Rule: Manufactured Home Dispute Resolution Program

Monday,
May 14, 2007
Part III
Department of
Housing and Urban
Development
24 CFR Parts 3280, 3282, and 3288
Manufactured Home Dispute Resolution
Program; Final Rule
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27222 Federal Register / Vol. 72, No. 92 / Monday, May 14, 2007 / Rules and Regulations
DEPARTMENT OF HOUSING AND resolution programs and to establish General

URBAN DEVELOPMENT guidelines for the creation of state-
administered dispute resolution As previously discussed, HUD was
24 CFR Parts 3280, 3282, and 3288 programs. charged with implementing a system to
resolve disputes among manufacturers,
[Docket No. FR–4813–F–03] Specifically, section 623(c)(12) of the
retailers, and installers. As several
Act (42 U.S.C. 5422(c)(12)) calls for the
RIN 2502–AH98 commenters noted, the proposed rule
implementation of ‘‘a dispute resolution
did not include a definition of
Manufactured Home Dispute program for the timely resolution of
‘‘installer.’’ In response to this
Resolution Program disputes between manufacturers,
comment, this rule defines the term
retailers, and installers of manufactured
‘‘installer.’’ Additional information
AGENCY: Office of the Assistant homes regarding responsibility, and for
regarding installers may be found in the
Secretary for Housing—Federal Housing the issuance of appropriate orders, for
Manufactured Home Installation
Commissioner, HUD. the correction or repair of defects in
Program Proposed Rule published June
ACTION: Final rule. manufactured homes that are reported
14, 2006 (71 FR 34476).
during the 1-year period beginning on
SUMMARY: This rule establishes a federal the date of installation.’’ A state is not Even though the Act does not require
manufactured home dispute resolution required to be a State Administrative their participation in the HUD Dispute
program and guidelines for the creation Agency under HUD’s manufactured Resolution Program, HUD views the
of state-administered dispute resolution home program to administer its own participation of homeowners as a
programs. Under the National dispute resolution program. However, crucial element to a viable program.
Manufactured Housing Construction any state submitting a state plan to Under Section 625 of the Act, HUD has
and Safety Standards Act of 1974, as change its status from a the broad authority to involve
amended by the Manufactured Housing nonparticipating state to a conditionally homeowners in the dispute resolution
Improvement Act of 2000, HUD is or fully approved State Administrative program. Consistent with the proposed
required to establish a program for the Agency after the effective date must rule, this final rule gives homeowners
timely resolution of disputes among provide for a dispute resolution program the right to participate in the HUD
manufacturers, retailers, and installers as part of its plan. Any state that was Dispute Resolution Program by
of manufactured homes regarding conditionally or fully approved before initiating the Mediation and Arbitration
responsibility, and the issuance of the effective date will not be required to Process and by acting as observers of the
appropriate orders, for the correction or include a dispute resolution program in process. This final rule does not
repair of defects in manufactured homes its state plan, as long as the state recognize homeowners as parties.
that are reported during the 1-year maintains conditionally or fully HUD and the MHCC, in its meetings,
period beginning on the date of approved status. Section 623(g)(2) of the recognized that it may have been
installation. Act requires HUD to implement a HUD possible under the proposed rule for the
DATES: Effective Date: February 8, 2008. Manufactured Home Dispute Resolution parties to argue that there is no dispute
Program that will meet the above between them when in fact there is a
FOR FURTHER INFORMATION CONTACT:
requirements in any state that has not defect that needs correction. In this final
William W. Matchneer III, Associate
established a program that complies rule, HUD has ensured that the HUD
Deputy Assistant Secretary for
with the Act. The state where the home Manufactured Home Dispute Resolution
Regulatory Affairs and Manufactured
is sited determines whether the HUD Program results in a proper
Housing, Department of Housing and
Manufactured Home Dispute Resolution determination of defect and culpability.
Urban Development, 451 Seventh Street,
Program or the state program applies. Funding
SW., Room 9164, Washington, DC
20410, telephone (202) 708–6401 (this is Proposed Rule
not a toll-free number). Persons with The MHCC and commenters have
On October 20, 2005, HUD published continued to recommend that parties
hearing or speech impairments may
the Manufactured Home Dispute that use and receive the benefits of the
access this number via TTY by calling
Resolution Program Proposed Rule (70 dispute resolution process pay at least a
the toll-free Federal Information Relay
FR 61178) with a comment due date of portion of the direct costs associated
Service at (800) 877–8389.
December 19, 2005. HUD received with the program. HUD agrees with this
SUPPLEMENTARY INFORMATION: responses from 20 commenters during ‘‘fees for service’’ approach and is
I. Background the comment period. The commenters currently seeking statutory authority to
included two state agencies, several assess users of the program a fee for
Requirement for a Dispute Resolution statewide and national manufactured costs associated with the program.
Program housing associations, individuals, the Absent such authority, the Department
The National Manufactured Housing Manufactured Housing Consensus will absorb the cost of running the
Construction and Safety Standards Act Committee (MHCC), and one low- program in HUD-administered states as
of 1974 (the Act) (42 U.S.C. 5401–5426) income housing organization. general program expenses. It is
is intended, in part, to protect the anticipated that such fees for service
II. Particular Areas of Interest to
quality, safety, durability, and would not be used to cover the purely
Commenters
affordability of manufactured homes. administrative costs to HUD of
The Act was amended on December 27, This section of the preamble discusses implementing the program, but would
2000, by the Manufactured Housing particular areas of interest to include a filing fee to initiate a dispute
Improvement Act of 2000, Public Law commenters in addition to the resolution process, a fee to initiate
106–569, to require HUD, among other discussions of public comments that arbitration, and the assessment of
things, to establish and implement a appear throughout the preamble in arbitration costs to a losing party. Other
new manufactured home dispute conjunction with the description of the administrative costs of the program in
resolution program for states that choose dispute resolution program adopted in HUD-administered states would be
not to operate their own dispute this final rule. funded as general program expenses.
Federal Register / Vol. 72, No. 92 / Monday, May 14, 2007 / Rules and Regulations 27223
Several commenters stated it is unfair III. Program Administration for the installation. It is only alleged defects
to consumers in states with their own HUD-Administered Program reported in the first year after the first
dispute resolution programs both to pay HUD interprets the language set forth installation that are covered under the
for their state’s program and subsidize in section 623(g)(3) of the Act (42 U.S.C. HUD Manufactured Home Dispute
the administration of HUD’s program in 5422(g)(3)) as permitting the use of Resolution Program. As used in HUD’s
states that are not offering programs. contractors in the implementation of the Manufactured Home Dispute Resolution
The Department is sensitive to this dispute resolution program in HUD- Program and this new part 3288, the
issue. However, because fees for service administered states. HUD will likely use term ‘‘defect’’ is defined to parallel its
are not currently authorized, the contractors as screening neutrals, definition in the Act. Accordingly, the
financing of the HUD Manufactured mediators, and arbitrators, and they will rule also makes clear that for the HUD
Home Dispute Program will be absorbed be required to become familiar with Manufactured Home Dispute Resolution
as a general Office of Manufactured HUD’s manufactured home program. Program, the term ‘‘defect’’ includes
Housing program expense as described HUD acknowledges, however, that each defect in the installation,
above. dispute resolution experts emphasize construction, or safety of the home.
As discussed in the proposed rule, that a primary consideration for Persons familiar with HUD’s long-
HUD will use mediation and arbitration, selecting neutrals, mediators, and established program for manufactured
two widely accepted methods of dispute arbitrators should be their background home construction and safety standards
resolution, as well as an alternative and experience in dispute resolution. are likely to be accustomed to using the
process that will allow manufacturers, The HUD Manufactured Home term ‘‘defect’’ in a narrower way. In
retailers, and installers an opportunity Dispute Resolution Program is governed regulations implementing the historical
to resolve disputes outside of the HUD by the Administrative Dispute aspects of HUD’s manufactured home
Mediation and Arbitration Process Resolution Act, 5 U.S.C. 571 et seq. The program, the term has been defined to
established by this rule. The addition of HUD Manufactured Home Dispute encompass only construction and safety
an alternate process to the HUD Resolution Program consists of a standards, and to exclude matters that
Manufactured Home Dispute Resolution Mediation and Arbitration Process involve significant health and safety
Program is based on comments received comprised of six parts, in addition to issues. See the definition in § 3282.7(j).
