To Cert or Not to Cert? Our Opinion—Not So Fast

I am a female manufactured home contractor specializing in manufactured home foundation repair. It’s not the most glamorous job in the world and mainly consists of crawling underneath the darkside of people’s homes, often in claustrophobic tight conditions and in poor air circulation environments. Some manufactured homes are set in a pit to give an attractive low profile curb appeal, much like a site built home. Others are installed above ground and some even on full basement. On the subset types, there’s not a lot of room for the configuration of the female form to navigate easily from one end of the home to the other. While trying to do the military crawl underneath, my bottom inevitably pops up and then when I try to balance out, my head often jerks up and whamm—straight into the I-beam. My male co-workers find this particularly funny and when they hear my yelps as my body parts bang and clang against metal, I hear uncontrollable laughter. Fortunately YouTube has yet to find me underneath the dank and dirty world that is the manufactured home contractor’s domain. Believe me, we see it all, spiders, snakes, rats, centipedes, scorpions, dead carcasses (cats, rats, bunnies, and yes even a coyotes) not to mention standing water, sewer leaks, falling insulation, splitting marriage lines, overextended screw jacks, shifting or compromised supports. I have yet to find any buried treasure but we frequently find several cases of empty beer cans which may be the reason many of the homes we work on seem to be set up off kilter right from the beginning.

Having worked in the business for twenty some years, we have striven to maintain our business model as closely associated with the name of our company, On The Level, as possible and have tried to avoid the trampy style of some of our competition who frighten the mobilehome senior market with scare tactics,convincing widows to buy overpriced “earthquake bracing”, locktops, or “marriage rods. In most cases, these products were unnecessary or unpermitted and a waste of homeowner’s money.

And yet necessary upgrades for manufactured home foundations suddenly made an appearance when the lending market (specifically FHA and VA Loans) imposed foundation standards for permanent attachment in order to meet loan criteria. Without an engineer’s certification proving that the manufactured home’s foundation met FHA-insured standards (THE PERMANENT FOUNDATION GUIDE FOR MANUFACTURED HOMES, HUD 1996) , an FHA or VA loan could not move forward. The good news is that there are dozens of state-certified alternate and pre-fabricated systems available in the marketplace so that a home can have foundation repairs without having to renovate the entire understructure.

While the foundation standard is defined in the HUD Permanent Foundation Handbook, the problem is that individual states have divergent installation, titling, and real property provisions so each home must be evaluated on a case-by-case basis. But as a company, On The Level does not stop at the evaluation of just the foundation. It is our opinion that a foundation certification is NOT a stand-alone document. Proving that the foundation is compliant should NOT be the first step on the long laundry list of conditions. IT SHOULD BE THE LAST CONDITION! Let me explain, in many cases, we have evaluated the foundation and we know it can certify or it will certify with a retrofit but we refuse to move forward with the actual letter. Why? Our competition takes the attitude that they are only being hired to assess the foundation so that’s what they do: assess the foundation in a vacumn irrespective of other data, then they write a pass or fail certification, and take the money and run. So what if a $3000 retrofit could potentially kill the loan? Who cares if there is evidence that the home was moved from another location? Who cares if the home is located in a flood plain? Who cares if the home doesn’t have HUD tags? That’s not the engineer’s or retrofitter’s job, right? The engineer only needs to write a determination of the foundation itself. End of story.

We disagree. My point is that this is state-by-state tricky wicket. In most cases, I’ll get a demand from an enthusiastic loan officer, “I just need the cert”. When I say, “Not so fast—our research shows issues in other areas”, I think most of them think we are trying to drag our feet. Not true! It is our policy as a company never to charge for a failed foundation inspection report—we only charge the borrower or lender once a foundation report certifies that the foundation meets the PERMANENT FOUNDATION GUIDE FOR MANUFACTURED HOMES, HUD 1996.

