Laws & Regs

Thursday,
October 20, 2005

Part II

Department of
Housing and Urban
Development
24 CFR Parts 3280, 3282 and 3288
Manufactured Housing Dispute Resolution
Program; Proposed Rule

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Federal Register / Vol. 70, No. 202 / Thursday, October 20, 2005 / Proposed Rules

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Parts 3280, 3282 and 3288
[Docket No. FR–4813–P–02; HUD–2005–
0038]
RIN 2502–AH98

Manufactured Housing Dispute
Resolution Program
Office of the Assistant
Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
AGENCY:

SUMMARY: This proposed rule would
establish a federal manufactured
housing dispute resolution program and
guidelines for the creation of stateadministered dispute resolution
programs. Under the National
Manufactured Housing Construction
and Safety Standards Act of 1974, as
amended by the Manufactured Housing
Improvement Act of 2000, HUD is
required to establish a program for the
timely resolution of disputes among
manufacturers, retailers, and installers
of manufactured homes regarding
responsibility, and the issuance of
appropriate orders, for the correction or
repair of defects in manufactured homes
that are reported during the one-year
period beginning on the date of
installation.

Comment Due Date: December
19, 2005.
ADDRESSES: Interested persons are
invited to submit comments regarding
this rule to the Regulations Division,
Office of General Counsel, Department
of Housing and Urban Development,
451 Seventh Street, SW., Room 10276,
Washington, DC 20410–0500. Interested
persons may also submit comments
electronically through either:
• The Federal eRulemaking Portal at:
http://www.regulations.gov; or
• The HUD electronic Web site at:
http://www.epa.gov/feddocket. Follow
the link entitled ‘‘View Open HUD
Dockets.’’ Commenters should follow
the instructions provided on that site to
submit comments electronically.
Facsimile (fax) comments are not
acceptable. In all cases, communications
must refer to the above docket number
and title. All comments and
communications submitted will be
available, without charge, for public
inspection and copying between 8 a.m.
and 5 p.m. weekdays at the above
address. Due to security measures at the
HUD Headquarters building, please
schedule an appointment to review the
public comments by calling the
Regulations Division at (202) 708–3055
DATES:

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(this is not a toll-free number). Copies
of the public comments are also
available for inspection and
downloading at http://www.epa.gov/
feddocket.
FOR FURTHER INFORMATION CONTACT:
William W. Matchneer III,
Administrator, Office of Manufactured
Housing Programs, Department of
Housing and Urban Development, 451
Seventh Street, SW., Room 9164,
Washington DC 20410; telephone (202)
708–6401 (this is not a toll-free
number). Persons with hearing or
speech impairments may access this
number via TTY by calling the toll-free
Federal Information Relay Service at
(800) 877–8389.
SUPPLEMENTARY INFORMATION:
I. Background
Requirement for a Dispute Resolution
Program
The National Manufactured Housing
Construction and Safety Standards Act
of 1974 (the Act) (42 U.S.C. 5401–5426)
is intended, in part, to protect the
quality, safety, durability, and
affordability of manufactured homes.
The Act was amended on December 27,
2000, by the Manufactured Housing
Improvement Act of 2000, Public Law
106–569, to require HUD, among other
things, to establish and implement a
new manufactured housing dispute
resolution program for states that choose
not to operate their own dispute
resolution programs and to establish
guidelines for the creation of stateadministered dispute resolution
programs. Specifically, section
623(c)(12) of the Act (42 U.S.C.
5422(c)(12)) calls for the
implementation of ‘‘a dispute resolution
program for the timely resolution of
disputes between manufacturers,
retailers, and installers of manufactured
homes regarding responsibility, and for
the issuance of appropriate orders, for
the correction or repair of defects in
manufactured homes that are reported
during the 1-year period beginning on
the date of installation.’’ A state is not
required to be a state administrative
agency (SAA) under HUD’s
manufactured housing program to
administer its own dispute resolution
program. However, any state submitting
a state plan to change its status from a
nonparticipating state to a conditionally
or fully approved SAA after December
26, 2005, must provide for such a
dispute resolution program as part of its
plan. Any state that is conditionally or
fully approved on December 26, 2005,
will not be required to include a dispute
resolution program in its state plan as
long as the state maintains conditional

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or full approval status. Section 623(g)(2)
of the Act also requires HUD to
implement, beginning on December 27,
2005, a HUD Manufactured Housing
Dispute Resolution Program that will
meet the above requirements in any
state that has not established a program
that complies with the Act.
Advance Notice of Proposed
Rulemaking
On March 10, 2003 (68 FR 11452),
HUD issued an Advance Notice of
Proposed Rulemaking (the ANPRM)
asking for comments on how the federal
manufactured housing dispute
resolution program should be structured
and implemented. Seven state agencies,
several statewide and national
manufacturing housing associations,
individuals, the Manufactured Housing
Consensus Committee (MHCC), and
other organizations, such as consumer
groups and dispute resolution
organizations, submitted comments.
References to the comments received on
a particular issue are made throughout
this preamble.
II. Principle Behind Proposed Rule For
the HUD-Administered Program
General
In designing the HUD Manufactured
Housing Dispute Resolution Program to
operate in HUD-administered states,
HUD considered the approaches of
existing state dispute resolution
programs, examined various dispute
resolution processes, and consulted
with experts at the Department of
Justice. Many commenters, including
the MHCC, encouraged the creation of a
dispute resolution process that
incorporated the widely accepted
processes of mediation, negotiation, and
arbitration. HUD considered these
processes carefully, as well as
alternative approaches used in some
state programs. HUD proposes the
program described below as a way to
achieve several goals. First, the dispute
resolution program should be based on
processes widely accepted by the
alternative dispute resolution
community and that have been proven
to be successful in resolving disputes.
Second, the program must be fair and
expeditious. Third, the dispute
resolution program must be easily
accessible to all likely users.
Specifically, the program should
include homeowners, as well as
manufacturers, retailers, and installers
that are mentioned in the Act. The
proposed program establishes
procedures to resolve disputes among
manufacturers, retailers, and installers.
Although the Act does not require their

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participation, HUD views homeowners
as an integral part of the dispute
resolution process. The MHCC and the
majority of commenters favored the
participation of homeowners. Virtually
all commenters acknowledged a role for
the homeowners in initiating the
dispute resolution process and the value
of homeowner input in the process. In
its comments, the MHCC recommended
that ‘‘Any party to the process (the
consumer, manufacturer, retailer or
installer) should be permitted to initiate
the dispute resolution process.’’ The
MHCC also stated that ‘‘Consumers are
eligible to participate in the process if
they desire.’’ Fourth, the program
should conserve the resources and
expenses of all of the parties and the
Department.
The degree to which HUD has
authority to use additional approaches
to meet this last goal is currently being
examined. For example, the MHCC and
commenters have recommended that
parties that use and receive the benefits
of the dispute resolution process in
specific cases pay at least a portion of
the direct costs associated with the
program in those cases. This is an
approach used by many states that
currently have dispute resolution
programs. Such user charges would
generally not be intended to cover the
purely administrative costs to HUD of
implementing the program, but might
include a filing fee to initiate a dispute
resolution process, a fee to initiate
arbitration, and the assessment of
arbitration costs to a losing party. Other
administrative costs of the program in
HUD-administered states would be
funded as general program expenses.
HUD is currently reviewing this
approach and will not introduce a userfee approach until HUD’s authority on
the approach is clear. Nevertheless,
HUD is requesting comments on the
advisability of incorporating such fees
in HUD-administered states. If user fees
are incorporated, what are appropriate
amounts to be paid for what services?
Should homeowners be required to pay
any fees? If the dispute goes to
arbitration, should all fees be paid by
the party or parties determined to be
responsible for the defect?
For the Federal program, HUD
proposes the use of two widely accepted
methods of dispute resolution, as well
as an opt-out provision that would
allow commercial entities an
opportunity to resolve disputes outside
the federal program. The program would
employ elements of mandatory
mediation and nonbinding arbitration.
Several commenters, including the
MHCC, suggested using a combination