from the MHCC. In its comments to the the Alternative Process. The six parts of For purposes of the HUD Manufactured
proposed rule, the MHCC recommended the Mediation and Arbitration Process Home Dispute Resolution Program,
that a term other than ‘‘Commercial Opt- are: Initial Reporting of an Alleged however, a defect is any problem in the
Out Option’’ be used for the alternate Defect, Initiating Dispute Resolution, performance, construction, components,
process. In its place, HUD has Intake and Screening, Mediation, or material of the home that renders the
substituted the term ‘‘Alternative Nonbinding Arbitration, and HUD home or any part of it not fit for the
Process.’’ Review. When the manufacturer, ordinary use for which it was intended,
The HUD Manufactured Home retailer, and installer agree that the including, but not limited to, a defect in
Dispute Resolution Program reflects the homeowner is not responsible for the construction, safety, or installation
Executive Branch’s emphasis on causing the defect, they may elect to use of the home. The broader use of the term
utilizing dispute resolution processes to the Alternative Process instead of the as it applies to rights and
resolve conflicts in a cost-effective and HUD Mediation and Arbitration Process. responsibilities established under this
expeditious manner, and on fostering The parties would then engage in a new part 3288, is distinguished from the
good government by giving parties the neutral evaluation process of their own term’s historical use in part 3282.
opportunity to resolve disputes design. However, if the defect is not As previously discussed, alleged
amicably and creatively through corrected or repaired, the homeowner defects must be reported within 1 year
alternative dispute resolution. It also has the right to invoke the HUD of the date of home installation to be
dovetails with Congress’ active Mediation and Arbitration Process after eligible for the HUD Manufactured
promotion of alternative dispute 30 days have elapsed from the initiation Home Dispute Resolution Program. The
resolution as set forth in the of the Alternative Process. Department strongly encourages the
Administrative Dispute Resolution Act parties and homeowners to seek to
of 1996 (5 U.S.C. 571 et seq.). IV. HUD Manufactured Home Dispute resolve disputes directly with the party
There were several comments to the Resolution Program in HUD- or parties that they believe to be
proposed rule about the relationship Administered States responsible for causing the alleged
between the HUD Dispute Resolution As noted previously, HUD will defect before invoking the HUD
Program and subpart I of 24 CFR part administer its dispute resolution Manufactured Home Dispute Resolution
3282 (Subpart I). This final dispute program only in states that choose not Program. Nevertheless, any of the
resolution rule is not inconsistent with to operate their own dispute resolution parties, and the homeowners, must
other requirements of the Act. programs. The following discussion of report the existence of possible defects
Specifically, nothing in this final rule the HUD-administered program will not within the 1-year period in order to
absolves the manufacturer of its apply in any state that provides preserve the option of initiating the
notification and correction satisfactory assurances that it has HUD Manufactured Home Dispute
responsibilities or other obligations implemented its own qualifying dispute Resolution Program. The report may be
under Subpart I. The dispute resolution resolution program, and that certifies its made to the Department, any of the
program provides an additional program to HUD, as described in parties, or a State Administrative
homeowner protection mechanism and Section VI of this preamble. Agency. To be more flexible, the
does not toll or replace the Department is permitting reports to be
manufacturer’s responsibilities under A. Initial Reporting of an Alleged Defect made to State Administrative Agencies
Subpart I. Furthermore, the HUD Under the Act, alleged defects that in addition to the Department and the
Dispute Resolution Program does not can be referred to the dispute resolution parties. The Department recommends
replace any manufacturer’s warranty program must be reported within the that reports of alleged defects be made
program. first year after the date of home in writing, including, but not limited to,
e-mail, written letter, certified mail, or D. Mandatory Mediation the parties and the homeowner setting
fax. Reports are also permitted by The second stage in the process is forth the date, place, and time the
telephone. A report of an alleged defect mandatory mediation. The dispute arbitration is to be held. If a party
must, at a minimum, include a resolution provider will select a chooses not to participate in the
description of the alleged defect, the mediator, who will be a different arbitration, the process will continue
name of the homeowner, and the individual from the screening neutral without input from that party. The
address of the home. Parties alleging used during the intake and screening arbitrator will have the authority to
defects are encouraged to send any process. The mediator will mediate the issue requests for documentation and
written correspondence via certified dispute and attempt to facilitate a information necessary to complete the
mail, fax, e-mail or other method, so settlement. The parties will be given 30 record, conduct on-site inspections,
that there will be proof of date of days from the commencement of the
dismiss frivolous allegations, and set
delivery. After reporting an alleged hearing dates and deadlines. The
mediation to reach a settlement. For
defect, the reporting party or arbitrator will be required to complete
cases involving defects presenting an
homeowner is encouraged to allow time the arbitration within 21 days of receipt
unreasonable risk of injury, death, or
for a satisfactory response before of the request for arbitration, unless
significant loss or damage to valuable
initiating the HUD Manufactured Home good cause is found by HUD. After
personal property, the parties will have
Dispute Resolution Program. conducting a hearing, the arbitrator will
a maximum of 10 days from the
provide the parties and HUD with a
B. Initiating the Process commencement of the mediation to
written nonbinding recommendation as
Any party or a homeowner may reach an agreement. The dispute
to who the responsible party or parties
initiate the HUD Mediation and resolution provider will notify the are and what actions should be taken.
Arbitration Process in a HUD- parties and the homeowner in writing of Several commenters, including the
administered state by submitting a the date of the commencement of the MHCC, proposed that the contents of
request for dispute resolution to the mediation. Sample agreements will be the recommendation be made available
dispute resolution provider or by calling made available to the parties as drafting to HUD and the parties simultaneously.
a toll-free number. guidance. Upon the parties reaching and The Department agrees and has
signing an agreement, the mediator will restructured the Mediation and
C. Intake and Screening forward copies of any settlements Arbitration Process accordingly. Several
When the request for dispute reached to the parties, the homeowner, commenters, including the MHCC,
resolution has been received by the and HUD. Except for the report of an stated that the parties should have the
dispute resolution provider, the alleged defect, any request for dispute ability to enter into binding agreements
screening neutral will review the resolution, and any written settlement of their choosing at any point in the
sufficiency of the information provided agreement, all other documents and process. Taking this into consideration,
with the request. Although there is no communications provided in confidence HUD has modified the procedures set
specified time period established for the and used in the mediation will be out in the proposed rule. Under the final
screening neutral to review the request confidential, in accordance with the rule, at any time before HUD issues a
for dispute resolution, as recommended Administrative Dispute Resolution Act final order, the parties may submit an
by the MHCC and other commenters, it of 1996 (5 U.S.C. 571 et seq.). Once the offer of settlement to HUD that HUD
is HUD’s intention to perform this task settlement agreement is signed, the may, at its discretion, incorporate into
in a timely manner. If a defect is corrective repairs must be completed the order.
properly alleged and timely reported, within 30 days, unless a longer period
notice of the request will be forwarded is agreed to by the homeowner and the F. HUD Review
to the manufacturer, retailer, and parties. The final stage of the process is HUD
installer by the screening neutral to the Review. After the arbitrator makes a
extent the appropriate parties can be E. Nonbinding Arbitration
recommendation, he or she will forward
identified based on the information in The third stage that may be invoked it to HUD. HUD will review the
the request. If the screening neutral is nonbinding arbitration. If the parties arbitrator’s recommendation, the record,
determines there is sufficient fail to reach a settlement during and any settlement offers. HUD will
documentation of an alleged defect mediation, a party or the homeowner accept, modify, or reject the
presenting an unreasonable risk of may, within 15 days of the expiration of recommendation. Several commenters,
injury or death, a copy of the request the time allowed for reaching a including the MHCC, were opposed to
will be sent to HUD. If a request is settlement, request nonbinding HUD having the option to accept,
lacking any of the required information, arbitration. The party or the homeowner modify, or reject the arbitrator’s
the screening neutral will contact the requesting nonbinding arbitration will recommendation. HUD considers it
requester or the parties to supplement be required to submit a written request appropriate for HUD to issue final
the initial request. If information for arbitration to the dispute resolution enforceable orders and that this inherent
necessary to qualify the matter for the provider. The dispute resolution governmental function cannot be
HUD Manufactured Home Dispute provider will determine how an delegated to a private party. It is HUD’s
Resolution Program is not received arbitrator will be selected for each case. obligation to issue an order that under
within a reasonable time established by The parties may request an in-person the Administrative Procedure Act can
the screening neutral, the request for hearing, to be held at the discretion of withstand the arbitrary and capricious
dispute resolution will be considered the arbitrator, after considering factors standard. When a defect is determined
withdrawn. The Department anticipates such as cost. If such a request is not to be present, HUD will issue an
establishing additional specific time made by all parties within 5 days of the appropriate order that assigns
periods for intake and screening as part dispute resolution provider’s receipt of responsibility for correction of the
of the contracting process with the the request for arbitration, the arbitrator defect. In the order for correction, HUD
third-party dispute resolution provider may conduct either a record review or will include a date by which the
and publicizing these time periods on a telephonic hearing. The dispute correction of all defects must be
HUD’s Web site http://www.hud.gov. resolution provider will issue a notice to completed, taking into consideration the
seriousness of the defect. A party’s V. Informing Homeowners About requirements for full certification to
failure to comply with an order of HUD Manufactured Home Dispute four, and to three for conditional
will be considered a violation of section Resolution approval. The proposed rule also
610(a)(5) of the Act (42 U.S.C. One key component of the HUD required that states allow homeowners
5409(a)(5)). Manufactured Home Dispute Resolution to initiate complaints. Comments from
The responsible party or parties will Program is notifying homeowners about the MHCC and others recommended
be required to pay for or provide any the availability of dispute resolution in that this requirement be removed. HUD
repair of the home. HUD may apportion HUD-administered states through the has changed the certification form to
the costs for correction and repair if HUD Manufactured Home Dispute allow states flexibility when operating
culpability rests with more than one Resolution Program, and in all other their own programs and to give them the
party. states through state dispute resolution ability to design programs that closely
programs. Homeowners will be advised model the statutory requirements. The
G. Alternative Process When
of the availability of the HUD minimum requirements for certification
Homeowners Are Not Responsible for
Manufactured Home Dispute Resolution are set forth in Part II of the Dispute
the Defect
Program from retailers when purchasing Resolution Certification attached as an
Manufacturers, retailers, and a manufactured home. The rule requires appendix, and include provisions for:
installers who have been unable to retailers to provide each homeowner (1) The timely resolution of disputes
resolve a dispute involving a defect with a standard notice at the time of regarding responsibility for correction
among themselves and who certify that signing of a contract for the sale or lease and repair of defects in manufactured
the homeowner is not responsible for of a manufactured home. This is homes involving manufacturers,
the defect will have the option of consistent with numerous comments retailers, or installers; (2) provisions for
electing to use an Alternative Process received from the MHCC and others issuance of appropriate orders for
under the HUD Manufactured Home opposed to the posting of a notice in correction and repairs of defects in the
Dispute Resolution Program. The each home, but favoring a standard homes; (3) a coverage period for
Alternative Process permits the parties notice to be provided at or before the disputes involving defects that are
to seek neutral evaluation outside of the signing of the sales contract. reported within a minimum of 1 year
procedures established by the HUD The Department will notify the public from the date beginning on the date of
Mediation and Arbitration Process. To about the HUD Manufactured Home first installation; and (4) adequate
participate in the Alternative Process, at Dispute Resolution Program through the funding and personnel. Any state that
least one of the parties must submit a Consumer Manual that 42 U.S.C. 5416 certifies that its program meets these
written notification to the dispute and 24 CFR 3282.207 currently require four minimum requirements will be
resolution provider after it has reported be provided with each manufactured accepted and permitted to implement its
an alleged defect or has been informed home. The manufacturer will be own program. A state that meets three
that an alleged defect has been reported required to include in the Consumer of the four minimum requirements
to another party. Parties must elect to Manual the specific language that is set under § 3288.205(a)(1) through (4) will
use the Alternative Process no more out in the revised § 3282.207 in this be conditionally approved by HUD.
