Comment Detail

Comment

RE: MANUFACTURED HOUSING - TENANT LEASE PROTECTIONS

Thank you for the opportunity to speak at FHFA's listening session on manufactured housing tenant lease protections. We wanted to briefly follow up on a few items.

1. Freddie Mac's 2018 Survey of State Laws ("Study"). Mr. Aber from Freddie Mac stated that Freddie relied upon the Study in determining the need for Tenant Lease Protections. We call your attention to our October 29, 2021 letter in which we specifically referenced the flaws with respect to Arizona Law. The Study found that Arizona has only 38% of the TLPs. However, a more fair score card would determine that Arizona law, taken as a whole, provides vastly more tenant protection than the TLPs taken as a whole. Mr. Martini (Cabrillo Management Corporation) detailed how California law touches all the protections even though the Study only credits California with 63%. We respectfully suggest that these issues are prevalent throughout the Study for the following reasons:

(a) The Study gave credit only for a state law protection specifically tracking the TLP and for nothing else. For example, all states regulate evictions and have specific rules protecting tenants rights in this process, but the study found ZERO states aligned with the post-eviction sale and only 8 as a "maybe."
(b) The Study ignored all other tenant protections provided in state law. This impacts items such as the one year renewable lease term. Many states govern lease term and many states have eviction only upon demonstration of cause. This makes lease term irrelevant. If a tenant may be evicted "for cause" only, then a month to month lease is adequate protection. The Study gave credit only for a one year renewable lease (13 states) and not for any other specified lease term (oddly, Illinois requires a 2 year renewable lease, but it scored a "yes" in this category even though two years is not one year.)
(c) The Study was not conducted by a firm with any expertise in MH landlord/tenant law. While taking a fresh look is understandable, consultation with industry experts may have yielded a better overall view of the law.
(d) On page 3, the Study does give a nod to the fact that some states have MH tenant protections as a "legislative priority" and "in some instances took their regulation in a direction diametrically opposed to the DTS tenant protections." This provided an advance warning that the TLPs are problematic in these highly regulated states.

2. Implementation. We heard from Mr. Aber that conflicting TLPs "do not apply." But this is not what the documents say and not what Freddie requires. If TLPs are not applicable because they conflict with state law, why are they included in the Riders that Borrowers must covenant to implement? Why must they be sent out to every tenant? Why is FHFA stretching so far to create risk for its customers? Taking a state by state approach that revises the TLPs to reflect state law or merely eliminating the TLPs in favor of the tried and true borrower covenant to "comply with all state law" serves tenants equally well and does not create compliance risk for borrowers. We pointed out in October the issues in Arizona with implementing the TLPs via a rule and regulation amendment. We respectfully believe this is a legal issue in other states as well as Arizona and urge FHFA to fully evaluate this process with its local counsel and borrower's local counsel before pressing borrowers to implement in this manner.

3. Further Protections. We are adamantly opposed to extending TLPs to renters who have different interests than homeowners (and are covered by yet another landlord /tenant act in Arizona) and we are adamantly opposed to further efforts to create a national landlord tenant regulatory overlay for our communities. These efforts will not improve the availability of affordable housing. We agree with Mr. Thelen from Sun that an effort to increase supply by overcoming restrictive zoning and NIMBY attitudes would be more impactful.

Many speakers pressed for some sort of rent regulation. We strongly oppose any efforts in this direction. It is interesting to note that the speaker from San Jose, California who fervently believed that her City is not protecting her forgot to mention that San Jose has imposed restrictive rent control with vacancy control on communities for decades. This is a strong incentive for landlords to convert to alternative uses which are not so restrictive in a time of increasing land values. It also shows that these restrictive ordinances have done nothing to aate the City's housing shortage, housing insecurity or housing costs. Rent control is not the solution.

We do believe that the TLP’s must be considered on a state-by-state basis due to not only a state’s landlord-tenant laws, but other laws which may apply such as eviction, closure of communities, and assistance to upgrade pre-HUD homes.

Thank you for the opportunity to submit these comments.