DOVER, DE – A request by Windsor-Mount Joy Mutual Insurance Company (“WNMJ”) to increase insurance rates on over 2,000 manufactured housing policyholders by 20%-30% has been denied by Insurance Commissioner Trinidad Navarro. Many of these homeowners have already received premium increase notices from WNMJ effective March 15, 2017. Because of the Insurance Commissioner’s denial, those increases will not go into effect. For reasons set forth in his order, Commissioner Navarro has deemed the request excessive and unreasonable.

WNMJ’s requested increase would unfairly impact manufactured homeowners in one geographic region-Eastern Sussex County. After reviewing the request, Commissioner Navarro found the request to be unreasonable. The Department of Insurance subsequently hired an independent actuary to determine the fairness of the requested rate increase. After reviewing 1 0 years of claims files for the company, the Department contracted actuary concluded that this area, receiving the largest proposed increase, is also the area that has had the fewest claims. The company’s cost for reinsurance and brokerage fees were also indicated as being higher than the industry average.

In response, Commissioner Navarro issued the following statement:

“As Insurance Commissioner, it is my duty to look out for and protect consumers. After our analysis, we believe it is unfair for a company to pass on its negotiable reinsurance costs and negotiable brokerage fees to its policyholders by increasing their rates.

At this point, there are several routes we can take. WNMJ can either negotiate a better rate for consumers, or file for a public hearing on this matter. That decision will be forthcoming.

When I ran for this position, I promised to thoroughly review and deny any requests for rate increases that I deem to be excessive. I have already negotiated lower rate increases in other cases, however, this is the first that I have had to outright deny. In the future, I will not hesitate to apply strict standards and scrutiny to any rate filing. I will also continue to deny any request for rate increase that I find excessive.”

View PDF (see page 2 of 2): windsor-mt-joy-rate-denial

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Contact: Vince Ryan

Office: 302-674-7303

Mobile: 302-387-7670

vince.ryan@delaware.gov

Attorney General Matt Denn’s office has filed suit against the owner of three Delaware manufactured housing communities for attempting to financially pressure tenants to give up their legal right to arbitrate proposed rent increases.

The Department of Justice’s Consumer Protection Unit filed the lawsuit Friday against Chicago-based Hometown America Communities, Inc., the fifth-largest owner of manufactured housing communities in the United States.  The lawsuit alleges that Hometown America violated Delaware law by issuing rent increase notices to tenants of its Barclay Farms, Angola Beach Estates, and Rehoboth Bay communities that attempt to factor Hometown America’s anticipated litigation costs into its rent increase, by requiring homeowners to waive their right to arbitrate the proposed rent hikes in exchange for giving them a purported “discount” to a substantial rent increase.  Such conduct is forbidden under Delaware’s manufactured housing laws, which prohibit community owners from factoring arbitration and other litigation-related costs into the rent charged to homeowners under any circumstances, and prohibit community owners from trying to include in their rental terms provisions where homeowners waive rights provided to them by law.

“This tactic of getting community tenants to sign away their legal rights in exchange for a lower rent increase is reprehensible,” Attorney General Denn said.  “When predatory conduct by community owners threatens to upset the balance struck by the General Assembly when it passed the rent justification law for manufactured home communities, my office will act aggressively to protect tenants.”

Historically, community owners had disproportionate power to set rental rates, because it is difficult for tenants to move their manufactured homes to new locations. Delaware enacted a rent justification law two years ago to remedy this imbalance and give important protections to tenants—including the right to arbitrate proposed rent increases—while still ensuring that landowners could earn a reasonable return on their investment.

The Attorney General’s lawsuit seeks, among other things, a declaration that Hometown America’s rent increase notices are invalid, an order directing Hometown America to pay affected tenants the equivalent of three month’s rent for having willfully violated Delaware’s manufactured housing laws, payment of civil penalties, and an order requiring Hometown America to cease and desist its unlawful activities.

Photos available on Flickr, video available on YouTube

Measure brings predictability to homeowners’ lives

DOVER – After years of uncertainty surrounding their annual rent increases, Gov. Jack Markell Sunday signed a measure limiting the majority of increases for manufactured housing community residents.

“The work done on this issue by lawmakers and advocates to come together and resolve a challenging issue reflects a theme of the legislative session that will conclude tonight,” Markell said during a Sunday afternoon bill signing ceremony. “I commend the sponsors of this legislation and all of the lawmakers involved for their hard work on a carefully crafted compromise that resulted in broad support, striking a balance between the needs of homeowners and community owners.”

Sen. Bruce Ennis, D-Smyrna, has led the fight for the law is a balanced compromise and said Markell’s signing represents a great day for homeowners.

“It has been a long struggle and I think this is great because it just creates some predictability for people in manufactured homes in regard to rent increases and I think it’s important that we were able to give some protections and predictability,” Ennis said. “It’s very important that we protect the property rights and the investment of the park owners while, at the same time, we’re creating predictable land rents for the tenants.”

Under the new law, community owners could automatically raise rents by the three-year average of the Philadelphia regional consumer price index. If circumstances, such as major capital improvements to a community, caused landowners to seek a higher rent hike, they would have to make their case before the state’s Manufactured Housing Relocation Authority.  The law also provides for arbitration and legal review – if an increase is disputed by either landowners or tenants. It also provides penalties for community owners who continue to raise rents beyond the ceiling.

Unlike traditional residential neighborhoods, where homeowners own both the home and the ground it sits on, homeowners in manufactured housing communities own their homes but rent the land. Unlike stereotypical mobile homes, once a modern day manufactured home is in place, it can be as difficult as a site-built home to move.

Officials say the homes make up about 11 percent of Delaware’s overall housing stock and, in some areas, they represent the best affordable housing choice for many people.

“It’s a unique arrangement,” said Sen. Brian Bushweller, D-Dover, who joined forces with Ennis on the bill.  “I think this is a great day for housing in Delaware because this is a law that recognizes that and takes great pains to ensure basic fairness for both sides. It gives more stability and predictability in budgeting, but it gives landowners a chance to increase rents and a mechanism for bigger increases if they are justifiable.”

Leaders of the Delaware Manufactured Homeowner Association and Land Lease Homeowners Association have been a constant presence at Legislative Hall in support the bill and earlier efforts. State Rep. Paul Baumbach said their willingness to work the issue out was important.

Congratulations to homeowners, DMHOA and LLHC for working together with each other and  legislators and landlords to fix this problem that has been plaguing tens of thousands of Delawareans for many years,” said Baumbach, D-Newark, the bill’s chief House sponsor.

Ed Speraw, president of the manufactured homeowners association, said the signing was a great day for homeowners.

“By doing this, we’ve helped thousands and thousands of manufactured homeowners, and these people needed this bill – badly,” he said. “This law will help thousands of people who might have been forced from their homes through dramatic rent increases keep their homes.”

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