than 7 days after notification of a rule. The language gives detailed HUD recognizes that some states may
request for dispute resolution has been information about the HUD program. have a different definition of ‘‘defect’’ or
delivered by overnight delivery, or
VI. State Dispute Resolution Programs use a different threshold for its program
commercial carrier, or by fax, to the
in Non-HUD-Administered States than the one set forth in these
screening neutral. Parties who elect to
regulations for the HUD program. For
use the Alternative Process must agree The HUD Manufactured Home
purposes of state certification, this rule
to engage a neutral of their own Dispute Resolution Program will not be
provides for state approval if the
selection. The selected neutral will implemented in states that are certified
threshold for the program is
evaluate the dispute and make an by HUD and have dispute resolution
functionally equivalent to the federal
assignment of responsibility for programs that comply with the
correction and repair. The actual minimum requirements set out in these definition of ‘‘defect.’’
process followed will be designed and regulations. These states will administer VII. Role of the Manufactured Housing
agreed to by the parties; there are no their own dispute resolution programs. Consensus Committee in Future
particular procedural requirements, A state dispute resolution program will Revisions of This Regulation
such as witnesses or formal evidence. be required to meet criteria listed in a
The parties may elect to memorialize certification form. However, the final Several commenters expressed a
the assignment of responsibility in rule does not specify how the criteria desire to have the Department work
writing and should agree to act upon the are to be met. Comments from the closely with the MHCC in future
neutral’s assignment of responsibility MHCC and others strongly supported rulemaking for the dispute resolution
for correction and repair. The redefining HUD’s proposed state program. Such involvement is not
participants must agree to allow the requirements for certification. Those specifically provided for in the Act.
homeowner or the homeowner’s commenters were in favor of having the However, HUD provides in this rule for
representative to be present at any state requirements parallel the statutory the MHCC’s input prior to publication
meetings and to be informed of the requirements. Additionally, those of any new dispute resolution
outcome. The parties may inform the commenters noted that some states have rulemaking initiated by HUD. This rule
Department of the outcome. At any time already implemented programs that also provides that the MHCC may
after 30 days of the Alternative Process closely model the statutory initiate its own recommendations for
notification, any party or the requirements. The proposed rule HUD regarding dispute resolution
homeowner may invoke the HUD included six requirements for full regulations, and that HUD will explain
Mediation and Arbitration Process and certification and five for conditional to the MHCC any modification or
proceed to mediation by following the approval. In response to the comments, rejection by HUD of the MHCC
established procedures. HUD has reduced the minimum recommendations.
VIII. Conforming Amendments dispute by all parties without 15. A new subpart E has been added
As stated in the October 20, 2005, acceptance of responsibility will result to address the role of the MHCC in
proposed rule, since HUD is using the in the mediator referring the matter to Dispute Resolution Program rulemaking
term ‘‘manufactured home’’ in this rule, arbitration for determination of the procedures.
it is taking this opportunity to correct defect and responsibility for the defect.
X. Findings and Certifications
the definition in 24 CFR 3280.2 by A similar provision is added at
§ 3288.40(d), that if the parties deny a Regulatory Planning and Review
adding the reference to self-propelled
dispute exists and the arbitrator The Office of Management and Budget
vehicles found in section 603(6) of the
determines there is a defect, the (OMB) reviewed this rule under
Act (42 U.S.C. 5402(6)). HUD is also
arbitrator will make a determination of Executive Order 12866 (entitled
clarifying the methodology for the
responsibility for the defect. These ‘‘Regulatory Planning and Review’’).
calculation of square footage that is
additions protect the homeowner’s right OMB determined that this rule is a
included in the current regulatory
to have the existence of, and ‘‘significant regulatory action’’ as
definition. This action will result in
responsibility for, any alleged defect defined in section 3(f) of the Order
consistent usage of the term for all parts
determined through the HUD (although not an economically
of the manufactured home program. The
Manufactured Home Dispute Resolution significant regulatory action under the
definition in this final rule is unchanged
Program in HUD-administered states in Order). The docket file is available for
from the definition that appeared in the the event existence of a dispute is
proposed rule. public inspection in the Regulations
denied by all of the parties without Division, Office of General Counsel,
IX. Changes to the Proposed Rule in determination of the defect and of Department of Housing and Urban
This Final Rule responsibility for the defect. Development, 451 Seventh Street, SW.,
8. A procedure cited in the preamble Room 10276, Washington, DC 20410–
The following changes to the October of the proposed rule (at 70 FR 61180),
20, 2005, proposed rule are made by this 0500. Due to security measures at the
that if the screening neutral determines HUD Headquarters building, please
final rule, consistent with the there is sufficient documentation of an
discussion of public comments in this schedule an appointment to review the
alleged defect presenting an docket file by calling the Regulations
preamble and as further explained unreasonable risk of injury or death, a
below: Division at (202) 708–3055 (this is not
copy of the request will be sent to HUD, a toll-free number).
1. To provide consistency in this rule is explicitly added to this rule at
with the terminology used in other HUD § 3288.30(d). Similarly, a procedure Paperwork Reduction Act
regulations, the term ‘‘manufactured cited in the preamble of the proposed
home’’ rather than ‘‘manufactured The information collection
rule (at 70 FR 61180), to make sample requirements contained in this rule have
housing’’ is used, and references to agreements available to the mediation
‘‘HUD’’ have been substituted for been approved by OMB under the
parties as drafting guidance, is included Paperwork Reduction Act of 1995 (44
references to ‘‘the Secretary.’’ in the final rule at § 3288.35(d)(2).
2. While this final rule gives U.S.C. 3501–3520) and assigned OMB
9. Section 3288.40(c) makes explicit control number 2502–0562. In
homeowners the right to participate in the arbitrator’s authority to make accordance with the Paperwork
the HUD Dispute Resolution Program by proposed findings of the presence of a Reduction Act, HUD may not conduct or
initiating the Mediation and Arbitration defect and culpability. sponsor, and a person is not required to
Process and by acting as observers of the 10. An extension of the 21-day time respond to, a collection of information,
process, it does not recognize period by which the arbitrator is unless the collection displays a
homeowners as parties. required to complete the arbitration is currently valid OMB control number.
