Study: Persistent problems in manufactured home
warranty service and enforcement provoke customer ire

AUSTIN, TX -- While some components of manufactured homes have improved, many items still trouble consumers (including plumbing fixtures, trim and floor coverings poorly affixed, transportation damage and faulty installation) and when they try to get help from the state they face nearly insurmountable barriers, according to a Consumers Union study released today.

"Although the industry has come a long way since the 1970s, it still has a lot of work to do if it intends to forge a new image with consumers," said Kevin Jewell, a CU policy associate and author of the report. "Manufacturers will need to assume greater responsibility for the final product and regulators will need to be much more responsive to consumers."

Consumers Union surveyed recent purchasers of manufactured homes to find out their experiences with their homes, analyzed responses to the American Housing Survey, and reviewed 300 randomly selected complaints on file at Texas Department of Housing and Community Affairs (TDHCA) Manufactured Housing Division over a two-year period ending June of 2002. This data was supplemented by a FOIA request to HUD for information on factory, dealer, and home inspection results. The study can be downloaded at http://www.consumersunion.org/mh.

Consumers Union's researchers found largely ineffective regulation of the manufactured housing industry by the Texas Department of Housing and Community Affairs (TDHCA) Manufactured Housing Division.

· The Department rejected more than a third of warranty complaints without investigation.
· While every consumer has a legal right to ask for and receive an inspection, the department does not tell consumers about this right.
· In cases where the Department does find an incorrect installation, the licensee is rarely fined if they correct the individual's problem, and the Department does not flag repeat offenders.
· Retailer showroom audits are so infrequent that a retailer can expect to get audited once every 37 years.

"The problem is they see their role more as a service agency for the industry than a protector of home buyers," Jewell noted. "Without a strong regulator and enforcer to protect consumer rights, the 1.2 million Texas families who live in these homes find themselves at a greater disadvantage."

Of those homeowners surveyed by CU, one-third (33 percent) said they were more dissatisfied than satisfied with their new home, including 17 percent who were completely dissatisfied. A stunning 79 percent of respondents said they had experienced problems.

· The Top 6 problem areas reported by new homeowners surveyed by CU were: (1) doors/windows (40 percent); (2) plumbing (32 percent); (3) walls (27 percent); (4) roof (18 percent); (5) floor - covering (14 percent); and (6) floor - structural (8 percent).

· Manufactured home residents are 49 percent more likely to have major door repair work than site built home residents, and report broken windows at three times the rate of site built home residents.

· Although structural plumbing has improved, 57 percent more manufactured home dwellers performed major repairs on their plumbing fixtures than site built dwellers, according to American Housing Survey data.

· Three of every 10 new home purchasers said they were "completely dissatisfied" with the warranty work on their new home.

· Roof problems have actually improved over the last quarter of a century, and today manufactured home owners are no more likely to perform a major repair to their roof than conventional home owners. But roofs still ranked within the Top 5 problem areas.

Manufactured home companies with the highest number of formal Texas complaints per 100 homes titled

· Southern Energy Homes	8.7
· Pioneer Homes	6.9
· Cavalier Homes	5.3

The companies with the lowest number of formal complaints for the same period were:

· Elliott (Solitaire) Homes	0.4
· Skyline Homes	1.0
· Palm Harbor Homes	1.6

Consumers Union recommends:

· Inspection of all homes, rather than the 25 percent currently required to be inspected at random.

· Escrow of the final payment to the retailer until installation and warranty repairs are complete and verified by a third party.

· Better, more relevant consumer information from TDHCA, investigation of all complaints, and a clear sense of purpose as a consumer protection agency.

· Voluntary arbitration elected by both parties, rather than one imposed on consumers unilaterally.

· An extended split warranty system for manufactured homes -- a general warranty for
1 year and a "structural" warranty for 5 years, since consumers may not be able to discover hidden trouble within the home within the first year.

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Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

  
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