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of mediation and arbitration for the
federal program.
Mediation is a process that uses a
neutral party or mediator to facilitate
discussion between disputing parties.
The primary goal of mediation is to have
parties reach a mutually agreeable
solution to their dispute. The mediator
acts as a guide throughout the process
and helps the parties to focus on the
issues in order to reach an agreement.
The mediator does not have final
decision-making authority. Arbitration
is an adjudicative process in which a
neutral person, or a panel of neutral
persons, makes a ruling after
considering written evidence, oral
argument, or both.
The objective of the dispute
resolution program proposed by HUD is
to resolve most requests for dispute
resolution before arbitration and thereby
minimize the cost to parties. HUD
expects that a substantial number of
potential disputes would be resolved
through the Commercial Opt-Out
Option. At appropriate times after the
federal program is implemented, the
Secretary will review the structure of
the program and make modifications as
necessary, using notice-and-comment
rule-making procedures. The Secretary
will check for any indication that the
program discourages or impedes direct
negotiation among the affected parties
themselves and, if so, will try to modify
the program to avoid this undesirable
consequence. The proposed program
reflects the Executive Branch’s
emphasis on utilizing dispute resolution
processes to resolve conflicts in a costeffective and expeditious manner, as
well as on fostering good government by
giving parties the opportunity to resolve
disputes amicably and creatively
through alternative dispute resolution. It
also dovetails with Congress’ active
promotion of alternative dispute
resolution as set forth in the
Administrative Dispute Resolution Act
of 1996 (5 U.S.C. 571 et seq.).
Relationship With Notification and
Correction Requirements
The proposed program is also not
inconsistent with other requirements of
the Act. For example, nothing in these
regulations absolves the manufacturer of
its notification and correction
requirements under subpart I of 24 CFR
part 3282 (Subpart I). Nothing in either
a state or the Federal Dispute Resolution
Program will interfere with Subpart I.
Subpart I is based on the statutory
requirements in sections 613 and 615 of
the Act (42 U.S.C. 5412 and 5414),
while the authority for the dispute
resolution program is found under
section 623 of the Act (42 U.S.C. 5422).

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Section 615 imposes upon
manufacturers certain specific
requirements for notification and
correction when a manufactured home
does not comply with the Manufactured
Home Construction and Safety
Standards in part 3280 or contains an
imminent safety hazard. Section 613 of
the Act requires manufacturers to
correct or replace homes sold to retailers
that have not yet been sold to
purchasers. Nothing in section 623 of
the Act changes the requirements in
sections 613 and 615.
If this proposed rule is implemented,
manufacturers would continue to be
responsible for compliance with
Subpart I, and HUD and the SAAs
would continue to have authority to
assure and enforce manufacturers’
compliance with Subpart I. Sections 613
and 615 of the Act do not provide
authority for any consumer enforcement
of the notification and correction
requirements, and are distinguishable
from section 623 of the Act, which
provides authority for the dispute
resolution program. If a manufacturer
receives a homeowner complaint about
a manufactured home, the manufacturer
has received information that triggers its
Subpart I responsibilities. However, a
homeowner does not trigger the dispute
resolution process unless the
homeowner follows the specific steps
provided in this proposed rule. Thus,
the dispute resolution program provides
an additional homeowner protection
mechanism.
III. Program Administration for the
HUD-Administered Program
HUD interprets the language set forth
in section 623(g)(3) of the Act (42 U.S.C.
5422(g)(3)) as permitting the use of
contractors in the implementation of the
dispute resolution program in HUDadministered states. HUD anticipates
using contractors as screening neutrals,
mediators, and arbitrators. HUD also
anticipates that the contractors used
would be required to become familiar
with HUD’s manufactured housing
program, as many commenters,
including the MHCC, recommended.
HUD acknowledges, however, that
dispute resolution experts emphasize
that a primary consideration for
selecting neutrals, mediators, and
arbitrators should be their background
and experience in dispute resolution.
Independence is also an important
factor.
The HUD Manufactured Housing
Dispute Resolution Program would be
governed by the Administrative Dispute
Resolution Act, 5 U.S.C. 571 et seq. The
proposed dispute resolution program
consists of six parts, in addition to the

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opt-out option. The six components are:
Initial Notification of a Problem,
Initiating Dispute Resolution, Intake and
Screening, Mediation, Nonbinding
Arbitration, and Secretarial Review.
Commercial entities, when they are the
only parties involved in a dispute
concerning who is responsible for
correcting a defect, may elect to opt out
of the HUD Manufactured Housing
Dispute Resolution Program. The
commercial entities would then engage
in a neutral evaluation process of their
own design. The dispute resolution
program will be applicable to
manufactured homes installed after
December 27, 2005, or the effective date
of a final rule, whichever is later. Under
the HUD Manufactured Housing
Program, alleged defects must be
reported to the manufacturer, retailer,
installer, or HUD within one year of the
date of installation of the manufactured
home, in order to be eligible for the
dispute resolution program.
IV. HUD Manufactured Housing
Dispute Resolution Program in HUDAdministered States
As noted previously, HUD will
administer its dispute resolution
program only in states that choose not
to operate their own dispute resolution
programs. The following discussion of
the HUD-administered program will not
be germane in any state that through
state law adopts and implements its
own qualifying dispute resolution
program and certifies its program to
HUD as described in Section VI of this
preamble.
A. Initial Notification of a Problem
As previously discussed, alleged
defects that can be referred into the
dispute resolution program must be
reported within the first year after the
date of home installation. As used in
HUD’s Manufactured Housing Dispute
Resolution Program and this new part
3288, the term ‘‘defect’’ is defined to
parallel its definition in the Act.
Accordingly, the proposed rule also
makes clear for the dispute resolution
program that the term ‘‘defect’’ covers
each defect in the installation,
construction, or safety of the home.
Commenters familiar with HUD’s longestablished program for manufactured
housing construction and safety
standards are likely to be accustomed to
using the term ‘‘defect’’ in a narrower
way. In regulations implementing the
historical aspects of HUD’s
manufactured housing program, the
term has been defined to encompass
only construction and safety standards,
and to exclude matters that implicated
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the definition in § 3282.7(j). For
purposes of the dispute resolution
program, however, a defect is any
problem in the performance,
construction, components, or material of
the home that renders the home or any
part of it not fit for the ordinary use for
which it was intended, including but
not limited to a defect in the
construction, safety, or installation of
the home. In reviewing this proposed
rule and preparing comments,
commenters should be mindful of the
broader use of the term as it applies to
rights and responsibilities established
under this new part 3288, as
distinguished from the term’s historical
use in the program in part 3282.
As previously discussed, alleged
defects must be reported within one
year of the date of home installation.
The Department strongly encourages the
parties, especially homeowners, to seek
to resolve disputes directly with the
party or entities that they believe to be
responsible before initiating the federal
manufactured housing dispute
resolution process. Nevertheless, all
parties, including homeowners, must
report the existence of possible defects
within the one-year period in order to
preserve the option of initiating the
federal manufactured housing dispute
resolution process. The Department
recommends that reports of defects be
made in writing, including but not
limited to email, written letter, certified
mail, or fax. Reports would also be
permitted by telephone. A report of a
defect should, at a minimum, include a
description of the alleged defect. Parties
alleging defects are encouraged to send
any written correspondence via certified
or express mail, so that there would be
proof of date of delivery. The
Department welcomes comments on
effective ways for homeowners to report
the existence of defects. After reporting
a defect, the reporting party would be
encouraged to allow time for a
satisfactory response before initiating
the HUD Manufactured Housing Dispute
Resolution Program after having
reported a problem.

Screening Neutral would review the
sufficiency of the information provided
with the request for initiation of a
dispute resolution process. If a defect is
properly alleged, the Screening Neutral
would forward the request for
mediation. If the Screening Neutral
determines there is sufficient
documentation of a defect presenting an
unreasonable risk of injury or death, a
copy of the request would be sent to
HUD. If a request is lacking any of the
required information, the Screening
Neutral would contact the requester in
order to supplement the initial request.
The specific time periods for intake and
screening are not codified because the
Department anticipates establishing
these directly as part of the contracting
process with the third-party dispute
resolution provider. HUD will, however,
publicize these time periods on its
website. The Department is interested in
comments on this plan for establishing
and announcing the intake and
screening schedules.

B. Initiating the Process
Parties may initiate the federal
manufactured housing dispute
resolution process by submitting a
request for dispute resolution to the
dispute resolution provider or by calling
a toll-free number. Requests for dispute
resolution may come from homeowners,
retailers, manufacturers, or installers.