3. A statement has been added to the now permitted for good cause under
dispute resolution language required in § 3288.40(h). Unfunded Mandates Reform Act
the consumer manual by § 3280.2(e) that 11. Under § 3288.40(h), the contents Title II of the Unfunded Mandates
the HUD Dispute Resolution Program of the arbitrator’s recommendation are Reform Act of 1995 (2 U.S.C. 1531–
does not replace any manufacturer’s to be made available to HUD and the 1538) establishes requirements for
warranty program. parties simultaneously, rather than only federal agencies to assess the effects of
4. A definition of the term ‘‘installer’’ to HUD as was stated in the proposed their regulatory actions on state, local,
has been added to the list of definitions rule. and tribal governments and the private
at § 3288.3. 12. The final rule, at § 3288.40(i), sector. This rule, which implements a
5. The rule at § 3288.5 requires allows the parties to submit an offer of statutory mandate to establish a program
retailers to provide each homeowner settlement to HUD at any time before a for the resolution of a narrow category
with a standard notice at the time of final order is issued that HUD may, at of disputes, will not impose any federal
signing of a contract for the sale or lease HUD’s discretion, incorporate into the mandates on any state, local, or tribal
of a manufactured home, rather than the order. government or the private sector within
posting of a notice in each home. 13. For the alternate dispute the meaning of the Unfunded Mandates
6. The rule at § 3288.15(b) now resolution procedure of subpart C, the Reform Act of 1995.
permits reports of defects to be made to term ‘‘Alternative Process’’ has been
State Administrative Agencies in substituted for ‘‘Commercial Opt-Out Environmental Review
addition to the Department and the Option.’’ This final rule does not direct,
parties. 14. In § 3288.205(a), the final rule has provide for assistance or loan and
7. A provision is added at § 3288.30(c) reduced the minimum requirements for mortgage insurance for, or otherwise
that denial of a dispute by all of the full certification from six to four, and govern or regulate, real property
parties that there is a dispute does not from five to three for conditional acquisition, disposition, leasing,
preclude the dispute resolution process approval. The proposed requirements rehabilitation, alteration, demolition, or
from going forward to mediation. A dealing with homeowner initiation of new construction, or establish, revise, or
provision is also added at § 3288.35(c) the process and conflict of interest have provide for standards for construction or
that, during mediation, denial of a been removed. construction materials, manufactured
housing, or occupancy. Accordingly, resolution of $98 per home. Dispute significant economic impact on a
under 24 CFR 50.19(c)(1), this final rule resolution would, therefore, provide an substantial number of small entities.
is categorically excluded from average savings of $402 per home.
Several commenters claimed that the Executive Order 13132, Federalism
environmental review under the
National Environmental Policy Act of number of complaints was not properly Executive Order 13132 (entitled
1969 (42 U.S.C. 4321). substantiated and was unrealistically ‘‘Federalism’’) prohibits, to the extent
low. However, these numbers were practicable and permitted by law, an
Impact on Small Entities developed by carefully sampling 12 agency from promulgating a regulation
The Regulatory Flexibility Act (5 current state dispute resolution that has federalism implications and
U.S.C. 601 et seq.) requires that a programs. Furthermore, the Small either imposes substantial direct
regulation that has a significant Business Administration has accepted compliance costs on state and local
economic impact on a substantial these estimates while none of the governments and is not required by
number of small entities, small commenters supplied any numbers of statute, or preempts state law, unless the
businesses, or small organizations their own. Some commenters also relevant requirements of section 6 of the
include an initial regulatory flexibility complained that the cost estimate Executive Order are met. This rule does
analysis describing the regulation’s provided by HUD runs only through the not have federalism implications and
impact on small entities. Such an mediation phase. While this is true, does not impose substantial direct
analysis need not be undertaken if the HUD’s research, which was again based compliance costs on state and local
agency has certified that the regulation on current state program experience, governments or preempt state law
will not have a significant economic determined that the number of disputes within the meaning of the Executive
impact on a substantial number of small requiring arbitration would be minimal. Order. State and local governments are
entities. The small increase in total cost not required to establish dispute
HUD has conducted a labor and travel associated with this final rule would not resolution programs, but the rule
cost impact analysis for this rule. The impose a significant burden for a small
cost analysis determines the cost provides a mechanism to recognize state
business. The rule would regulate
difference between a typical dispute programs that meet the statutory
establishments primarily engaged in the
resolution process (the process) elements of a dispute resolution
production of manufactured homes
involving manufactured housing and program to operate in lieu of the federal
(NAICS 32991) and the sale of
the civil litigation costs between one or manufactured home dispute resolution
manufactured homes (NAICS 453930).
more parties involved in a program.
In addition, manufactured home set-up
manufactured housing dispute. A and tie-down establishments (installers) Catalog of Federal Domestic Assistance
typical dispute resolution method is a would be included within the definition
two-step process: mediation and, for a of all other special trade contractors The Catalog of Federal Domestic
small percent of unsuccessful mediation (NAICS 23599). Of the 222 firms Assistance number for Manufactured
cases, arbitration. included under the NAICS 32991 Housing is 14.171.
The potential cost impact of the definition, 198 are small manufacturers, List of Subjects
mediation step for manufacturers would which fall below the small business
be approximately $1,550 per dispute, threshold of 500 employees. There are 24 CFR Part 3280
$237 for retailers, and $177 for 10,691 retailers included under NAICS Housing standards, Incorporation by
installers. HUD anticipates that it may 453930; all of the firms fall below the reference, Manufactured homes.
be administering the dispute resolution $11 million annual income rate. Of the
process in 26 states where 31,320 firms included under NAICS 24 CFR Part 3282
approximately 37,800 homes are 23599 definitions, only 53 firms exceed Administrative practice and
expected to be installed annually. the small business threshold of 500 procedure, Consumer protection,
Currently, 45 manufacturing corporate employees and none of these is Intergovernmental relations,
entities ship into those states, while primarily a manufactured home set-up Investigations, Manufactured homes,
1,719 retailers sell homes and and tie-down establishment. The rule, Reporting and recordkeeping
approximately 5,000 individuals or therefore, would affect a substantial requirements, Warranties.
businesses install manufactured homes number of small entities. However, the
in those states. home manufacturers, retailers, and 24 CFR Part 3288
Based on the preceding data, HUD installers would be subject only to an
anticipates taking action on 1,890 Administrative practice and
associated labor cost and travel expense
complaints under the federal procedure, Consumer protection,
necessary to attend the mediation
manufactured home dispute resolution Intergovernmental relations,
process and labor costs to participate in
process during an average year. Manufactured homes, Reporting and
the expected record review and possible
Presuming that the average cost of this recordkeeping requirements.
telephonic or face-to-face meeting for
action ($1,964) will be incorporated into arbitration. Moreover, because the great ■ Accordingly, HUD amends parts 3280
the home price or related service fees of majority of manufacturers, retailers, and and 3282 and adds a new part 3288 in
every installed home in the 26 states installers are considered small entities, chapter XX of title 24 of the Code of
(37,800), the cost impact to each there would not be any disproportionate Federal Regulations to read as follows:
installed home would be $98. impact on them. Therefore, although
If all 1,890 cases were settled through this rule would affect a substantial PART 3280—MANUFACTURED HOME
litigation rather than dispute resolution, number of small entities, it would not CONSTRUCTION AND SAFETY
the cost of litigating 1,890 cases would have a significant economic impact on STANDARDS
total $18.9 million. Averaged across them. In addition, the speedier and
37,800 homes, the average cost of more certain resolution of disputes ■ 1. The authority citation for part 3280
litigation incorporated into each home should help the affected businesses. continues to read as follows:
price would be $500 per home, Accordingly, the undersigned certifies Authority: 42 U.S.C. 3535(d), 5403, and
compared to the average cost of dispute that this final rule would not have a 5424.
