Manufactured Housing Dispute Resolution Program, 61178-61191 [05-20953]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 70, Number 202 (Thursday, October 20, 2005)]
[Proposed Rules]
[Pages 61178-61191]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-20953]



[[Page 61177]]

-----------------------------------------------------------------------

Part II





Department of Housing and Urban Development





-----------------------------------------------------------------------



24 CFR Parts 3280, 3282 and 3288



Manufactured Housing Dispute Resolution Program; Proposed Rule

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

[[Page 61178]]


-----------------------------------------------------------------------

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

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would establish a federal manufactured 
housing dispute resolution program and guidelines for the creation of 
state-administered 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.

DATES: 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: https://
www.regulations.gov; or
     The HUD electronic Web site at: https://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 
(this is not a toll-free number). Copies of the public comments are 
also available for inspection and downloading at https://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 state-administered 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 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

[[Page 61179]]

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 user-fee 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 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 cost-effective 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). 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 HUD-administered 
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

[[Page 61180]]

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 HUD-
Administered 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 long-established 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 significant health and safety 
issues. See the definition in Sec.  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.

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.

C. Intake and Screening

    Once the request for dispute resolution has been received by the 
dispute resolution provider, the 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.

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.

E. Nonbinding Arbitration

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

[[Page 61181]]

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 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-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 https://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 Sec.  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.

[[Page 61182]]

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 self-certification 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 self-certification very similar to the self-certification 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 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 self-certification 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 Sec.  
3288.205 (e) and (f), and three of the four minimum requirements under 
Sec.  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 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 Sec.  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'').

[[Page 61183]]

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 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:

----------------------------------------------------------------------------------------------------------------
                                     Number of     Responses per   Total annual      Hours per
     Information collection         respondents     respondent       responses       response       Total hours
----------------------------------------------------------------------------------------------------------------
State Certification for                       17               1              17               1              17
 Manufactured Housing Dispute
 Resolution.....................
Federal manufactured housing               3,600               1           3,600               1          3,600
 dispute resolution information*
----------------------------------------------------------------------------------------------------------------
* 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 
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).

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

[[Page 61184]]

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 tie-down 
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 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.

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 Sec.  3280.2, the definition of ``manufactured home'' is 
revised to read as follows:


Sec.  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 Sec.  
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

[[Page 61185]]

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 Sec.  3282.207, redesignate paragraph (e) as paragraph (f), 
and add a new paragraph (e) to read as follows:


Sec.  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 ``HUD-administered 
states.'' You may contact HUD at (202) 708-6423 or (800) 927-2891, 
or visit the HUD Web site at https://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 one-year 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 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 mhs@hud.gov.
    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 https://
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 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 HUD-
Administered 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


Sec.  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

[[Page 61186]]

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.


Sec.  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 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.


Sec.  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


Sec.  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.


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


Sec.  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