We provide a one-stop shop for borrowers, lenders, processors to get nationwide engineer’s certifications quickly and accurately. No charges for failed reports EVER!!!! www.onthelevelcontractors.com

And if you don’t have a lender, a manufactured home loan specialist: www.mh-lending.com

One of the problems with manufactured housing and its perceived reliability in the mind of the consmer to withstand different weather and terrain conditions has been the disconnect between how the code requires the home to be designed and engineered in the factory and how the home is installed in the field. In other words, there is a lack of continuity between what the manufacturer sends out the door and the dealer and installer delivers and sets up on the home site. While the HUD Code of 1976 established that manufactured homes had to be factory designed and engineered to federal law standards with specific electrical, heating, plumging and thermal standards as well as performance requirements for structural design, construction, fire resistance, energy efficiency and transportation from the factory to the site , the installation standards were left to the local and state jurisdictional authorities. Interestingly, in some states installation requirements are rigorous while others, lax to non-existent.

To quote the code, “every HUD Code manufactured home is built in a factory, under controlled conditions, and has a special label affixed on the exterior of the home indicating that the home has been designed, constructed, tested and inspected to comply with the stringent federal standards set forth in the code. No manufactured home may be shipped from the factory unless it complies with the HUD Code and receives a certification label from an independent third party inspector.”

So let’s say the home was designed to meet Wind Zone II requirements, this home would not receive a HUD label and data compliance certificate nor could leave the factory without substantive engineering and design proof that the design met those specified Wind Zone engineering requirements. However, the irony is that after all the in-factory inspections and compliance requirements had been met and certified as HUD compliant, the home could simply be shipped out of the area to a state that might not mandate or enforce wind tie-downs at all. So conceivably, all the regulations set forth for factory production could be completely abandoned when the home arrived at the site. And most anyone that stays abreast of current events has seen how vulnerable manufactured homes are in high wind zone areas. Does “Wizard of Oz” come to mind?

However the new HUD Code is in the process of changing not only how local jurisdictions (those building department enforcing local codes) oversee HUD compliant housing, but also a complete revision of rules, regulations and requirements that will affect thousands of dealers and installers (those that perpetuate the market growth of the industry). So in short, this is a good thing and here is why: manufactured housing installation will finally be standardized and will match up with the factory design criteria. For instance if the home is designed in the factory for a 30 lbs. roof load, then it makes sense that a foundation must be installed based on the same specifications. What a concept that the understructure system should be able to support the roof – the same applies for wind and seismic zones as well.

Most of this is simply common sense and something that most general building contractors of site-built homes have been following for years. Items such as site preparation, drainage, fall, soil compaction are part and parcel to the check-list protocol for a standard site-built-home-contractor, and yet, something that the maverick, often unlicensed and uninsured installer has cast aside simply as nuisance or inconsequential to the installation standards. For a general spoof on the industry and the stereotype that unfortunately still prevails but needs to change, check out You Tube Bubba Inc., http://youtube.com/watch?v=VQcT0tz8twk

Thus, better regulatory installations will not only make homes safer, but will hopefully mitigate the pervasive and on-going issues of sticky doors, mating-line inconsistencies, understructure moisture intrusion, squeaks and the laundry list of other issues that can often leave homeowners unsettled about manufactured home living. Furthermore, it is our hope that with these changes, lending institutions will also begin to regard the manufactured housing industry with higher regard.

Without the helping hand of the loan industry, not even the most affordable housing is a viable alternative for those that want to grab onto the American dream. Fortunately FHA has been aware of the state-to-state inconsistencies and in order to comply with their loan guidelines, they have requiree an engineer’s certification of the home’s foundation and any attached structures that may impact the structural integrity of the home. The engineer must cite that the home meets the HUD guidelines detailed the PERMANENT FOUNDATION GUIDE FOR MANUFACTURED HOMES, 1996. This is one situation where regulatory policy to enforce better installation guidelines will likely benefit all involved: the homeowner, the borrower, the lender, and most of all, the reputation of the manufactured home industry.

Janis Arenson is with OnTheLevel Contractors, Inc., manufactured homes specialists with offices in California.