■ 2. In § 3280.2, the definition of (e) Dispute resolution information. (1) mail, by fax, or by email. When making a
‘‘manufactured home’’ is revised to read The manufacturer must include the report by telephone, homeowners are
as follows: following language under a heading of encouraged to make a note of the phone call,
including names of conversants, date, and
‘‘Dispute Resolution Process’’ in the
§ 3280.2 Definitions. time. No particular format is required to
consumer manual: submit a report of an alleged defect, but any
* * * * * such report should at a minimum include a
Many states have a consumer assistance or
Manufactured home means a dispute resolution program that homeowners description of the alleged defect, the name of
structure, transportable in one or more may use to resolve problems with the homeowner, and the address of the home.
sections, which in the traveling mode is manufacturers, retailers, or installers Homeowners are encouraged to send
8 body feet or more in width or 40 body concerning defects in their manufactured reports of an alleged defect first to the
feet or more in length or which when homes that render part of the home unfit for manufacturer, retailer, or installer of the
erected on-site is 320 or more square its intended use. Such state programs may manufactured home, or a State
feet, and which is built on a permanent include a process to resolve a dispute among Administrative Agency. Reports of alleged
a manufacturer, a retailer, and an installer defects may also be sent to HUD at: HUD,
chassis and designed to be used as a Office of Regulatory Affairs and
about who will correct the defect. In states
dwelling with or without a permanent where there is not a dispute resolution Manufactured Housing, Attn: Dispute
foundation when connected to the program that meets the federal requirements, Resolution, 451 Seventh Street, SW.,
required utilities, and includes the the HUD Manufactured Home Dispute Washington, DC 20410–8000; faxed to (202)
plumbing, heating, air-conditioning, and Resolution Program will operate. These are 708–4213; e-mailed to mhs@hud.gov, or
electrical systems contained in the ‘‘HUD-administered states.’’ The HUD reported telephonically at (202) 708–6423 or
structure. This term includes all Manufactured Home Dispute Resolution (800) 927–2891.
structures that meet the above Program is not for cosmetic or minor If, after taking the steps outlined above, the
problems in the home. You may contact the homeowner does not receive a satisfactory
requirements except the size
HUD Manufactured Housing Program Office response from the manufacturer, retailer, or
requirements and with respect to which at (202) 708–6423 or (800) 927–2891, or visit installer, the homeowner may file a dispute
the manufacturer voluntarily files a the HUD website at www.hud.gov to resolution request with the dispute
certification pursuant to § 3282.13 of determine whether your state has a state resolution provider in writing, or by making
this chapter and complies with the program or whether you should use the HUD a request by phone. No particular format is
construction and safety standards set Manufactured Home Dispute Resolution required to make a request for dispute
forth in this part 3280. The term does Program. Contact information for state resolution, but the request should generally
not include any self-propelled programs is also available on the HUD include the following information:
website. If your state has a state program, (1) The name, address, and contact
recreational vehicle. Calculations used
please contact the state for information about information of the homeowner;
to determine the number of square feet the program, how it operates, and what steps (2) The name and contact information of
in a structure will include the total of to take to request dispute resolution. When the manufacturer, retailer, and installer of the
square feet for each transportable there is no state dispute resolution program, manufactured home;
section comprising the completed a homeowner may use the HUD (3) The date or dates the report of the
structure and will be based on the Manufactured Home Dispute Resolution alleged defect was made;
structure’s exterior dimensions Program to resolve disputes among the (4) Identification of the entities or persons
measured at the largest horizontal manufacturer, retailer, and installer about to whom each report of the alleged defect
projections when erected on site. These responsibility for the correction or repair of was made and the method that was used to
defects in the manufactured home that were make the report;
dimensions will include all expandable reported during the 1-year period starting on (5) The date of installation of the
rooms, cabinets, and other projections the date of installation. Even after the 1-year manufactured home affected by the alleged
containing interior space, but do not period, manufacturers have continuing defect; and
include bay windows. Nothing in this responsibility to review certain problems that (6) A description of the alleged defect.
definition should be interpreted to mean affect the intended use of the manufactured Information about the dispute resolution
that a manufactured home necessarily home or its parts, but for which correction provider and how to make a request for
meets the requirements of HUD’s may no longer be required under federal law. dispute resolution is available at http://
Minimum Property Standards (HUD (2) The manufacturer must include www.hud.gov or by contacting the Office of
Handbook 4900.1) or that it is the following language under a heading Manufactured Housing Programs at (202)
automatically eligible for financing of ‘‘Additional Information ‘‘ HUD 708–6423 or (800) 927–2891.
A screening agent will review the request
under 12 U.S.C. 1709(b). Manufactured Home Dispute Resolution and, as appropriate, forward the request to
* * * * * Program’’ in the consumer manual: the manufacturer, retailer, installer, and
The steps and information outlined below mediator. The mediator will mediate the
PART 3282—MANUFACTURED HOME apply only to the HUD Manufactured Home dispute and attempt to facilitate a settlement.
PROCEDURAL AND ENFORCEMENT Dispute Resolution Program that operates in The parties to a settlement include, as
REGULATIONS HUD-administered states, as described under applicable, the manufacturer, retailer, and
the heading ‘‘Dispute Resolution installer. If the parties are unable to reach a
■ 3. The authority citation for part 3282 Information’’ in this manual. Under the HUD settlement that results in correction or repair
is revised to read as follows: Manufactured Home Dispute Resolution of the alleged defect, any party or the
Program, homeowners must report defects to homeowner may request nonbinding
Authority: 28 U.S.C. 2461 note; 42 U.S.C. the manufacturer, retailer, installer, a State arbitration. Should any party refuse to
3535(d) and 5424. Administrative Agency, or HUD within 1 participate, the arbitration shall proceed
year after the date of the first installation. without that party’s input. Once the
■ 4. In § 3282.207, redesignate
Homeowners are encouraged to report defects arbitrator makes a non-binding
paragraph (e) as paragraph (f), add a in writing, including, but not limited to, recommendation, the arbitrator will forward
new paragraph (e), and revise the email, written letter, certified mail, or fax, it to the parties and HUD. HUD will have the
second sentence of paragraph (f) as
but they may also make a report by option of adopting, modifying, or rejecting
redesignated, to read as follows: telephone. To demonstrate that the report the recommendation when issuing an order
was made within 1 year after the date of requiring the responsible party or parties to
§ 3282.207 Manufactured home consumer installation, homeowners should report make any corrections or repairs in the home.
manual requirements. defects in a manner that will create a dated At any time before HUD issues a final order,
* * * * * record of the report: for example, by certified the parties may submit an offer of settlement
to HUD that may, at HUD’s discretion, be Subpart E—Dispute Resolution Program provides an Alternative Process for
incorporated into the order. Rulemaking Procedures manufacturers, retailers, and installers
In circumstances where the parties agree 3288.300 Applicability. who agree that a homeowner is not
that one or more of them, and not the 3288.305 Consultation with the responsible for the alleged defect to
homeowner, is responsible for the alleged Manufactured Housing Consensus resolve their disputes about
defect, the parties will have the opportunity Committee. responsibility for correction or repair
to resolve the dispute outside of the HUD
Authority: 42 U.S.C. 3535(d), 5422 and outside of the HUD Mediation and
Mediation and Arbitration process by using 5424.
the Alternative Process. Homeowners will Arbitration Process under subpart B.
maintain the right to be informed in writing Subpart D of this part establishes the
Subpart A—General minimum requirements that must be
of the outcome when the Alternative Process
is used, within 5 days of the outcome. At any § 3288.1 Purpose and scope. met by a state applying to implement its
time after 30 days of the Alternative Process (a) Purpose. The Act is intended, in own dispute resolution program that
notification, any participant or the part, to protect the quality, safety, complies with the Act, and the
homeowner may invoke the HUD durability, and affordability of procedure for determining whether the
Manufactured Home Dispute Resolution requirements for complying have been
manufactured homes. Section 623(c)(12)
Program and proceed to mediation. met. Subpart E of this part establishes
The HUD Manufactured Home Dispute
of the Act (42 U.S.C. 5422 (c)(12))
requires the implementation of ‘‘a special rulemaking procedures that
Resolution Program is not a warranty apply to the issuance of new regulations
program and does not replace the dispute resolution program for the
timely resolution of disputes between that implement the dispute resolution
manufacturer’s or any other warranty
program. manufacturers, retailers, and installers requirements set forth in section 623 of
of manufactured homes regarding the Act (42 U.S.C. 5422).
(f) * * * A manual substantially responsibility, and for the issuance of (2) Warranties not affected. This part
complies with the guidelines if it appropriate orders, for the correction or is not a warranty program and the
includes the language in paragraph (e) repair of defects in manufactured homes requirements established in this part do
of this section and presents current that are reported during the 1-year not replace the manufacturer’s or any
material on each of the subjects covered period beginning on the date of other warranty program. Such warranty
in the guidelines in sufficient detail to installation.’’ The purpose of this part is program may have its own
inform consumers about the operation, to provide a dispute resolution program requirements.
maintenance, and repair of for the timely resolution of disputes § 3288.3 Definitions.
manufactured homes.* * * among manufacturers, retailers, and The following definitions apply in
■ 5. In chapter XX, add a new part 3288, installers regarding the responsibility this part:
to read as follows: for correction or repair of defects Act means the National Manufactured
reported by the homeowner or others Housing Construction and Safety
PART 3288—MANUFACTURED HOME and reported in the 1-year period after Standards Act of 1974, 42 U.S.C. 5401–
DISPUTE RESOLUTION PROGRAM the first installation of the manufactured 5426.
home. Appropriate order means an order
Subpart A—General (b) Scope— (1) Applicability. In issued by HUD or an order that is
Sec. carrying out this purpose, it is presumed enforceable under state law.