D. Mandatory Mediation
The second stage in the process is
mandatory mediation. The dispute
resolution provider would select a
mediator, who would be a different
individual from the Screening Neutral
used during the intake and screening
process. The mediator would mediate
the dispute and attempt to facilitate a
settlement. The parties would be given
30 days to reach a settlement. For cases
involving defects presenting an
unreasonable risk of injury, death, or
significant loss or damage to valuable
personal property, the parties would
have a maximum of 10 days to reach an
agreement. Sample agreements would
be made available to the parties as
drafting guidance. Upon reaching and
signing an agreement, copies of any
settlements reached would be forwarded
to the parties and to HUD by the
mediator. All other documents and
communications used in the mediation
would be confidential, in accordance
with the Administrative Dispute
Resolution Act of 1996 (5 U.S.C. 571 et
seq.). Once the settlement agreement is
signed, the corrective repairs must be
completed within 30 days, unless a
longer period is agreed to by the
homeowner and the parties. The MHCC
commented that a 30-day period seemed
an appropriate time in which to
complete corrective repairs. Additional
comments on the reasonableness of the
periods are requested.

C. Intake and Screening
Once the request for dispute
resolution has been received by the
dispute resolution provider, the

E. Nonbinding Arbitration
The third stage that may be invoked
is nonbinding arbitration. If the parties
fail to reach a settlement during

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mediation, a party may, within 15 days
of the expiration of the mediation
period, request nonbinding arbitration.
The party requesting nonbinding
arbitration would be required to submit
a written request for arbitration to the
dispute resolution provider. The dispute
resolution provider would determine
how an arbitrator would be selected for
each case. The parties may request an
in-person hearing, to be held at the
discretion of the arbitrator, after
considering factors such as cost. If such
a request is not made by all parties
within 5 days of the dispute resolution
provider’s receipt of the request for
arbitration, the arbitrator may conduct
either a record review or a telephonic
hearing. If a party chooses not to
participate in the arbitration, the
process would continue without input
from that party. The arbitrator would
have the authority to issue orders to
compel the completion of the record,
conduct onsite inspections, dismiss
frivolous allegations, and set hearing
dates and deadlines. The arbitrator
would be required to complete the
arbitration within 21 days of receipt of
the request for arbitration. After
conducting a hearing, the arbitrator
would provide HUD with a written
nonbinding recommendation as to who
the responsible party or parties are and
what actions should be taken. The
contents of the recommendation would
only be made available to the Secretary.
Comments are requested on whether 21
days is sufficient time for the arbitration
and whether additional time should be
allowed for special circumstances.
F. Secretarial Review
The final stage of the process is
Secretarial Review. After the arbitrator
makes a recommendation, it would be
forwarded to the Secretary. The
Secretary would review the
recommendation and the record. The
Secretary would accept, modify, or
reject the recommendation. Once the
Secretary acts, he or she would issue an
order that assigns responsibility. In the
order for correction, the Secretary
would include a date by which the
correction of all defects must be
completed, taking into consideration the
seriousness of the defect. A party’s
failure to comply with an order of the
Secretary would be considered a
violation of section 610(a)(5) of the Act
(42 U.S.C. 5409(a)(5)).
The responsible party or parties
would be required to pay for or provide
any repair of the home. The Secretary
may apportion the costs for correction
and repair if culpability rests with more
than one party. The Department is
interested in comments on the

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procedures outlined in Sections IV.C
through IV.F of this preamble,
particularly on whether the proposed
time limits are reasonable. Comments
are also welcome on whether or not
there should be a time limit for Section
IV.F and, if so, what a reasonable limit
should be.
G. Commercial Opt-Out Option When
Homeowners Are Not Responsible
Manufacturers, retailers, and
installers (‘‘commercial parties’’) who
have been unable to resolve a dispute
involving a defect among themselves
and who certify that the homeowner is
not responsible for the defect would
have the option to opt out of the HUD
Manufactured Housing Dispute
Resolution Program completely, in order
to seek neutral evaluation outside of the
structure of the HUD Manufactured
Housing Program. To participate in the
Commercial Opt-Out Option, any of the
commercial parties must submit a
written notification to the dispute
resolution provider after it has reported
an alleged defect or has been informed
that an alleged defect has been reported
to another party. Parties must opt out no
more than 5 days after receiving notice
from the Screening Neutral of a request
for dispute resolution and before the
HUD Manufactured Housing Dispute
Resolution Program has commenced.
Participants who elect to opt out must
agree to engage a neutral expert. The
selected neutral expert would evaluate
the dispute and make an assignment of
responsibility for correction and repair.
The actual process followed would be
designed and agreed to by the
participants; there are no particular
procedural requirements, such as
witnesses or formal evidence. The
participants may elect to memorialize
the assignment of responsibility in
writing. The participants must agree to
allow the homeowner or the
homeowner’s representative to be
present at any meetings and to be
informed of the outcome. The
participants may inform the Department
of the outcome. At any time after 30
days of the Opt-Out Option notification,
any party, including the homeowner,
may invoke the HUD Manufactured
Housing Dispute Resolution Program
and proceed to mediation by following
the established procedures.
The Commercial Opt-Out Option was
designed taking into account MHCC
comments endorsing an alternate
simplified process with minimal HUD
involvement. HUD expects that the
Commercial Opt-Out Option would
allow for the resolution of disputes
concerning defects in a cost-effective,
expeditious, and fair manner in HUD-

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administered states. The Department is
soliciting comments on the Commercial
Opt-Out Option, and specifically on
whether the option would ensure that
homeowners’ problems are adequately
addressed and remedied. Comments are
also welcomed on the reasonableness of
the 5-day time period in which parties
must opt out after receiving notice of a
request for dispute resolution.
V. Informing Homeowners About
Manufactured Housing Dispute
Resolution
One key component of the HUD
Manufactured Housing Dispute
Resolution Program will be notifying
homeowners about the availability of
dispute resolution in HUD-administered
states through the HUD Manufactured
Housing Dispute Resolution Program
and in all other states through state
dispute resolution programs. In its
comments, the MHCC suggested that
information about the HUD
Manufactured Housing Dispute
Resolution Program be made available
in a standard notice that the retailer
would provide to each homeowner at or
before the signing of the sales contract.
The homeowner would be required to
sign a notice evidencing receipt. The
Department is also considering notifying
the homeowner by requiring a one-page
informational document on the HUD
Manufactured Housing Dispute
Resolution Program to be included with
the closing materials. The one-page
informational document would mention
that HUD will maintain a list of states
that are operating state programs at
http://www.hud.gov, to help
homeowners determine whether their
state has a program or if their state is a
HUD-administered state and they
should use the HUD Manufactured
Housing Dispute Resolution Program.
Additional comments on homeowner
notification are welcomed.
In addition, the Department proposes
notifying the public about the HUD
Manufactured Housing Dispute
Resolution Program through the
Consumer Manual that 42 U.S.C. 5416
and 24 CFR 3282.207 currently require
to be provided with each manufactured
home. The manufacturer would be
required to include in the Consumer
Manual the specific language, or its
equivalent, that is set out in the
proposed revision of § 3282.207 in the
proposed rule. The language would give
detailed information about the dispute
resolution program. The Department
also welcomes comments on the specific
proposal and language for notification
in the Consumer Manual.

