBCS) is under contract with HUD to monitor the DAPIAs' and IPIAs' performance (and to perform many other functions related to the regulation of manufactured housing). 

A state may handle any of the three categories of enforcement activities if HUD approves a State Administrative Agency (SAA). The 21 fully approved SAAs undertake all enforcement actions for the pre-production through post-production stages. Fifteen states have conditionally approved SAAs. HUD is responsible for all enforcement, including handling of consumer complaints, in the 14 non-SAA states. HUD also oversees the SAAs, DAPIAs, IPIAs, and NCSBCS.

Consumer complaints received by SAAs or HUD that concern matters covered by the HUD Code are referred to manufacturers. The SAA or HUD, as applicable, oversees the manufacturer's complaint resolution activities. HUD regulations require the manufacturer to determine whether the problem constitutes a violation of the HUD Code, whether it occurred systematically in more than one home, and how serious a problem it is. A problem classified as an "imminent safety hazard" (presenting "an imminent and unreasonable risk of death or severe personal injury") or a "serious defect" (posing "an unreasonable risk of injury or death") must be corrected within 20 days if it affects only one home; if it affects more than one, the manufacturer must submit a plan of notification and correction to the SAA or to HUD. A "defect" (rendering the home or any part of it unfit for "ordinary use" but not resulting in "unreasonable risk of injury or death") or "noncompliance" (a failure to comply with the HUD Code that does not fit one of the more serious categories) need not be corrected, nor the purchaser notified, if only one home is affected. If more than one home is affected by a defect, the manufacturer must notify consumers of the existence of the defect. Notification of a noncompliance is necessary only if the SAA or HUD requires it.⁵⁹ 

While, as noted above, states may not impose stricter construction standards than the HUD Code, they do have the authority to add consumer protections through licensing and warranty requirements. Thirty-five states require manufactured home retailers to obtain a license, 25 license in-state and 22 out-of-state manufacturers, 19 license installers, 16 license salespeople, and a few apply licensing requirements to brokers and repairer/refurbishers.⁶⁰ Twenty-one states have established some kind of warranty requirements for manufacturers and/or retailers, though their warranty provisions vary widely. Nationally, manufacturers generally provide a one-year warranty but do not cover defects resulting from improper transportation or installation. As noted above, the majority of complaints about manufactured housing are related to installation.

The Commission concluded that the existing regulatory and enforcement system suffers from a number of problems. "Because of delegation by HUD of much of its authority under the Act, there is a lack of checks and balances and a lack of a review process for participants in the enforcement system who may abuse or exceed their authority." Standards are not updated as often as needed. The relationships between HUD and the state agencies, as well as those among manufacturers, retailers, transporters, and installers, are divided and not always clear-cut, leaving homeowners uncertain about where to seek assistance with problems.⁶¹ 

Others have pointed out problems in the existing regulatory process as well. The American Association of Retired Persons, for example, has noted that the quality assurance process is uneven. In addition, AARP is concerned that DAPIAs and IPIAs may suffer from conflicts of interest because they are paid by manufacturers, their fees are negotiated with the manufacturers, and a manufacturer may discharge a PIA at any time. In some cases, a company inspects both the design and production of a manufacturer, possibly resulting in another type of conflict of interest, with the production overseers less likely to identify design-related problems.⁶²

It is difficult to identify ways in which these regulatory issues might affect manufactured housing differently in rural/nonmetro areas than in cities. Rural/nonmetro residents are, however, disproportionately affected by gaps and problems in the regulatory process, simply because more manufactured homes are placed in rural/nonmetro areas.

A separate set of regulatory issues facing manufactured housing is created by regulatory barriers at the state and local levels, although such barriers may exist less frequently in rural/nonmetro areas. Because "trailers" have a negative image as low-quality housing for low-income persons, some zoning codes ban manufactured housing or restrict it to specific areas designated as mobile home parks or to remote areas where infrastructure is lacking.⁶³ Such restrictive zoning may have led to a decrease in the number of parks.⁶⁴ Since rural/nonmetro areas are less likely to have zoning codes than cities, some have also cited restrictive urban and suburban zoning as a reason why manufactured homes are more common in rural/nonmetro areas.⁶⁵ 

To stop this discriminatory trend, many states -- although it is not clear how many -- have taken steps to protect manufactured housing. In 1991 the Advisory Commission on Regulatory Barriers to Affordable Housing stated that 16 states "explicitly bar" local discrimination against manufactured housing.⁶⁶ The American Association of Retired Persons has asserted that in 1989 22 states had statutes prohibiting zoning that discriminated against manufactured housing.⁶⁷ A list compiled by the Manufactured Housing Institute (MHI) in 1993 or 1994 shows that by statute or court decision 23 states prohibit the exclusion of manufactured homes in residential zones. A number of the provisions on MHI's list, however, apply only to manufactured housing that meets the jurisdiction's standard for site-built housing, or prohibit exclusion while allowing localities to impose standards similar to those for site-built housing, including "design" or "aesthetic" criteria. Such standards may be imposed intentionally in order to block the use of manufactured housing. They may require that roofs be more steeply sloped -- therefore higher -- than the typical manufactured housing roof is, posing transportation difficulties because highway underpasses have limited heights, and raising the cost of homes built to meet these atypical specifications.⁶⁸ Requirements for full foundations or minimum floor areas also raise costs.⁶⁹ 

The regulatory problems created by zoning codes are less likely to occur in rural/nonmetro areas, simply because those areas are less likely to have zoning codes, but these problems are by no means exclusively urban. While apparently no study has been done on the manufactured housing-related provisions of the zoning codes that do exist in numerous counties and small cities, rural/nonmetro residents do have the same prejudices as their urban counterparts against buildings and residents they perceive as different from themselves. ⁷⁰  On the other hand, in areas without restrictions on land use, a rural/nonmetro family may install a manufactured home on any land they own, rent, or use, or may expand a house by setting a manufactured home next to an existing building.

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