3288.1 Purpose and scope. that if a manufactured home contains an Date of installation means the date all
3288.3 Definitions. alleged defect that is reported in the first utilities are connected and the
3288.5 Retailer notification at sale. year after installation and was not manufactured home is ready for
Subpart B—HUD Manufactured Home caused by the homeowner, then the occupancy as established, if applicable,
Dispute Resolution Program in HUD- manufacturer, retailer, or installer is by a certificate of occupancy, except as
Administered States responsible for the alleged defect and follows: if the manufactured home has
3288.10 Applicability. the dispute resolution process not been sold to the first person
3288.15 Eligibility for dispute resolution. recognized in this part is an appropriate purchasing the home in good faith for
3288.20 Reporting a defect. means for resolving disputes about purposes other than resale by the date
3288.25 Initiation of dispute resolution. responsibility for correction and repair the home is ready for occupancy, the
3288.30 Screening of dispute resolution of the alleged defect. For purposes of the date of installation is the date of closing
request. dispute resolution process recognized in under the purchase agreement or sales
3288.33 Notice of dispute resolution. this part, only alleged defects reported contract for the manufactured home.
3288.35 Mediation. in the first year after the first installation Day means a calendar day.
3288.40 Nonbinding arbitration. are covered by the process. The state Defect means any defect in the
3288.45 HUD review and order.
where the home is sited determines performance, construction, components,
Subpart C—Alternative Process in HUD- whether the HUD Manufactured Home or material of a manufactured home that
Administered States Dispute Resolution Program or a state renders the home or any part of the
3288.100 Scope and applicability. program applies. Subpart A of this part home not fit for the ordinary use for
3288.105 Time when Alternative Process is establishes general provisions which it was intended, including, but
available. applicable to HUD’s implementation of not limited to, a defect in the
3288.110 Alternative Process agreements. a dispute resolution program as required construction, safety, or installation of
Subpart D—State Dispute Resolution by the Act. Subpart B of this part the home. For purposes of state
Programs in Non-HUD-Administered States establishes the HUD Manufactured certification under § 3288.205, HUD will
Home Dispute Resolution Program that find it acceptable if the threshold for the
3288.200 Applicability.
3288.205 Minimum requirements. HUD will administer in any state that state’s program is functionally
3288.210 Acceptance and recertification does not establish a program that equivalent to this definition.
process. complies with the Act and been Dispute resolution provider means a
3288.215 Effect on other manufactured accepted by HUD as provided in subpart person or entity providing dispute
home program requirements. D of this part. Subpart C of this part resolution services for HUD.
Homeowner means a person who and ‘‘Additional Information—HUD that is made to the manufacturer,
purchased or leased the manufactured Manufactured Home Dispute Resolution retailer, installer, or a State
home in good faith for purposes other Program’’ in the Consumer Manual required Administrative Agency of the
than resale. to be provided to the purchaser. These manufactured home should be done in
programs are not warranty programs and do
HUD means the U.S. Department of not replace the manufacturer’s, or any other
a manner that will create a dated record
Housing and Urban Development. person’s, warranty program. of the report that demonstrates that the
Installer means the person who is report was made within 1 year after the
retained to engage in, or who engages in, Subpart B—HUD Manufactured Home date of installation; for example, by
the business of directing, supervising, Dispute Resolution Program in HUD- certified mail, fax, or email. Persons
controlling, or correcting the initial Administered States who report an alleged defect by
installation of a manufactured home. telephone should make a
Manufactured home has the same § 3288.10 Applicability. contemporaneous note of the telephone
meaning as the term ‘‘manufactured The requirements of the HUD call, including date, time, the name of
home’’ as defined in 24 CFR 3280.2. Manufactured Home Dispute Resolution the person who received the report, the
Manufactured Housing Consensus Program established in this subpart B name of the business contacted, and the
Committee or MHCC means the apply in each state that does not telephone number called. If the matter
consensus committee established establish a state dispute resolution goes to arbitration, the arbitrator and
pursuant to section 604(a)(3) of the Act, program that complies with the Act and HUD will review whether there is
42 U.S.C. 5403(a)(3). has been accepted by HUD as provided sufficient evidence to believe the report
Party or parties means, individually in subpart D of this part. was made on a timely basis.
or collectively, the manufacturer, (2) Obligation to retain. Each report of
§ 3288.15 Eligibility for dispute resolution.
retailer, or installer of a manufactured a defect, including logs of telephonic
home in which a defect has been (a) Initiation of actions. complaints, received by a manufacturer,
reported in accordance with § 3288.20. Manufacturers, retailers, and installers retailer, a State Administrative Agency
State Administrative Agency means of manufactured homes are eligible to or installer, must be maintained for 3
an agency of a state that has been initiate and participate in the HUD years from the date of receipt.
approved or conditionally approved to Manufactured Home Dispute Resolution (e) Reports made to a State
carry out the state plan for enforcement Program. Homeowners may initiate Administrative Agency. Reports of
of the standards pursuant to section 623 action under, and be observers to, the defects in the manufactured home that
of the Act, 42 U.S.C. 5422. HUD Manufactured Home Dispute are made in the first year after its
Timely reporting means the reporting Resolution Program. installation can be sent to the
of an alleged defect within 1 year after (b) Eligible disputes. Only disputes appropriate State Administrative
the date of installation of a concerning alleged defects that have Agency. Contact information about a
manufactured home in accordance with been reported to the manufacturer, State Administrative Agency is available
§ 3288.20. retailer, installer, HUD, or a State at http://www.hud.gov. Contact the
Timely resolution means the Administrative Agency within 1 year appropriate State Administrative
resolution of disputes among after the date of the first installation of Agency to determine the method for
manufacturers, retailers, and installers the manufactured home are eligible for making the report.
within 120 days of the time a request for resolution through the HUD (f) Reports made to HUD. Reports of
dispute resolution is made, except that Manufactured Home Dispute Resolution alleged defects in the manufactured
if the defect presents an unreasonable Program. The eligible dispute includes home that are made in the first year after
risk of injury, death, or significant loss the defect alleged in a timely report and its installation can be sent to HUD. The
or damage to valuable personal any related issues. report to HUD may be made using any
property, the resolution must be within § 3288.20 Reporting a defect. of the following methods:
60 days of the time a request for dispute (1) In writing at: HUD, Office of
(a) Making a report. To preserve the Regulatory Affairs and Manufactured
resolution is made. right to request dispute resolution Housing, Attn: Dispute Resolution, 451
§ 3288.5 Retailer notification at sale. through HUD, alleged defects must be Seventh Street, SW., Washington, DC
reported to the manufacturer, retailer, 20410–8000;
Retailer notice at the time of signing.
installer, HUD, or a State Administrative (2) By telephone at: (202) 708–6423 or
At the time of signing a contract for sale
Agency. An alleged defect may be (800) 927–2891;
or lease for a manufactured home, the
reported by a homeowner, (3) By fax at: (202) 708–4213; or
retailer must provide the purchaser with
manufacturer, retailer, or installer. (4) By e-mail at mhs@hud.gov.
a retailer notice. This notice may be in
(b) Form of report. It is recommended (g) Effect of report. The reporting of an
a separate document from the sales
that alleged defects be reported in alleged defect does not initiate the HUD
contract or may be incorporated clearly
writing, including, but not limited to, e- Manufactured Home Dispute Resolution
in a separate section on consumer
mail, written letter, certified mail, or Program, but only establishes whether
dispute resolution information at the
fax. The existence of an alleged defect the requirement of timely reporting in
top of the sales contract. The notice
may also be reported by telephone. accordance with § 3288.15(b) has been
must include the following language: (c) Content of report. No particular met. The HUD Manufactured Home
The U.S. Department of Housing and form or format is required to report an Dispute Resolution Process is initiated
Urban Development (HUD) Manufactured alleged defect, but any such report must,
Home Dispute Resolution Program is
when a request for dispute resolution is
at a minimum, include a description of submitted to HUD in accordance with
available to resolve disputes among
the alleged defect, the name of § 3288.25.
manufacturers, retailers, or installers

concerning defects in manufactured homes. homeowner, and the address of the
home. § 3288.25 Initiation of dispute resolution.
Many states also have a consumer assistance
or dispute resolution program. For additional (d) Record of report—(1) To evidence (a) Preliminary effort. HUD strongly
information about these programs, see timeliness. To establish timely encourages the homeowner or party
sections titled ‘‘Dispute Resolution Process’’ reporting, the report of an alleged defect reporting an alleged defect to seek to
resolve the dispute directly with any the request will be forwarded, as mediation to reach a mediated
manufacturer, retailer, or installer that provided in § 3288.33, to the settlement. In every case, the dispute
the person reporting the defect believes manufacturer, retailer, and installer, as resolution provider will notify the
to be responsible before initiating the appropriate and to the extent the parties and the homeowner, in writing,
HUD dispute resolution process. appropriate parties can be identified of the date of the commencement of the
(b) Request for dispute resolution. based on the information in the request. mediation.