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VI. State Dispute Resolution Programs
in Non-HUD-Administered States
The HUD Manufactured Housing
Dispute Resolution Program would not
be implemented in states that request to
be certified and that have dispute
resolution programs that comply with
the minimum requirements set out in
these regulations. These states would
administer their own dispute resolution
programs. The responses to the ANPRM
showed the diversity and innovation of
state dispute resolution programs.
Among HUD’s goals in the
implementation of the HUD
Manufactured Housing Dispute
Resolution Program proposed in this
rule is to encourage the growth and
continued innovation of state programs.
In furtherance of this goal, this rule
would establish a self-certification
process for each state. A state dispute
resolution program would be required to
meet criteria listed in the selfcertification form, but the rule
establishing this form would not specify
how the criteria are to be met. In this
way, states will have more flexibility to
design dispute resolution programs or
modify existing ones according to their
individual preferences and
circumstances. Comments received from
the MHCC strongly supported states
creating and operating their own
programs.
Under the rule as proposed, each state
wishing to implement its own dispute
resolution program must certify
compliance with the minimum
requirements by submitting a completed
Dispute Resolution Certification Form to
HUD for review and acceptance. In part,
the form would serve as a selfcertification very similar to the selfcertification process the MHCC and
other commenters proposed in their
responses to the ANPRM. The Dispute
Resolution Certification Form
developed by HUD and attached as an
Appendix to this proposed rule directs
respondents to answer questions
specifically related to how their dispute
resolution programs comply with the
requirements stated in the Act and this
regulation. The Certification Form
would require identification of the state
agency that administers the dispute
resolution program, the director of that
agency, and the person who directly
supervises the administration of the
program. A brief written description of
the state’s dispute resolution program
would be required, including
information on how disputes are
resolved regarding responsibility for
correction and repair of defects in
manufactured homes involving retailers,
manufacturers, or installers and how the

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program provides for the timely
resolution of disputes and the issuance
of appropriate orders. HUD intends to
put information about states that are
certified, including each state’s contact
information, on its Web site.
The minimum requirements for selfcertification are set forth in Part II of the
proposed Certification and include: (1)
The timely resolution of disputes
regarding responsibility for correction
and repair of defects in manufactured
homes involving manufacturers,
retailers, or installers; (2) provisions for
issuance of appropriate orders for
correction and repairs of defects in the
homes; (3) a coverage period for
disputes involving defects that are
reported within at least one year from
the date beginning on the date of
installation; (4) provisions for
homeowners to initiate complaints for
resolution and to have homeowner
interests protected; (5) provisions for
adequate funding and personnel; and (6)
provisions for conflict of interest
safeguards that ensure that a dispute
resolver does not have a significant
interest in the outcome of a particular
dispute or a significant relationship to a
person involved in a particular dispute.
Any state that certifies that its program
meets these six minimum requirements
would be accepted and permitted to
implement its own program.
A state that meets the minimum
requirements set forth under § 3288.205
(e) and (f), and three of the four
minimum requirements under
§ 3288.205(a)–(d), may be conditionally
accepted by the Secretary. A state that
is conditionally accepted would be
permitted to implement its own
program for a period of not more than
3 years absent extension of this period
by HUD. Part III of the proposed
Certification requires more detailed
information about the state’s program.
HUD anticipates that Part III, as well as
the other parts of the Certification,
would be used to assess whether future
modification of the HUD Manufactured
Housing Dispute Resolution Program
will be necessary.
In reviewing a state’s certification,
HUD may contact the state to request
additional clarification or information
as necessary. States that are rejected
would be notified and given 30 days to
submit a revised Certification. States
that fail to submit a revised Certification
or are otherwise still rejected would
have a right to a hearing on the rejection
using the procedures set forth under
subpart D of Part 3282. If a state has a
dispute resolution program as part of its
state plan, it would be reviewed as part
of the state plan. Accepted states would
be required to recertify every 3 years or

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when there is any significant change to
the state program, whichever is the
earlier. If the Secretary becomes aware
at any time that a state no longer meets
the minimum requirements set forth
under § 3288.205, or failed to properly
recertify, the acceptance of the
Certification may be revoked after an
opportunity for a hearing. HUD
welcomes comments especially from the
states on the certification requirements.
HUD seeks comments from states that
currently have dispute resolution
programs on whether their programs
include the homeowner. If such a state
does not, the commenter is asked to
identify any homeowner protections
that are in place and to address the
feasibility of adding the homeowner to
its program.
VII. Specific Issues for Comment
In addition to commenting on the
specific provisions included in this
proposed rule, the public is invited to
comment on the following questions,
and any other related matters or
suggestions:
(1) What other methods should be
used to notify and educate the
homeowner about the HUD
Manufactured Home Dispute Resolution
Program and the availability of state
programs in non-HUD-administered
states? Should a temporary notice be
required to be posted in each home?
(2) What criteria should be used for
conditional acceptance of state dispute
resolution programs?
(3) What should be the criteria for
determining whether there is adequate
staffing and resources?
(4) What type of conflict-of-interest
provision should states administering
their own dispute resolution program be
required to have?
VIII. Conforming Amendments
Since HUD is using the term
‘‘manufactured home’’ in this proposed
rule, HUD is taking this opportunity to
correct the definition in 24 CFR 3280.2
by adding the reference to self-propelled
vehicles found in section 603(6) of the
Act (42 U.S.C. 5402(6)). HUD is also
clarifying the methodology for the
calculation of square footage that is
included in the current regulatory
definition. This action will result in
consistent usage of the term for all parts
of the manufactured housing program.
IX. Findings and Certifications
Regulatory Planning and Review
The Office of Management and Budget
(OMB) reviewed this rule under
Executive Order 12866 (entitled
‘‘Regulatory Planning and Review’’).

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OMB determined that this rule is a
‘‘significant regulatory action’’ as
defined in section 3(f) of the Order
(although not an economically
significant regulatory action under the
Order). The docket file is available for
public inspection in the Regulations
Division, Office of General Counsel,
Department of Housing and Urban
Development, 451 Seventh Street, SW.,
Room 10276, Washington, DC 20410–
0500. Due to security measures at the
HUD Headquarters building, please

schedule an appointment to review the
docket file by calling the Regulations
Division at (202) 708–3055 (this is not
a toll-free number).
Paperwork Reduction Act
The proposed information collection
requirements contained in this rule have
been submitted to the Office of
Management and Budget (OMB) for
review under the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501–3520).
Under this Act, an agency may not
conduct or sponsor, and a person is not
Number of
respondents

Information collection
State Certification for Manufactured Housing Dispute Resolution ...............................................................................
Federal manufactured housing dispute resolution
information* ......................................................................

Responses
per
respondent

required to respond to, a collection of
information unless the collection
displays a valid control number.
The public reporting burden for this
collection of information is estimated to
include the time for reviewing the
instructions, searching existing data
sources, gathering and maintaining the
data needed, and completing and
reviewing the collection of information.
The following table provides
information on the estimated public
reporting burden:
Total annual
responses

Hours per
response

Total hours

17

1

17

1

17

3,600

1

3,600

1

3,600

* Almost all of the details of the requests for federal dispute resolution will follow initial complaints already sent to the manufacturer or to the
federal manufactured housing program.

In accordance with 5 CFR
1320.8(d)(1), HUD is soliciting
comments from members of the public
and affected agencies concerning the
proposed collection of information to:
(1) Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
(2) Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information;
(3) Enhance the quality, utility, and
clarity of the information to be
collected; and
(4) Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated collection
techniques or other forms of information
technology, e.g., permitting electronic
submission of responses.
Interested persons are invited to
submit comments regarding the
information collection requirements in
this proposal. Under the provisions of 5
CFR 1320, OMB is required to make a
decision concerning this collection of
information between 30 and 60 days
after today’s publication date. Therefore,
any comment on the information
collection requirements is best assured
of having its full effect if OMB receives
the comment within 30 days of today’s
publication. This time frame, however,
does not affect the deadline for
comments to the agency on the
proposed rule. Comments must refer to
the proposal by name and docket
number (FR–4813–P–02) and must be
sent to: HUD Desk Officer, Office of

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Management and Budget, New
Executive Office Building, Washington,
DC 20503 and Kathleen O. McDermott,
Reports Liaison Officer, Office of the
Assistant Secretary for Housing-Federal
Housing Commissioner, Department of
Housing and Urban Development, 451
Seventh Street, SW., Room 9116,
Washington, DC 20410–8000.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. 1531–
1538) establishes requirements for
federal agencies to assess the effects of
their regulatory actions on state, local,
and tribal governments and the private
sector. This rule, which implements a
statutory mandate to establish a program
for the resolution of a narrow category
of disputes, will not impose any federal
mandates on any state, local, or tribal
government or the private sector within
the meaning of the Unfunded Mandates
Reform Act of 1995.
Environmental Review
This proposed rule does not direct,
provide for assistance or loan and
mortgage insurance for, or otherwise
govern or regulate, real property
acquisition, disposition, leasing,
rehabilitation, alteration, demolition, or
new construction, or establish, revise or
provide for standards for construction or
construction materials, manufactured
housing, or occupancy. Accordingly,
under 24 CFR 50.19(c)(1), this proposed
rule is categorically excluded from
environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).