One of the most frustrating things for manufactured home owners in the last few years has been the changing emphasis on type of foundations on their understructures in order to qualify for loans. Frustrating because as of a few years ago this was not a requirement so many homeowners either bought a home or refinanced a home without the “foundation” restriction and now either they are selling or refinancing and they are finding a different lending environment. It catches many by surprise! At pace with the more restrictive lending requirements for borrower credit qualification, the manufactured home itself may also have to meet a lender’s own fitness standards. Some of this has been created by the bad rap manufactured homes seem to get by the sensational press focusing on flying, collapsing or burning manufactured homes during every wind, hurricane or earthquake disaster. However, another part of the equation is the unique methodology of registration and titling of manufactured homes, in some cases leaving the lender without a security interest in the home.

Manufactured homes are the only types of dwelling units that can either be classified as personal property (aka chattel) or real property. Interesting, the determination of how the home can be classified is often determined by the type of support foundation under the home. Removal of the tires and axles is only one part of the equation. In most states, some sort of connection between the ground and the home is a requisite to title the home as real property. Depending on the state, this can range from simple to complex. In California for instance, a permit has to be pulled at the local licensing jurisdiction presenting the foundation plans that have been stamped by an engineer. It then has to be inspected by a building inspector, then a Department of Housing and Community Development (HCD) Form 433A has to be signed by the same building official and then recorded at the County Recorder’s office. On FHA-insured loans the process goes a step further. The foundation must meet the guidelines of the Permanent Foundation Guide to Manufactured Homes, HUD Publication 1996 and only a licensed engineer can certify to the foundation worthiness. Therefore each understructure and its certification is done on a case- by-case basis.

It is important to understand that this doesn’t mean that if a home’s original installation was not done to the standard that it can’t be retrofitted fairly easily and inexpensively. Thankfully, the home does not have to be raised and have new cement walls installed to support the perimeter. Manufacturers throughout the nation have created retrofit systems that often meet not only the local or state requirements for permanent affixation, but may meet the HUD standards as well.

In many cases the age of the home is at issue. Most lenders want the home to meet Housing and Urban Development (HUD) standards which means the home will at least be June 15, 1976 or newer. To signify the homes age worthiness, some lenders require proof of the existence of the HUD label (the metal plate affixed at the end of each transportable unit).

If your lender is requiring an engineer’s certification, make sure the engineer is familiar or specializes in manufactured homes. If not, he/she may misinterpret the HUD Handbook or may not be familiar with the many fairly economical retrofit systems available. We have seen many engineers recommend a retrofit fix that may exceed $20,000 when a pre-engineered system might be in the range of $3,000-$6,000 depending on the size of the home. Or if the engineer is not able to discern the difference between a HUD or pre-HUD home, he or she may recommend costly upgrades that may be counter-indicated if the underwriter will turn down the home because of its age.

Navigating through the loan process these days on any loan is more tiresome. The manufactured home loan can be even trickier unless you are dealing with seasoned professionals that can balance the requirements of the building departments, the underwriters and the federal government. On The Level is such a company that partners with lenders, engineers, manufacturers and governmental agencies to get the job and paperwork done seamlessly for the borrower.

Many high quality manufactured home developments were first developed as rental or lease communities and later through the resident or homeowner association efforts or through owner determination, the development was converted to resident ownership. One of the most popular methods of park conversion was through a condominium plan. Unfortunately the legal verbiage in the condo plan inadvertently excluded manufactured home communities from certain types of financing, specifically FHA insured loans or loans that would ultimately be sold to the secondary market. This often compromised the very heart and soul of the manufactured home market—either the first home buyer or the retirement owner. Without appropriate financing the first-time home buyer was unable to secure the best source of dollars available and the senior was unable tap into his/her nest egg by virtue of a Reverse Mortgage. A reverse mortgage lets homeowners 62 years or older borrow against the equity in their property. They can take the proceeds as a monthly check, lump sum or line of credity. Instead of making payments to the lenders, as with a traditional mortgage, the lender pays the homeowner. The loan is repaid with interest when the borrower sells, moves or dies.
The understanding of manufactured homes and their associated communities by the highest level of FHA and HUD officials as well as our political leaders in Washington was also flawed. Rental parks that converted to resident ownership through the condominium process were viewed on paper as developments with lower quality homes. In reality, these are developments like Rancho Carlsbad and Champagne Village (just two parks to cite examples with golf courses, enviable locations and amenities with home prices in the $300,000-$500,000 range. Far from substandard.
On March 29, 2007, H.R. 1852 (the Expanding Homeownership Act of 2007) was introduced into the House of Representatives by Congresswoman Maxine Waters (D-CA). The bill has been referred to the Senate Committee on Banking, Housing and Urban Affairs. Passage of a compromise version by both houses of Congress is expected to pass by the first quarter of 2008. When The U.S. Congress passes the FHA Modernization bill, this bill will bring the benefits of reverse mortgages and comprehensive mortgages to homeowners that have been excluded for too long. HUD officials have given assurances that the logistics will be implemented quickly.
Some of the logistical issues on a manufactured home are as follows to secure an FHA insured loan.
Proof that the home is newer than June 15, 1976
Engineer’s Certification that the home is on a permanent foundation and that any attached buildings to not impact the structural integrity of the home and that the skirting enclosure is HUD compliant.
Certainly there are other issues pertinent to the loan but without the two above, FHA financing cannot be procured. On The Level General Contractors can assist both in the engineer certification process or if necessary retrofit the home to meet the HUD Handbook 1996 guidelines.