Any of the parties or the homeowner (b) Insufficient information. If a (2) Alleged defects presenting an
may initiate the HUD Manufactured request for dispute resolution is lacking unreasonable risk of injury, death, or
Home Dispute Resolution Program at any information necessary to determine significant loss or damage to valuable
any time after an alleged defect has been if the dispute resolution process should personal property. For mediations
reported, by requesting dispute proceed, the screening neutral will involving alleged defects that appear to
resolution, as follows: contact the requester or the parties present an unreasonable risk of injury,
(1) By mailing, e-mailing, or otherwise about supplementing the initial request. death, or significant loss or damage to
delivering a written request for dispute If information necessary to qualify the valuable personal property as
resolution to the dispute resolution matter for the HUD Manufactured Home determined by the screening neutral, the
provider at the address or e-mail Dispute Resolution Program is not parties have a maximum 10 days from
address provided either at http:// received within a reasonable time the commencement of the mediation to
www.hud.gov, or by contacting HUD’s established by the screening neutral, the reach a settlement.
Office of Regulatory Affairs and request for dispute resolution will be (3) For corrective repairs. Unless a
Manufactured Housing at (202) 708– considered withdrawn. longer period is agreed to in writing by
6423 or (800) 927–2891; (c) Denial of a dispute. Denial by all the parties to the mediated settlement
(2) By faxing a request for dispute of the parties that there is a dispute does and the homeowner, corrective repairs
resolution to the fax number provided not preclude the dispute resolution must be completed no later than 30 days
either at http://www.hud.gov, or by process from going forward to after the date the settlement agreement
contacting HUD’s Office of Regulatory mediation. A screening neutral’s is signed by the applicable parties.
Affairs and Manufactured Housing at determination that a defect is properly (c) Denial of dispute. During
(202) 708–6423 or (800) 927–2891; or alleged is prima facie evidence of a mediation, denial of a dispute by all
(3) By telephoning a request for dispute. If the defect has not been parties without acceptance of
dispute resolution to the number corrected or repaired, the matter will be responsibility will result in the mediator
provided either at http://www.hud.gov, referred to mediation. referring the matter to arbitration for
or by contacting HUD’s Office of (d) Determination of unreasonable determination of the defect and
Regulatory Affairs and Manufactured risk. If the screening neutral determines responsibility for the defect.
Housing at (202) 708–6423 or (800) 927– there is sufficient documentation of an (d) Written settlement agreement.
2891. alleged defect presenting an (1) Upon reaching an agreement, the
(c) Requested information. The unreasonable risk of injury or death, he parties will sign a written settlement
dispute resolution provider will request or she will send a copy of the request agreement. The dispute resolution
at least the following information when to HUD. provider will forward copies of the
a person seeks to initiate dispute
§ 3288.33 Notice of dispute resolution. agreements with the original signatures
resolution under the HUD Manufactured
(a) Once the screening neutral of the parties to the parties, the
Home Dispute Resolution Program:
determines that a defect is properly homeowner, and to HUD.
(1) The name, address, and contact
alleged and timely reported, notice (2) Sample agreements will be made
information of the homeowner;
(2) The name and contact information about the request will be forwarded to available to the parties as drafting
of the manufacturer, retailer, and the parties by overnight delivery, guidance by the dispute resolution
installer of the manufactured home, to commercial carrier, or fax. provider.
the extent available; (b) If the parties have not initiated the (e) Failure of mediation. If mediation
(3) The date the report of the alleged Alternative Process in accordance with is not successful, parties or the
defect was made; § 3288.105 of this part within 7 days of homeowner may proceed to nonbinding
(4) The name and contact information the screening neutral’s notification, the arbitration, as provided in § 3288.40 of
of the recipient or recipients of the screening neutral will refer the matter to this part.
report of the alleged defect; mediation. (f) Confidentiality. Except for the
(5) The date of installation of the report of an alleged defect, any request
§ 3288.35 Mediation. for dispute resolution, and any written
manufactured home affected by the
alleged defect; and (a) Mediator. The dispute resolution settlement agreement, all other
(6) A description of the alleged defect. provider will provide for the selection documents and communications
of a mediator. The selected mediator provided in confidence and used in the
§ 3288.30 Screening of dispute resolution will not be the person who screened the mediation will be confidential, in
request. dispute resolution request. The selected accordance with the Administrative
(a) Review for sufficiency. When the mediator will mediate the dispute and Dispute Resolution Act of 1996 (5 U.S.C.
request for dispute resolution has been attempt to facilitate a settlement. If a 571 et seq.).
received by the dispute resolution party identifies any other party that
provider, a screening neutral will should be included in the mediation, § 3288.40 Nonbinding arbitration.
review the sufficiency of the the mediator will contact the other party (a) When initiated. (1) If, following
information provided in the request for and provide information about the mediation under § 3288.35, the parties
dispute resolution and determine if the scheduled mediation meetings. fail to reach a settlement, any party or
dispute resolution process should (b) Time—(1) For reaching settlement. the homeowner may, within 15 days of
proceed. If the screening neutral Except as provided in paragraph (b)(2) the expiration of the deadline applicable
determines that a defect is properly of this section, the parties are allowed under § 3288.35(b), initiate nonbinding
alleged and timely reported, notice of 30 days from the commencement of the arbitration.
(2) In addition, arbitration may be discretion of the arbitrator, after a violation of section 610(a)(5) of the
initiated upon referral by the mediator considering appropriate factors, such as Act (42 U.S.C. 5409(a)(5)).
pursuant to § 3288.35(c). cost.
(b) Written request—(1) Submission to (g) Effect on nonparticipating parties. Subpart C—Alternative Process in
HUD. A written request for arbitration If a party chooses not to participate in HUD-Administered States
must be submitted to the dispute the arbitration, the process will § 3288.100 Scope and applicability.
resolution provider. Information about continue without further input from that The requirements of this subpart C
the dispute resolution provider and how party. In such a case, the arbitrator may may be followed in lieu of the
to make a request for dispute resolution rely on the record developed through requirements of subpart B of this part to
will be available at http://www.hud.gov the arbitration to find a nonparticipating resolve disputes among manufacturers,
or by contacting HUD’s Office of party responsible for correction or repair retailers, and installers of manufactured
Manufactured Housing Programs at of a defect. homes in any state where subpart B of
(202) 708–6423 or (800) 927–2891. (h) Completion of arbitration. (1) this part would otherwise apply. In
(2) Contents of request. The written Unless an extension is granted for good limited circumstances, this subpart C
request for arbitration must include: cause by HUD, the arbitrator, within 21 permits manufacturers, retailers, and
(i) The name and address of the party days of the dispute resolution provider’s installers of manufactured homes to use
making the request; receipt of the request for arbitration, the
(ii) A brief description of the alleged neutrals of their choosing to resolve
arbitrator will complete the arbitration disputes concerning alleged defects in
defect or a copy of the report of the process and provide HUD with all manufactured homes.
alleged defect; and background information used during the
(iii) A copy of the request for dispute arbitration and with a written, § 3288.105 Time when Alternative Process
resolution. nonbinding recommendation as to is available.
(c) Appointment and authority of which party or parties are responsible (a) The Alternative Process may be
arbitrator. Upon receipt of the request, for the defect, and what corrective invoked after an alleged defect has been
the dispute resolution provider will actions should be taken. reported, pursuant to § 3288.15(b).
select an arbitrator. The arbitrator will (2) Unless an extension is granted for However, the Alternative Process may
have the authority to: good cause by HUD, the arbitrator, not be invoked more than 7 days after
(1) Set hearing dates and deadlines; notification of a request for dispute
within 21 days of the dispute resolution
(2) Conduct on-site inspections; resolution has been received by all of
(3) Issue requests for documentation provider’s receipt of the request for
arbitration, will provide the parties with the parties. The notification must be
and information necessary to complete delivered by overnight delivery,
the record; a copy of the nonbinding
recommendation that was delivered to commercial carrier, or fax by the
(4) Dismiss frivolous allegations; screening neutral, in accordance with
(5) Make proposed findings, including HUD, in accordance with
§ 3288.40(h)(1). § 3288.30. If within 7 days of the receipt
findings of defect and culpability and a
(i) Settlement offers. At any time of notification, the Alternative Process
disposition recommendation to HUD;
before HUD issues a final order, the is not initiated, the screening neutral
and
parties may submit to HUD a proposal will refer the matter to the mediator.
(6) Recommend apportionment of the
to resolve the dispute. Once the Alternative Process is invoked,
responsibility of paying for or providing
neither the parties nor the homeowner
any correction or repair of the home § 3288.45 HUD review and order. may invoke the Mediation and
when recommending that culpability be
(a) Appropriate order. HUD will Arbitration Process in the HUD
assessed to more than one party.
(d) Denial of dispute. If the parties review the arbitrator’s recommendation Manufactured Home Dispute Resolution
deny a dispute exists and the arbitrator provided in accordance with Program for 30 days.
§ 3288.40(h), any settlement offers (b) No particular form or format is
determines there is a defect, the
presented by the parties in accordance required to provide notification for the
arbitrator will make a determination of
with § 3288.40(i), and the information Alternative Process, but the party or
responsibility for the defect.
gathered during the arbitration, and will parties submitting the notification must
(e) Notice to parties. The dispute
issue an appropriate order in which include a statement from the parties
resolution provider will provide the
HUD may accept, modify, or reject the participating in the Alternative Process
parties and the homeowner with a
recommendations. HUD will forward a stating that the homeowner is not
notice setting forth the date, place, and
copy of the order to the arbitrator and responsible for the alleged defect and
time an arbitration is to be held.