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Impact on Small Entities
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities, small
businesses, or small organizations
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities.
HUD has conducted a labor and travel
cost impact analysis for this rule. The
cost analysis determines the cost
difference between a typical dispute
resolution process (the process)
involving manufactured housing and
the civil litigation costs between one or
more parties involved in a
manufactured housing dispute. A
typical dispute resolution method is a
two-step process: Mediation and then
for a small percent of unsuccessful
Mediation cases, arbitration.
The potential cost impact of the
mediation step for manufacturers would
be approximately $1,550 per dispute
and $237 for retailers and $177 for
installers. HUD anticipates that it may
be administering the dispute resolution
process in 26 states where
approximately 37,800 homes are
expected to be installed annually.
Currently 45 manufacturing corporate
entities ship into those states, while
1,719 retailers sell homes and
approximately 5,000 individuals or

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businesses install manufactured homes
in those states.
Based on the preceding data, HUD
anticipates taking action on 1,890
complaints under the federal
manufactured housing dispute
resolution process in the year 2006.
Presuming that the average cost of this
action ($1,964) will be incorporated into
the home price or related service fees of
every installed home in the 26 states
(37,800), the cost impact to each
installed home would be $98.
If all 1,890 cases were settled through
litigation rather than dispute resolution,
the cost of litigating 1,890 cases would
total $18.9 million. Averaged across
37,800 homes, the average cost of
litigation incorporated into each home
price would be $500 per home,
compared to the average cost of dispute
resolution of $98 per home. This would
provide a savings of $402 or 75 percent
per home.
The small increase in total cost
associated with this proposed rule
would not impose a significant burden
for a small business. The rule would
regulate establishments primarily
engaged in the production of
manufactured homes (NAICS 32991)
and the sale of manufactured homes
(NAICS 453930). In addition,
manufactured home set-up and tiedown establishments (installers) would
be included within the definition of all
other special trade contractors (NAICS
23599). Of the 222 firms included under
the NAICS 32991 definition, 198 are
small manufacturers, which fall below
the small business threshold of 500
employees. There are 10,691 retailers
included under NAICS 453930; all of
the firms fall below the $11 million
annual income rate. Of the 31,320 firms
included under NAICS 23599
definitions, only 53 firms exceed the
small business threshold of 500
employees and none of these is
primarily a manufactured home set-up
and tie-down establishment. The rule,
therefore, would affect a substantial
number of small entities. However, the
home manufacturers, retailers, and
installers would only be subject to an
associated labor cost and travel expense
necessary to attend the mediation
process and labor costs to participate in
the expected record review and possible
telephonic or face-to-face meeting for
arbitration. Moreover, because the great
majority of manufacturers, retailers, and
installers are considered small entities,
there would not be any disproportional
impact on them. Therefore, although
this rule would affect a substantial
number of small entities, it would not
have a significant economic impact on
them. In addition, the speedier and

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more certain resolution of disputes
should help the affected businesses.
The Secretary, in accordance with the
Regulatory Flexibility Act (5 U.S.C.
605(b)), has reviewed and approved this
proposed rule and, in so doing, certifies
that the rule would not have a
significant economic impact on a
substantial number of small entities.
The proposed rule does not provide an
exemption for small entities. This
proposed rule does not establish any
responsibilities for all parties, but rather
establishes a process whereby all may
come to an amicable solution.
Notwithstanding HUD’s
determination that this rule would not
have a significant economic effect on a
substantial number of small entities,
HUD specifically invites comments
regarding any less burdensome
alternatives to this rule that will meet
HUD’s objectives as described in this
preamble.
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits, to the extent
practicable and permitted by law, an
agency from promulgating a regulation
that has federalism implications and
either imposes substantial direct
compliance costs on state and local
governments and is not required by
statute, or preempts state law, unless the
relevant requirements of section 6 of the
Executive Order are met. This rule does
not have federalism implications and
does not impose substantial direct
compliance costs on state and local
governments or preempt state law
within the meaning of the Executive
Order. State and local governments are
not required to establish dispute
resolution programs, but the rule
provides a mechanism to recognize state
programs that meet the statutory
elements of a dispute resolution
program to operate in lieu of the federal
manufactured housing dispute
resolution program.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance number for Manufactured
Housing is 14.171.
List of Subjects
24 CFR Part 3280
Housing standards, Incorporation by
reference, Manufactured homes.
24 CFR Part 3282
Administrative practice and
procedure, Consumer protection,
Intergovernmental relations,
Investigations, Manufactured homes,
Reporting and recordkeeping
requirements, Warranties.

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24 CFR Part 3288
Administrative practice and
procedure, Consumer protection,
Intergovernmental relations,
Manufactured homes, Reporting and
recordkeeping requirements.
Accordingly, for the reasons stated in
the preamble, HUD proposes to amend
parts 3280 and 3282 and add a new part
3288 in chapter XX of title 24 of the
Code of Federal Regulations as follows:
PART 3280—MANUFACTURED HOME
CONSTRUCTION AND SAFETY
STANDARDS
1. The authority citation for part 3280
continues to read as follows:
Authority: 42 U.S.C. 3535(d), 5403, and
5424.

2. In § 3280.2, the definition of
‘‘manufactured home’’ is revised to read
as follows:
§ 3280.2

Definitions.

*

*
*
*
*
Manufactured home means a
structure, transportable in one or more
sections, which in the traveling mode is
8 body feet or more in width or 40 body
feet or more in length or which when
erected on site is 320 or more square
feet, and which is built on a permanent
chassis and designed to be used as a
dwelling with or without a permanent
foundation when connected to the
required utilities, and includes the
plumbing, heating, air-conditioning, and
electrical systems contained in the
structure. This term includes all
structures that meet the above
requirements except the size
requirements and with respect to which
the manufacturer voluntarily files a
certification pursuant to § 3282.13 of
this chapter and complies with the
construction and safety standards set
forth in this part 3280. The term does
not include any self-propelled
recreational vehicle. Calculations used
to determine the number of square feet
in a structure will include the total of
square feet for each transportable
section comprising the completed
structure and will be based on the
structure’s exterior dimensions
measured at the largest horizontal
projections when erected on site. These
dimensions will include all expandable
rooms, cabinets, and other projections
containing interior space, but do not
include bay windows. Nothing in this
definition should be interpreted to mean
that a manufactured home necessarily
meets the requirements of HUD’s
Minimum Property Standards (HUD
Handbook 4900.1) or that it is

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automatically eligible for financing
under 12 U.S.C. 1709(b).
*
*
*
*
*
PART 3282—MANUFACTURED HOME
PROCEDURAL AND ENFORCEMENT
REGULATIONS
3. The authority citation for part 3282
continues to read as follows:
Authority: 42 U.S.C. 3535(d) and 5424.

4. In § 3282.207, redesignate
paragraph (e) as paragraph (f), and add
a new paragraph (e) to read as follows:
§ 3282.207 Manufactured home consumer
manual requirements.

*

*
*
*
*
(e) The manufacturer must include
the following language or its equivalent
in the consumer manual:
Many states have a dispute resolution
program that homeowners may use to resolve
problems with manufacturers, retailers, or
installers concerning defects in their
manufactured homes. In states where there is
not a dispute resolution program that meets
the federal requirements, the HUD
Manufactured Housing Dispute Resolution
Program will operate. These are ‘‘HUDadministered states.’’ You may contact HUD
at (202) 708–6423 or (800) 927–2891, or visit
the HUD Web site at http://www.hud.gov to
determine whether you have a state program
or should use the HUD Manufactured
Housing Dispute Resolution Program.
Contact information for state programs is also
available on the HUD website. If you have a
state program, please contact the state for
information about the program, how it
operates, and what steps to take to request
dispute resolution. When there is no state
dispute resolution program, homeowners
may use the HUD Manufactured Housing
Dispute Resolution Program to resolve
disputes among manufacturers, retailers, or
installers for the correction or repair of
defects in their manufactured home that were
reported during the one-year period starting
at the date of installation. Even after the oneyear period, manufacturers have continuing
responsibility to review certain problems that
affect the intended use of the manufactured
home or its parts, but correction of those
problems may no longer be required under
federal law. The HUD Manufactured Housing
Dispute Resolution Program is not for
cosmetic or minor problems in the home. It
is for problems that make the home or
components of the home not fit for the
ordinary use for which they were intended.
The steps and information outlined below
apply only to the HUD Manufactured
Housing Dispute Resolution Program that
operates in HUD-administered states. Under
the HUD Manufactured Housing Dispute
Resolution Program, homeowners must first
report defects to the manufacturer, retailer,
installer, or HUD. Homeowners are
encouraged to report defects in writing,
including but not limited to e-mail, written
letter, certified mail, or fax and may also
make a report by telephone. To demonstrate

