Loans are simply harder to get these days if you live in a manufactured home and harder still if that home is a singlewide. In many ways the manufactured home owner is treated as a second class citizen by the lending industry, probably because some of the misconceptions about the quality of construction and the negative perceptions created in the aftermath of major disasters (like a tornado or earthquake). And then there is the fact that many investors still consider manufactured homes “trailers”, viewing the residences as temporary structures which can be hauled off in the middle of the night, thus making the borrower and the home a flight risk. The singlewide home obviously provides the best comparison to the trailers of yesteryear so is often the greatest target of derision by lenders. Adding to the confusion is the fact that manufactured homes can either be titled as personal property or as real property. If it is titled as personal property, it is in essence in the same classification as a recreational vehicle and most lenders don’t feel they have an adequate security interest. (more…)

Just like all real estate, there is no doubt that the economic decline has impacted values in manufactured home communities.   However, condo parks have been harder hit than the broader community because financing for manufactured homes in condominium-classified parks completely disappeared for the last couple of years.   Except for hard money loans, private financing or VA loans, money simply dried up.   Investors shied away from any loan that was not FHA-insured which also included Reverse Mortgage or Home Equity Conversion Loans.   And it’s a vicious cycle.  Without loans, the sales market becomes stagnant and without sales, appraisers can’t find comparative values to provide a reasonable worth for your home

Fortunately, back in July Congress passed sweeping legislation that removed the condo exclusion, but it wasn’t until May that the Mortgagee Letters were released paving the way for financing opportunities.   However, the hard work has just begun.   Before a single loan can be originated, the park itself must receive approval from Housing and Urban Development.   This is no small feat and even once all the documentation is presented to the local overseeing HUD agency, the wait time for approval is 6-8 weeks.

There are many anxious lenders and homeowners that are excited about the new lending possibilities and the fact this will ultimately add more vibrance to the park community as well as increase the value potential of your home.   Yet, this is still a time to proceed with caution and not make any decisions until your management or HOA has expressly declared that the park has received approval.   The reason this is so critical is that over-anxious lenders are often encouraging a quickstart of the loan process by getting an appraisal.   This can have serious repercussions in a volatile market when the shelf-life of an appraisal is approximately two months.   Since most lenders don’t have an in-house underwriting department and the waiting line for an file evaluation is sometimes 3-6 weeks, your appraisal could be old before you start.

In addition, even once the park receives approval, there is another rigorous checklist for manufactured homes themselves.   First and more importantly your home must be newer than June 15, 1976.   No matter how beautifully renovated your home is or how updated its appearance, there are no exceptions.   The home must also be in its original location—so if the home was moved from another park, FHA will not insure the loan. The home must also be titled as real property and cannot be located in a flood plain.     Additionally, the home must be on a permanent foundation which must not only meet the local jurisdictional guideline but the HUD Permanent Foundation Guide For Manufactured Homes and an engineer must testify to this fact.   However, please don’t run out an install a foundation system prematurely.   This can generally be incorporated within the scope of the loan and should be the very last step of any loan process.   There is no sense spending several thousands of dollars on a foundation only to find out there are other issues that will complicate the loan.

When choosing a lender, carefully evaluate your options.   Ask specifically for referrals from other manufactured home owners.    You want a lender who understands that manufactured homes have specialty requirements and knows those requirements backwards and forwards.  And when choosing a foundation specialist or engineer for the certification, make sure you are working with one who will not charge you for a “failed” report and will your interests by not obligating you to a foundation retrofit or repair until the loan has the approval greenlight.

www.themanufacturedhomelendingsource.com and www.onthelevelcontractors.com

Park communities represent the most popular setting for manufactured homes. For loan purposes, lenders generally require that the owner of the home also own the land upon which the home sits. Until recently the park also had to be classified as a owner-owned Subdivision or a Planned Unit Development in order for manufactured homes to qualify for FHA-insured loans.

Many mobilehome parks and manufactured home communities began as land lease developments but as residents desired a greater control over their living situation and costs associated with their residences, many parks converted to resident ownership. Most of these used the process of the condominium conversion. Unfortunately, because of the classification, this property type was ineligible for FHA-insured loans including Reverse Mortgages or HECM. Fortunately, the Housing and Economic Recovery Act of 2008 (HERA) granted authority to add individual manufactured housing units located in condominium projects to HUD for FHA insurance but the process from Congressional authority to actual loan processing is still unraveling. (more…)

What’s the Difference Between a Personal Loan and a Mortgage Loan?
Manufactured homes are an interesting animal to be sure.   It is the only form of housing that can either be classified as Personal Property or Chattel (like a car) or Real Property (like a regular site-built home) and how the distinction is determined can be confusing.   To be considered real property, the owner of the manufactured home must also own the land upon which the home sits.   Even when the homeowner owns the land, he/she may choose to title each separately—the home as personal property and the land as realty.   However, if one wants to secure an FHA-insured mortgage loan, the home and land must be conjoined as a single entity as REAL PROPERTY.  There is the old joke with lenders that you’ll pull your “trailer” out in the middle of the night and haul it down the street and the will be left holding the bag. The truth is that until the home is titled as real property, your manufactured home will be treated just like a car in the eyes of a lender. (more…)

Finding the right lender

Fair or unfair to manufactured home borrowers, most lenders view manufactured homes with derision. We’ve all heard the term —trailer trash—well that’s how most lenders continue to characterize the manufactured home loan. Without owning the land, the manufactured home is pigeon-holed into a high percentage rate personal property loan. Even when the home sits on real property, the stigma persists in the minds of lenders that a homeowner will pull up his 5th wheel, hitch up the home, pull up stakes, and disappear down the road in the middle of the night – leaving the investor, high and dry. Although the portrait being portrayed treads on the side of ridiculous, the real concern for the lender is not only dismissing the above stigma, but how a simple classification of titling can significantly alter an investor’s mentality from “trailer” to legitimate dwelling. (more…)

Proving your home is a HUD Home

Manufactured home loans are very unique in that in order to qualify for a loan, the lender has to qualify more than just your ability to repay the loan and the fact that your home is a good risk based on the value. Manufactured homes have their own checklist of requirements, one of which is proving the home is a HUD home. And the best proof is the THE HUD TAG or LABEL that is attached to the rear of each section of the home. Unlike the textile tag on pillows and mattresses that says DO NOT REMOVE and everyone does anyway. This is the one label you should not remove. (more…)

Most lenders view the manufactured home loan as a “nuisance” loan. No matter what kind of manufactured home you have (even if it has tile roof and drywall interior), you’re going to be lumped into the “trailer” category in the mind of the loan officer. This is just a “loser loan” for him. A lot of work, and not enough commission! Plus there are so many compliance hoops to jump through and the compliance checklist is often daunting to the novice. And for the typical lending office, very rarely do the support staff know what they are doing. The processors don’t even understand the vocabulary much less the fine details, appraisers sometimes submit their data on the wrong form and even underwriters often fail to manage the file properly. (more…)