(f) Proceedings. (1) If all parties do not to each of the parties and the that one or more of the parties will
request an in-person hearing under homeowner, whether or not a party correct or repair the defect. All required
paragraph (f)(2) of this section within 5 chose to participate in the arbitration. agreements are set forth in § 3288.110 of
days of the dispute resolution provider’s (b) Contents of order. If HUD finds this part. The parties must also make
receipt of the request for arbitration, or that a defect exists, the order will reasonable efforts to include the
if the arbitrator rejects the request for an include the following: following information in the
in-person hearing, the arbitrator may (1) Assignment of responsibility for notification:
the correction and repair of all defects (1) Identification of the case; and
conduct either a record review or a (2) Identification of the parties
telephonic hearing. and associated costs; and
participating in the Alternative Process.
(2) If any party wants to request an in- (2) If the manufacturer, retailer, or (c) The screening neutral will notify
person hearing, in which the parties or installer is responsible for corrective the parties if the case is referred to the
their representatives may personally action, a date by which the correction
Alternative Process for resolution.

appear before the arbitrator, the and repair of each defect must be
arbitrator will consider such a request if completed, taking into consideration the § 3288.110 Alternative Process
it is made by all of the parties that are seriousness of the defect. agreements.
participating in the arbitration. Such an (c) Failure to comply. Failure to (a) Required agreement. To use the
in-person hearing will be held at the comply with an order issued by HUD is Alternative Process, the manufacturer,
retailer, and installer of the amend its state plan to provide for the receipt of such notification. Any state
manufactured home at issue, as requirements of paragraphs (a)(1) conditionally accepted will be
appropriate, must agree: through (3) of this section. permitted to implement its own dispute
(1) That there is a defect in the (2) After February 8, 2008, a state that resolution program for a period of not
manufactured home; submits a state plan for approval in more than 3 years, absent extension of
(2) That the manufacturer, retailer, or accordance with § 3282.302 of this this period by HUD.
installer is responsible for the defect; chapter must provide for the (d) Revocation. If HUD becomes aware
(3) That the homeowner is not requirements of paragraphs (a)(1)
at any time that a state no longer meets
responsible for the defect; through (3) of this section in its state
the minimum requirements set forth
(4) To engage a neutral to evaluate the plan.
under § 3288.205, HUD may revoke
dispute and make an assignment of
§ 3288.210 Acceptance and recertification acceptance of the state’s certification
responsibility for correction and repair;
process. after an opportunity for a hearing, using
and
(a) Submission of certification. A state the procedures set forth under subpart
(5) To notify the homeowner of, and
seeking HUD acceptance of its state D of part 3282.
allow the homeowner to be present at,
any meetings and to inform the dispute resolution program under this (e) Recertification of a program not
homeowner of the outcome. subpart must submit to HUD a included in state plan. Except as
(b) Additional element of agreement. completed Dispute Resolution provided in paragraph (f), to maintain
In addition, the parties should agree to Certification Form, which is available its accepted status, a state whose
act upon the neutral’s assignment of by contacting HUD by telephone at (202) program is not included in an approved
responsibility for correction and repair. 708–6423 or by e-mail at mhs@hud.gov. or conditionally approved state plan
The certification may be submitted as a must submit a current Dispute
Subpart D—State Dispute Resolution part of, or independent of, a state plan Resolution Certification Form to HUD
Programs in Non-HUD Administered under § 3282.302 of this chapter. If for review and acceptance as follows:
States included as part of a state plan, the state
does not have to separately certify that (1) Every 3 years within 90 days of the
§ 3288.200 Applicability. it meets the requirements of day and month of the most recent date
This subpart D establishes the § 3288.205(a)(4). of HUD’s acceptance of the state’s
minimum requirements that must be (b) HUD review and action. (1) HUD program or
met by a state to implement its own will review the Dispute Resolution (2) Whenever there is a significant
dispute resolution program and Certification Form submitted by a state change to the program.
therefore not be covered by the HUD and may contact the state to request (f) Inclusion in state plan. If a state
Manufactured Home Dispute Resolution additional clarification or information dispute resolution program is part of a
Program established in accordance with as necessary. Upon completing its state plan, it will be reviewed annually
subpart B. The subpart also establishes review, HUD will provide the state with as part of the state plan and separate
the procedure for determining whether notice of acceptance, conditional recertification of the state’s dispute
the state dispute resolution program acceptance, or rejection of its dispute resolution program is not required.
meets the requirements of the Act for resolution program.
operating in lieu of the HUD (2) A notice of acceptance will § 3288.215 Effect on other manufactured
Manufactured Home Dispute Resolution include the date of acceptance. home program requirements.
Program. (3) If HUD rejects a state’s dispute
resolution program, HUD will provide A state with an accepted dispute
§ 3288.205 Minimum requirements. an explanation of what is necessary to resolution program will operate in lieu
(a) List of requirements. The HUD obtain full acceptance. A revised of HUD’s Manufactured Home Dispute
Manufactured Home Dispute Resolution Dispute Resolution Certification Form Resolution Program established under
Program will not be implemented in any may be submitted within 30 days of subpart B of this part 3288. A state
state that complies with the procedures receipt of such notification. If the dispute resolution program, even if it is
of this subpart D and that has a dispute revised Dispute Resolution Certification an accepted dispute resolution program
resolution program that provides for the Form is inadequate or if the state fails under this part, does not supersede the
following minimum requirements: to resubmit within the 30-day period or requirements applicable to any other
(1) The timely resolution of disputes otherwise indicates that it does not aspect of HUD’s manufactured home
among manufacturers, retailers, or intend to change its Dispute Resolution program. Any responsibilities, rights,
installers regarding responsibility for Certification Form, HUD will notify the and remedies applicable under the
correction and repair of defects in state that its dispute resolution program Manufactured Home Construction and
manufactured homes; is not accepted and that it has a right to Safety Standards in part 3280 of this
(2) The issuance of appropriate orders a hearing on the rejection using the chapter and the Manufactured Home
for correction and repair of defects in procedures set forth under subpart D of Procedural and Enforcement
such homes; part 3282 of this chapter. Regulations in part 3282 of this chapter
(3) A coverage period for disputes that (c) Conditional acceptance. A state continue to apply as provided in those
includes at least defects that are meeting three of the four minimum parts in all states.
reported within 1 year after the date of requirements set forth under
first installation; and § 3288.205(a)(1) through (4) will be Subpart E—Dispute Resolution
(4) Adequate funding and personnel. conditionally accepted by HUD. If HUD Program Rulemaking Procedures
(b) Applicability to programs in state conditionally accepts a state’s dispute
§ 3288.300 Applicability.
plans. (1) In order to include a dispute resolution program, HUD will provide
resolution program in a state plan that an explanation of what is necessary to This subpart establishes special
on February 8, 2008 is fully or obtain full acceptance. A revised regulatory procedures for issuing or
conditionally approved under Dispute Resolution Certification Form revising dispute resolution program
§ 3282.302 of this chapter, a state must may be submitted within 30 days of regulations as codified in this part.
§ 3288.305 Consultation with the resolution program regulations or to recommendation entirely, and provide
Manufactured Housing Consensus modify or repeal any of the regulations to the MHCC a written explanation of
Committee. in this part. Along with each the reasons for the rejection. This
HUD will seek input from the MHCC recommendation, the MHCC must set section does not supersede section 605
when revising the HUD Manufactured forth pertinent data and arguments in of the National Manufactured Housing
Home Dispute Resolution Program support of the action sought. HUD will Construction and Safety Standards Act
regulations in this part 3288. Before either: accept or modify the of 1974 (42 U.S.C. 5404).
publication of a proposed rule to revise recommendation and publish it for
Dated: May 7, 2007.
these regulations, HUD will provide the public comment in accordance with
MHCC with an opportunity to comment section 553 of the Administrative Brian D. Montgomery,
on such revision. The MHCC may send Procedure Act (5 U.S.C. 553), along with Assistant Secretary for Housing—Federal
to HUD any of the MHCC’s own an explanation of the reasons for any Housing Commissioner.
recommendations to adopt new dispute such modification; or reject the BILLING CODE 4210–67–P
ER14MY07.006</GPH>
[FR Doc. 07–2363 Filed 5–11–07; 8:45 am]

BILLING CODE 4210–67–C
ER14MY07.007</GPH>

Rule: Manufactured Home Dispute Resolution Program

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Rule: Manufactured Home Dispute Resolution Program

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Monday,

May 14, 2007

DEPARTMENT OF HOUSING AND resolution programs and to establish General

manufacturers, retailers, or installers

Alternative Process for resolution.

[FR Doc. 07–2363 Filed 5–11–07; 8:45 am]

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