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that the report was made within one year
after the date of installation, homeowners
should report defects in a manner that will
create a dated record of the report, for
example, by certified mail, fax or e-mail.
When making a report by telephone,
homeowners are encouraged to make a note
of the phone call, including names of
conversants, date, and time. No particular
format is required to submit a report of an
alleged defect, but any such report should at
a minimum include a description of the
alleged defect or problem.
Homeowners are encouraged to send
reports of an alleged defect to the
manufacturer, retailer, or installer of the
manufactured home. Reports of alleged
defects may also be sent to HUD at: HUD,
Office of Regulatory Affairs and
Manufactured Housing, Attn: Dispute
Resolution, 451 Seventh Street, SW.,
Washington, DC 20410–8000; faxed to (202)
708–4213; or e-mailed to [email protected].
If, after taking the steps outlined above, the
homeowner does not receive a satisfactory
response from the manufacturer, retailer, or
installer, the homeowner may file a dispute
resolution request with the dispute
resolution provider in writing, or by making
a request by phone. No particular format is
required to make a request for dispute
resolution, but the request must include the
following information:
(1) The name, address, and contact
information of the homeowner;
(2) The name and contact information of
the manufacturer, retailer, and installer of the
manufactured home;
(3) The date the report of alleged defect or
problem notification was made;
(4) Identification of the entities or persons
to whom the report of the alleged defect was
sent, and the method that was used to make
the report;
(5) The date of installation of the
manufactured home affected by the defect;
and
(6) A description of the alleged defect.
Information about the dispute resolution
provider and how to make a request for
dispute resolution will be available at
http://www.hud.gov or by contacting the
Office of Manufactured Housing Programs at
(202) 708–6423 or (800) 927–2891.
A screening agent from a dispute
resolution provider will review the request
and, if appropriate, forward the request to a
mediator. The mediator will mediate the
dispute and attempt to facilitate a settlement.
If the parties are unable to reach a settlement,
any party may request nonbinding
arbitration. Should any party refuse to
participate, the arbitration shall proceed
without that party’s input. Once the
arbitrator makes a determination, the
arbitrator will forward it to the Secretary of
HUD, who may then adopt, modify, or reject
the recommendation. The responsible party
or parties will be required to pay for or
provide any repair of the home.
In circumstances where manufacturers,
retailers, and/or installers are involved and
agree that one of them and not the
homeowner is responsible for the alleged
defect, these commercial entities will have
the opportunity to resolve the dispute

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61185

outside of the HUD Manufactured Housing
Dispute Resolution Program by exercising the
Commercial Opt-Out Option. Homeowners
will maintain the right to be present at any
meetings and to be informed of the outcome
when the Commercial Opt-Out Option is
exercised. At any time after 30 days of the
Opt-Out Option notification, any participant
or the homeowner may invoke the HUD
Manufactured Housing Dispute Resolution
Program and proceed to mediation.

*

*
*
*
*
5. In chapter XX, add a new part 3288,
to read as follows:
PART 3288—MANUFACTURED HOME
DISPUTE RESOLUTION PROGRAM
Subpart A—General
Sec.
3288.1 Purpose and scope.
3288.3 Definitions.
3288.5 Effective date.
Subpart B—HUD Manufactured Housing
Dispute Resolution Program in HUDAdministered States
3288.10 Applicability.
3288.15 Eligibility for dispute resolution.
3288.20 Reporting a defect.
3288.25 Initiation of dispute resolution.
3288.30 Screening of dispute resolution
request.
3288.35 Mediation.
3288.40 Nonbinding arbitration.
3288.45 Secretarial review and order.
Subpart C—Commercial Opt-Out Option in
HUD-Administered States
3288.100 Scope and applicability.
3288.105 Time when Commercial Opt-Out
Option available.
3288.110 Opt-out agreements.
Subpart D—State Dispute Resolution
Programs in Non-HUD-Administered States
3288.200 Applicability.
3288.205 Minimum requirements.
3288.210 Acceptance and recertification
process.
3288.215 Effect on other manufactured
housing program requirements.
Authority: 42 U.S.C. 3535(d), 5422 and
5424.

Subpart A—General
§ 3288.1

Purpose and scope.

The National Manufactured Housing
Construction and Safety Standards Act
of 1974 (the Act) (42 U.S.C. 5401–5426),
is intended, in part, to protect the
quality, safety, durability, and
affordability of manufactured homes.
Section 623(c)(12) of the Act (42 U.S.C.
5422(c)(12)) requires the
implementation of ‘‘a dispute resolution
program for the timely resolution of
disputes between manufacturers,
retailers, and installers of manufactured
homes regarding responsibility, and for
the issuance of appropriate orders, for
the correction or repair of defects in
manufactured homes that are reported

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during the one-year period beginning on
the date of installation.’’ Subpart A of
this part establishes general provisions
applicable to HUD’s implementation of
a dispute resolution program as required
by the Act. Subpart B of this part
establishes the HUD Manufactured
Housing Dispute Resolution Program
that HUD will administer in any state
that does not establish a program that
complies with the Act. Subpart C of this
part provides an option for parties that
are not homeowners to resolve disputes
outside of the HUD Manufactured
Housing Dispute Resolution Program
under subpart B. Subpart D of this part
establishes the minimum requirements
that must be met by a state wishing to
implement its own dispute resolution
program that complies with the Act, and
the procedure for determining whether
the requirements for complying have
been met. The purpose of this part is to
provide a dispute resolution process for
the timely resolution of disputes among
manufacturers, retailers, and installers
regarding the responsibility for
correction or repair of defects reported
by the homeowner or others and
reported in the 1-year period after
installation in manufactured homes. In
carrying out this purpose, it is assumed
that if a manufactured home contains a
defect that was not caused by the
homeowner, the manufacturer, retailer,
or installer is responsible for the defect
and the dispute resolution process is an
appropriate means to resolve issues of
responsibility for correction and repair
of the home.
§ 3288.3

Definitions.

The following definitions apply in
this part:
Appropriate order means an order
issued by the Secretary or an order that
is enforceable under state law.
Date of installation means the date all
utilities are connected and the
manufactured home is ready for
occupancy as established, if applicable,
by a certificate of occupancy, except as
follows: if the manufactured home has
not been sold to the first person
purchasing the home in good faith for
purposes other than resale by the date
the home is ready for occupancy, the
date of installation is the date of the
purchase agreement or sales contract for
the manufactured home.
Day means a calendar day.
Defect includes any defect in the
performance, construction, components,
or material of a manufactured home that
renders the home or any part of the
home not fit for the ordinary use for
which it was intended, including but
not limited to a defect in the

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construction, safety, or installation of
the home.
Dispute resolution provider means a
person or entity providing dispute
resolution services for HUD.
Homeowner means the first person to
purchase or lease the home in good faith
for purposes other than resale.
Manufactured home has the same
meaning as ‘‘manufactured home’’ as
defined at 24 CFR 3280.2.
Party or parties means, individually
or collectively, the manufacturer,
retailer, or installer of a manufactured
home in which a defect has been
reported.
Timely reporting means the reporting
of an alleged defect within one year
after the date of installation of a
manufactured home.
Timely resolution means the
resolution of disputes among
manufacturers, retailers, and installers
within 120 days of the time a request for
dispute resolution is made, except that
if the defect presents an unreasonable
risk of injury, death, or significant loss
or damage to valuable personal
property, the resolution must be within
60 days of the time a request for dispute
resolution is made.
§ 3288.5

Effective date.

The requirements of this part are
applicable to manufactured homes
installed after December 27, 2005, or
after the initial effective date of this
part, whichever is later.
Subpart B—HUD Manufactured
Housing Dispute Resolution Program
in HUD-Administered States
§ 3288.10

Applicability.

The requirements of the HUD
Manufactured Housing Dispute
Resolution Program established in this
subpart B apply in each state that does
not establish a state dispute resolution
program that complies with the Act and
has been accepted by HUD as provided
in subpart D of this part.
§ 3288.15

Eligibility for dispute resolution.

