Senate Banking Committee Draft Gives Manufactured Home Retailers Relief from the Dodd-Frank Act

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Yesterday, the Senate Banking Committee released a bipartisan agreement to clarify that a manufactured housing retailer or seller is not considered a "loan originator" simply because they provide a customer with some assistance in the mortgage loan process.  This is a key tenet of the Preserving Access to Manufactured Housing Act, which excludes manufactured housing retailers and sellers from the definition of a loan originator so long as they are only receiving compensation for the sale of a home. 

MHI successfully argued that just as a real estate agent's sales commission does not make him or her a loan originator under current law, a similar distinction is needed for those selling manufactured homes.  While they are only in the business of selling homes and do not originate loans, manufactured home retailers and sellers currently run the risk of being considered mortgage loan originators. This is problematic because loan originators must comply with licensing or qualification requirements that are completely unrelated and irrelevant to manufactured home retailers and sellers.  This agreement affirms MHI's longstanding position that it is inappropriate for a manufactured housing retailer - whose business is to sell homes and who is not receiving any gain or compensation for minimally helping the borrower with the mortgage loan process - to be subjected to costly and labor-intensive activities that are clearly designed to apply to the actual individual making the mortgage loan.

The manufactured housing language was a part of a bipartisan regulatory reform package drafted by Senate Banking Committee Chairman Mike Crapo (R-ID). A bipartisan group of nine Republicans and nine Democrats cosponsored the measure, including: Mike Crapo (R-Idaho), Bob Corker (R-Tennessee), Tim Scott (R-South Carolina), Tom Cotton (R-Arkansas), Mike Rounds (R-South Dakota), David Perdue (R-Georgia), Thom Tillis (R-North Carolina), John Kennedy (R-Louisiana), Jerry Moran (R-Kansas), Joe Donnelly (D-Indiana), Heidi Heitkamp (D-North Dakota), Jon Tester (D-Montana), Mark Warner (D-Virginia), Tim Kaine (D-Virginia), Angus King (I-Maine), Joe Manchin (D-West Virginia), Claire McCaskill (D-Missouri), and Gary Peters (D-Michigan). 

The provision is in Section 107 of the package, which is within the title of the bill dealing with improving consumer access to mortgage credit.  Specifically, Section 107 amends the Truth in Lending Act (TILA) to exclude from the definition of "mortgage originator" an employee of a retailer of manufactured or modular homes who does not receive compensation or gain for taking residential mortgage loan applications while maintaining consumer protections. Senator Joe Donnelly (D-IN), author of the Preserving Access to Manufactured Housing Act (S. 1751) and long-time supporter of manufactured housing, strongly advocated for inclusion of this important consumer access provision in the package. 

The Senate's bipartisan reform package is expected to be considered by the Senate Banking Committee in the coming weeks. MHI will continue working with its champions as the package moves through the legislative process. 

The inclusion of this language in the Senate's financial regulatory relief package is the result of MHI's persistent efforts to ensure the needed changes contained in the Preserving Access to Manufactured Housing Act are passed into law as soon as possible. In addition to the Senate regulatory reform package, the full Preserving Access to Manufactured House Act was passed as a part of the House's financial reform package (H.R. 10) in June.   In September, the House also passed the bill's provisions as a part of its Fiscal Year 2018 Appropriations package. 

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