Author Bio
ON THE LEVEL General Contractors (B & C 47 521400) is a family-owned company specializing in the maintenance and retrofitting of mobilehome and manufactured home understructures 433A permanent foundation contractors.

Many mobile home parks and manufactured home communities began as rental parks where space rent was dictated by location, size, date of purchase and cost of living increases. It has become increasingly popular for residents to desire a greater control over their living situation and costs associated with their residences, thus converting the park to resident ownership has become a rising trend.
Success of the mobile home park conversion process is largely attributed to talented legal advisors that understand the complexities of the conversion process and can liaison with residents, homeowner’s association board of directors, building officials and lenders. As the trends in lending continue to change, the underwriters have become more proactive in their demands on the structural components of a manufactured home’s understructure for two reasons: safety to protect their investment and a desire to have a security interest as real property.
In order to understand the lender’s desire for security interest, one needs to understand that manufactured homes are unique housing because they can either be registered as person property (chattel) i.e. a car or recreational vehicle or real property like a stick built home (realty). The manner of classification is determined strictly by the foundation beneath it. In order to be classified as real property, the mobile home foundation must be considered “permanent”. For homeowners in existing structures, the thought of retrofitting their foundation to something permanent sounds daunting and expensive. Fortunately, wise engineers and manufacturing companies have found numerous methods to meet both safety and lending requisites without resetting the home. There are a variety of systems that are available to the homeowner and borrower. Although there is still a cost associated and a permit burden, the cost is relatively moderate considering the value received. Having the home attached through the process of a foundation retrofit conjoins the land and home, making the two entities a unified piece of real property, ergo protecting the security interest of the lender.
Therefore in the conversion process some lenders often require a 433A document which has been signed by the local permitting jurisdiction (building department) showing that the home is on a foundation. In order for the building department to make such a sign-off, they must be presented with a set of plans generally with a Standard Plan Approval number which has been certified by a structural engineer. Once installed, they inspect the system, sign the 433A and then record the 433A. Some lenders still accept the 433C document which simply converts the land to real property but the house retains it’s personal property classification. However, this has become increasingly less common as lending requirements tighten. Also this area has been a source of confusion and error for some escrow and title companies. It is common to see that the land and home show different owners because escrow or title did not understand the unique titling issues associated with manufactured homes. Again, using specialists that deal with the peculiarities of manufactured homes is important so that clerical errors don’t turn into big lawsuits later on.
On The Level is uniquely qualified to work as a team member to assist in the conversion process, having the ability to champion the homeowner’s cost concerns yet understand the local jurisdictional building requirements as well as the lender requirements. While there are many retrofitters that are able to “install only”, the paper work and associated follow-through in the 433A or engineer’s certification process can often cause loans to be delayed or fall through altogether. On The Level is a turn-key company that navigates the paperwork from start to finish, working with all players in the park conversion process.

Author Bio
ON THE LEVEL General Contractors (B & C 47 521400) is a family-owned company specializing in the maintenance and retrofitting of mobilehome and manufactured home understructures 433A permanent foundation contractors.