(a) Eligible parties. Manufacturers,
retailers, and installers of manufactured
homes are eligible to initiate action
under and participate in the HUD
Manufactured Housing Dispute
Resolution Program. Homeowners may
also initiate and participate in the HUD
Manufactured Housing Dispute
Resolution Program.
(b) Eligible disputes. Only disputes
concerning alleged defects that have
been reported to the manufacturer,
retailer, installer, or HUD within one
year after the date of installation of the
manufactured home are eligible for the

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HUD Manufactured Housing Dispute
Resolution Program. The matter eligible
for dispute resolution is the defect
alleged in a timely report and any
related issues.
§ 3288.20

Reporting a defect.

(a) Form of report. It is recommended
that defects be reported in writing,
including but not limited to e-mail,
written letter, certified mail, or fax.
Defects may also be reported by
telephone.
(b) Content of report. No particular
form or format is required to report a
defect, but any such report should at a
minimum include a description of the
alleged defect or problem.
(c) Record of report. (1) Report made
to parties. (i) To evidence timeliness. To
avoid issues of lack of timely reporting,
the report of a defect that is made to the
manufacturer, retailer, or installer of the
manufactured home should be done in
a manner that will create a dated record
of the report to demonstrate that the
report was made within one year after
the date of installation, for example, by
certified mail, fax, or e-mail. For reports
made by telephone, making a
contemporaneous note of the phone call
is recommended.
(ii) Obligation to retain. For purposes
of this part, each report of a defect,
including logs of telephonic complaints
received by a manufacturer, retailer,
and/or installer, must be maintained for
three years from the date of receipt, if
the report is made within one year after
the date of installation.
(2) Reports made to HUD. (i) Reports
of alleged defects that arise in the
manufactured home in the first year
after its installation can be sent to HUD:
(A) In writing at: HUD, Office of
Regulatory Affairs and Manufactured
Housing, Attn: Dispute Resolution, 451
Seventh Street, SW., Washington, DC
20410–8000;
(B) By telephone at: (202) 708–6423 or
(800) 927–2891;
(C) By fax at: (202) 708–4213; and
(D) By e-mail at [email protected].
(d) Effect of report. The reporting of
a defect does not initiate the dispute
resolution process, but only establishes
whether the requirement of timely
reporting in accordance with
§ 3288.15(b) has been met.
§ 3288.25

Initiation of dispute resolution.

(a) Preliminary effort. HUD strongly
encourages the party reporting the
defect to seek to resolve the dispute
directly with the party or parties that
they believe are responsible before
initiating the federal dispute resolution
process.
(b) Request for dispute resolution.
Any of the parties may initiate the HUD

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Manufactured Housing Dispute
Resolution Program process at any time
after a defect has been reported by
requesting dispute resolution as follows:
(1) By mailing, e-mailing, or otherwise
delivering a written request for dispute
resolution to the dispute resolution
provider at the address or e-mail
address provided either at http://
www.hud.gov or HUD’s Office of
Regulatory Affairs and Manufactured
Housing at (202) 708–6423 or (800) 927–
2891;
(2) By faxing a request for dispute
resolution to the fax number provided
either at http://www.hud.gov or HUD’s
Office of Regulatory Affairs and
Manufactured Housing at (202) 708–
6423 or (800) 927–2891; or
(3) By phoning in a request for
dispute resolution at the phone number
provided either at http://www.hud.gov
or HUD’s Office of Regulatory Affairs
and Manufactured Housing at (202)
708–6423 or (800) 927–2891.
(c) Required information. The dispute
resolution provider will request at least
the following information to initiate the
dispute resolution process:
(1) The name, address, and contact
information of the homeowner;
(2) The name and contact information
of the manufacturer, retailer, and
installer of the manufactured home;
(3) The date the report of the alleged
defect was made;
(4) The name and contact information
of the recipient or recipients of the
report of the alleged defect;
(5) The date of installation of the
manufactured home affected by the
defect; and
(6) A description of the alleged defect.
§ 3288.30
request.

Screening of dispute resolution

(a) Review for sufficiency. Once the
request for dispute resolution has been
received by the dispute resolution
provider, a Screening Neutral will
review the sufficiency of the
information provided in the request for
dispute resolution and determine if the
dispute resolution process should
proceed. If a defect is properly alleged,
the request will be forwarded for
mediation.
(b) Insufficient information. If a
request for dispute resolution is lacking
any information required to determine if
the dispute resolution process should
proceed, the Screening Neutral will
contact the requester in order to
supplement the initial request.
§ 3288.35

Mediation.

(a) Mediator. The dispute resolution
provider will provide for the selection
of a mediator. The selected mediator

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will not be the person who screened the
dispute resolution request. The selected
mediator will then mediate the dispute
and attempt to facilitate a settlement.
(b) Time. (1) For reaching settlement.
Except as provided in paragraph (b)(2)
of this section, the parties are allowed
30 days from the commencement of the
mediation to reach a mediated
settlement.
(2) Defects presenting an
unreasonable risk of injury, death, or
significant loss or damage to valuable
personal property. For mediations
involving defects that appear to present
an unreasonable risk of injury, death, or
significant loss or damage to valuable
personal property, the parties have a
maximum of 10 days to reach a
mediated settlement.
(3) For corrective repairs. Unless a
longer period is agreed to in writing by
the parties to the mediated settlement
and the homeowner, corrective repairs
must be completed no later than 30 days
after the settlement agreement.
(c) Written settlement agreement.
Upon reaching an agreement, the parties
will sign a written settlement
agreement. The dispute resolution
provider will forward copies of the
agreements with the original signatures
of the parties to the parties and to HUD.
(d) Confidentiality. Except for the
report of an alleged defect, any request
for dispute resolution, any agreement to
mediate, and any written settlement
agreement, all other documents and
communications used in the mediation
will be confidential, in accordance with
the Administrative Dispute Resolution
Act of 1996 (5 U.S.C. 571 et seq.).
§ 3288.40

Nonbinding arbitration.

(a) When initiated. If the parties fail
to reach a settlement through mediation
under § 3288.35, any party may, within
15 days of the expiration of any time
permitted under § 3288.35(b), initiate
nonbinding arbitration.
(b) Written request. (1) Submission to
HUD. A written request for arbitration
must be submitted to the dispute
resolution provider. Information about
the dispute resolution provider and how
to make a request for dispute resolution
will be available at http://www.hud.gov
or by contacting HUD’s Office of
Manufactured Housing Programs at
(202) 708–6423 or (800) 927–2891.
(2) Contents of request. The written
request for arbitration must include:
(i) The names and addresses of all
relevant parties, including the party
making the request;
(ii) A brief description of the alleged
defect or a copy of the report of the
defect; and

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(iii) A copy of the request for dispute
resolution.
(c) Appointment and authority of
arbitrator. Upon receipt of the request,
the dispute resolution provider will
provide for the selection of an arbitrator.
The arbitrator will have the authority to:
(1) Set hearing dates and deadlines;
(2) Conduct onsite inspections;
(3) Issue orders to compel the
completion of the record;
(4) Dismiss frivolous allegations;
(5) Make a disposition
recommendation to the Secretary; and
(6) Recommend apportionment of the
responsibility of paying for or providing
any repair of the home when culpability
is assessed to more than one party.
(d) Proceedings. (1) The arbitrator
may conduct either a record review or
a telephonic hearing if the parties do not
request an in-person hearing under
paragraph (d)(2) of this section within 5
days of the dispute resolution provider’s
receipt of the request for arbitration, or
if the arbitrator rejects the request for an
in-person hearing.
(2) If any party wants to request an inperson hearing, in which the parties or
their representatives personally appear
before the arbitrator, the arbitrator will
consider such a request if it is made by
all of the parties that are participating in
the arbitration. Such an in-person
hearing will be held at the discretion of
the arbitrator, after considering
appropriate factors, such as cost.
(e) Effect on nonparticipating parties.
If a party chooses not to participate in
the arbitration, the process will
continue without further input from that
party. In such a case, the arbitrator may
rely on the record developed through
the arbitration to find a nonparticipating
party responsible for correcting a defect.
(f) Completion of arbitration. Within
21 days of the dispute resolution
provider’s receipt of the request for
arbitration, the arbitrator will complete
the arbitration process and provide HUD
with a written, nonbinding
recommendation as to which party or
parties are responsible for the defect,
and what corrective actions should be
taken.
§ 3288.45

Secretarial review and order.

