HOUSING HANG-UPS: Banker Calls Modular Housing Key to Recovery

By PRISCILLA FRULLA

Bill Bynum is on a mission to put an end to the bureaucratic hang-ups keeping affordable housing from the people who need it most, and to help low- and moderate-income people in South Mississippi recover from Hurricane Katrina. He described his work as CEO of the nonprofit Enterprise Corporation of the Delta and Hope Community Credit Union as "banking on the edges."

ECD/Hope, a major community-development corporation, provides personal lending, financial counseling and business-planning assistance. It is based in Jackson and has an office in Biloxi.

"If you can put assets in people's pockets, then they can have more control over their well-being," said Bynum. "They can finance and use the assets in their home to send their kids to school or use as a safety net when a strong wind blows, like we have seen here."

ECD/Hope is coordinating the Home Again program in Pass Christian, which is providing 34 modular homes and one traditionally constructed home for owners who could not otherwise afford to rebuild. The program provides "gap loans" that are forgiven at the rate of 10 percent per year to cover rebuilding costs not covered by the government or insurance.

Bynum said Home Again is a pilot project that demonstrates what can be done. He believes modular housing is a key part of South Mississippi's recovery that needs to be addressed.

ECD/Hope vice president Phil Eide said one problem is the confusion over the distinction between modular and manufactured houses. Eide said around 70 modular homes were sold in Mississippi in 2005, compared to 30,000 manufactured homes.

"Manufactured has been a huge industry in the state for decades. Modular is a brand-new concept," said Eide. "Even this year there has been only 150 modular homes delivered into the state in the first six months."

Eide said there has been an intentional blurring of the issue by the manufactured-home industry, and in some cases homebuilders, because they see modular housing as competition.

Eide said manufactured housing is always built on a metal frame. Some modular houses are also built on a frame.

"The kind of modular we are looking for - permanent housing that is going to last and appreciate, rather than depreciate - is off-frame," said Eide. "That is much more like a stick-built house than it is a trailer."

Eide said quality modular homes are brought to a site, lifted onto a permanent foundation and attached to that foundation like a traditional home.

Eide said another problem that needs to be addressed is fire-marshal regulations that require all manufactured and modular homes to have a HUD sticker, like a VIN number in an automobile. Modular homes are not issued HUD numbers and therefore may not pass inspection under the letter of the law.

Eide said state law also requires modular homes be sold through a retailer, like those used for manufactured homes. He believes his organization should be able to order homes directly from the factory.

Bynum said there has been a lack of expertise in the area of affordable housing around the decision-making table.

"Traditional banks and large corporations have not historically been very effective at addressing the needs of the low-income population," he said. "They may be well-meaning, but they don't have that skill set."

Bynum said the state and banks also haven't had a lot of experience with nonprofit partners to assist low- and moderate-income households.

"We have had to hand-hold many of the banks that originated our mortgages. We had to make it very easy for them to make investments in poor communities," Bynum said. "Otherwise they gravitate toward the formulaic strategies they typically use that have been very profitable for them."

Eide listed five programs that are needed to address the housing crisis. He said the state has $3.5 million that could be used to help implement the following:

• Subsidies to help homeowners rebuild.

• Incentives for developers to build more homes for low- and moderate-income buyers.

• Down-payment assistance to help renters become homeowners.

• Improvements in organization and administration of public housing authorities.

• Help for the individual landlord with a small number of properties.