(a) Appropriate order. The Secretary
will review the arbitrator’s
recommendation provided in
accordance with § 3288.40(f) and the
record, if any, of the arbitration, and
will issue an order accepting,
modifying, or rejecting the
recommendation. The Secretary will
forward a copy of the order to the
arbitrator and to each of the parties,
whether or not a party participated in
the arbitration.

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(b) Contents of order. If the Secretary
finds that a defect exists, the order will
include the following:
(1) Assignment of responsibility for
the correction and repair of all defects
and associated costs; and
(2) A date by which the correction of
all defects must be completed, taking
into consideration the seriousness of the
defect.
(c) Failure to comply. A party’s failure
to comply with an order issued
pursuant to this part will be considered
a violation of section 610(a)(5) of the
Act (42 U.S.C. 5409(a)(5)).
Subpart C—Commercial Opt-Out
Option in HUD-Administered States
§ 3288.100

§ 3288.110

Scope and applicability.

The requirements of this subpart C
may be followed in lieu of the
requirements of subpart B of this part to
resolve disputes among manufacturers,
retailers, and installers of manufactured
homes in any state where subpart B of
this part would otherwise apply. In
limited circumstances, this subpart
permits manufacturers, retailers, and
installers of manufactured homes to use
expert neutrals of their choosing to
resolve disputes concerning defects in
manufactured homes. The Commercial
Opt-Out Option may be initiated after a
defect has been reported, but no more
than 5 days after notification from the
Screening Neutral of a request for
dispute resolution and before the HUD
Manufactured Housing Dispute
Resolution Program has commenced.
Once the Opt-Out Option is initiated,
none of the opt-out participants or the
homeowner can invoke the HUD
Manufactured Housing Dispute
Resolution Program for 30 days.
§ 3288.105 Time when Commercial OptOut Option available.

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Opt-out agreements.

(a) Required agreement. To use the
Commercial Opt-Out Option, as
appropriate, the manufacturer, retailer,
and installer of the manufactured home
at issue must agree:
(1) That there is a defect in the
manufactured home;
(2) That the manufacturer, retailer, or
installer is responsible for the defect;
(3) That the homeowner is not
responsible for the defect;
(4) To engage a neutral expert to
evaluate the dispute and make an
assignment of responsibility for
correction and repair; and
(5) To notify the homeowner of, and
allow the homeowner to be present at,
any meetings, and to inform the
homeowner of the outcome.
(b) Additional element of agreement.
In addition, the parties should agree to
act upon the neutral expert’s assignment
of responsibility for correction and
repair.
Subpart D—State Dispute Resolution
Programs in Non-HUD Administered
States
§ 3288.200

(a) The Commercial Opt-Out Option
may be initiated after a defect has been
reported, but no more than 5 days after
notification from the Screening Neutral
of a request for dispute resolution and
before the HUD Manufactured Housing
Dispute Resolution Program has
commenced, by a written notification to
HUD’s dispute resolution provider. The
notification may be made to the dispute
resolution provider by mail, fax, e-mail,
or other delivery at the address
provided at http://www.hud.gov.
(b) No particular form or format is
required to provide notification for the
Commercial Opt-Out Option, but the
party or parties submitting the
notification must include a statement
from the parties stating that the
homeowner is not responsible for the
alleged defect and make reasonable

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efforts to include the following
information:
(1) The name, address, and contact
information of the homeowner;
(2) The name and contact information
of the manufacturer, retailer, and
installer of the manufactured home;
(3) The date the report of the alleged
defect was made;
(4) The name and contact information
of the recipient or recipients of the
report of the alleged defect;
(5) The date of installation of the
manufactured home affected by the
defect; and
(6) A description of the alleged defect.

Applicability.

This subpart D establishes the
minimum requirements that must be
met by a state to implement its own
dispute resolution program and
therefore not be covered by the HUD
Manufactured Housing Dispute
Resolution Program established in
accordance with subpart B. The subpart
also establishes the procedure for
determining whether the state dispute
resolution program meets the
requirements of the Act for operating in
lieu of the federal dispute resolution
program.
§ 3288.205

Minimum requirements.

The HUD Manufactured Housing
Dispute Resolution Program will not be
implemented in any state that complies
with the procedures of this subpart D
and that has a dispute resolution

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program that provides for the following
minimum requirements:
(a) The timely resolution of disputes
regarding responsibility for correction
and repair of defects in manufactured
homes involving manufacturers,
retailers, or installers;
(b) The issuance of appropriate orders
for correction and repairs of defects in
the homes;
(c) A coverage period for disputes that
includes at least defects that are
reported within one year from the date
of installation;
(d) Provisions for homeowners to
initiate complaints for resolution and to
have homeowner interests protected;
(e) Provisions for adequate funding
and personnel; and
(f) Provisions for conflict of interest
safeguards which ensure that a dispute
resolver does not have a significant
interest in the outcome of a particular
dispute or a significant relationship to a
person involved in a particular dispute.
§ 3288.210
process.

Acceptance and recertification

(a) Submission of certification. A State
seeking certification must submit to
HUD for review and acceptance a
completed Dispute Resolution
Certification Form as provided by HUD.
The certification may be submitted as a
part of, or independent of, a State plan
under § 3282.302 of this chapter.
(b) HUD review and action. (1) HUD
will review the Dispute Resolution
Certification Form submitted by a State
and may contact the State to request
additional clarification or information
as necessary. Upon completing its
review, HUD will provide the State with
notice of acceptance, conditional
acceptance, or rejection of its dispute
resolution program.
(2) A notice of acceptance will
include the date of acceptance.
(3) If HUD rejects a State’s dispute
resolution program, HUD will provide
an explanation of what is necessary to
obtain full acceptance. A revised
Dispute Resolution Certification Form
may be submitted within 30 days of
receipt of such notification. If the
revised Dispute Resolution Certification
Form is inadequate or if the State fails
to resubmit within the 30-day period or
otherwise indicates that it does not
intend to change its Dispute Resolution
Certification Form, HUD will notify the
State that the dispute resolution
program is not accepted and that it has
a right to a hearing on the rejection
using the procedures set forth under
subpart D of part 3282 of this chapter.
(c) Conditional acceptance. A State
meeting the minimum requirements set
forth under § 3288.205(e) and (f), and

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three of the four minimum requirements
under § 3288.205(a) through (d) may be
conditionally accepted by the Secretary.
If HUD conditionally accepts a State’s
dispute resolution program, HUD will
provide an explanation of what is
necessary to obtain full acceptance. A
revised Dispute Resolution Certification
Form may be submitted within 30 days
of receipt of such notification. Any State
conditionally accepted will be
permitted to implement its own dispute
resolution program for a period of not
more than 3 years absent extension of
this period by HUD.
(d) Revocation. If the Secretary
becomes aware at any time that a State
no longer meets the minimum
requirements set forth under § 3288.205,
the acceptance of the Certification may
be revoked after an opportunity for a
hearing.

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(e) Recertification. To maintain its
accepted status, a State must submit a
current Dispute Resolution Certification
Form to HUD for review and
acceptance:
(1) Every three years within 90 days
of the day and month of its most recent
date of acceptance; or
(2) Whenever there is a significant
change to the program, whichever is the
earlier. A State that is conditionally
accepted will be permitted to
implement its own program for a period
of not more than three years absent
extension of this period by HUD.
(f) Inclusion in State plan. If a State
dispute resolution program is part of a
State plan, it will be reviewed annually
as part of the State plan.
§ 3288.215 Effect on other manufactured
housing program requirements.

A State with an accepted dispute
resolution program will operate in lieu

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of HUD’s Manufactured Housing
Dispute Resolution Program established
under subpart B of this part 3288. A
State dispute resolution program, even
if it is an accepted dispute resolution
program under this part, does not
supersede the requirements applicable
to any other aspect of HUD’s
manufactured housing program. Any
responsibilities, rights, and remedies
applicable under the Manufactured
Home Construction and Safety
Standards in part 3280 of this chapter
and the Manufactured Home Procedural
and Enforcement Regulations in part
3282 of this chapter continue to apply
as provided in those parts in all States.
Dated: September 27, 2005.
Brian D. Montgomery,
Assistant Secretary for Housing-Federal
Housing Commissioner.
BILLING CODE 4210–27–P

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BILLING CODE 4210–27–C