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.

However, not to despair. There is some hope on the horizon if your manufactured home (singlewide, doublewide, triplewide and bigger) meets the following criteria:

• The home must be built on June 15, 1976 or newer.
• The home must be greater than 400 square feet.
• The home must be titled as real property which means the home and land must be owned by the same person. If you own the land and the home is still considered personal property, the title must be converted.
• The home cannot be in a 100 year frequency flood area
• The home must be on a permanent foundation that meets the HUD Permanent Foundaiton Guide to Manufactured Homes and a professional engineer must testify to this fact with an engineer’s certification letter. If the foundation does not meet the requirements, then a foundation repair must be done prior to the loan.
• The home must be in its original location and cannot have been moved from any other location other than the factory or the dealer’s lot.

If all the other criteria is met, then contact www.mh-lending.com
If you have questions about whether the foundation will certify, contact 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.

Recently with the issuance of Mortgagee Letter 2009-16 Manufactured Housing Policy Guidance http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/, condo parks have now been eventually neglared eligible for FHA-insured financing. Or at least according to HUD they are now eligible! But one shouldn’t jump to fast! First, lenders have not yet announced they are ready to accept the product and thusfar there are no announced guidelines or underwriting procedures for handling these loans. Remember, even though FHA is accepting the product for insurance, FHA is not the actual funding source, only the insurance entity. Until there is clarity from the individual lenders how they will process the loans, everything remains at a standstill. Lenders may impose additional guidelines above and beyond what is required by HUD.

HUD’s announcement states that until they can send out updated condominium project approval guidelines for manufactured condominium projects, that the project approval is subject to the requirements found in HUD Manual 4150.1, Chapter 11. The Mortgagee Letter goes on to specify that their “Spot Loan Approval” process is not available (as outlined in Mortgagee Letter 1996-41) and that all manufactured housing condominium projects must obtain full approval by the applicable Home Ownership Center (HOC) for HUD that has authority over the geographical area where the project is located. Since none of the condo projects are on a HUD approved list, the approval process may take months.

Chapter 11 of the 4150.1 manual is approximately 32 pages long and encompasses everything from owner occupancy requirements, to common facility completion requirements; legal review of the condominium documents to phasing eligibility; review of the insurance of the project to management agreements and operating budgets and much more. Different things are required depending on the age of the project. In addition to the 4150.1 for condominium projects, the property also has to meet HUD’s guidelines for manufactured housing which, per HUD guidelines, includes:

• Must have a floor area of not less than 400 square feet.
• Must be classified and subject to taxation as real estate.
• Must be built on and remains on a permanent chassis.
• Must be above the 100 year return frequency flood elevation.
• Must be built after June 15, 1976
• The foundation system must meet the guidelines published in the Permanent Foundations Guide for Manufactured Housing, dated September 1996. A certification attesting to compliance must be obtained from a licensed professional engineer.
• The manufactured home must not have been installed or occupied previously at any other site or location.
• Additions or structural modifications must not put the home at risk.

This is a time for borrowers to carefully explore their options and to find companies that specialize in the manufactured home loan process and will not move forward with appraisals, engineer’s certifications or other steps until all the stars align in favor of the homeowner and borrower. The Manufactured Home Lending Source website: www.themanufacturedhomelendingsource.com will be an ongoing resource for update information for homeowners and realtors.

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.
What makes it all the more confusing when seeking a loan is that the titling process varies from state to state.   In some cases, the conversion to real property is a simple paper transaction removing the title off the Department of Motor Vehicles (ie Arizona and Oregon).   In other states, the building jurisdictions are involved and require installation of a permanent foundation to detitle the home as personal property and convert it to real property (ie California, Nevada  and New Mexico).   The Fannie-Mae website details the state by state titling procedures and is a valuable resource for both the loan processor and the borrower before they set the stage for a loan.    https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/manufachousing/titlingmanufhsing.
FHA-Insured Manufactured Home Mortgage Loans on Real Property also need to meet other requirements.    It is critical that the home meets all the criteria or the loan will fail to be processed:

• The manufactured must be a HUD home, which means it must be manufactured after June 15, 1976. If there are metal plates at the rear of the home that begin with a three Alpha letters like CAL, ARZ, ORE, that’s usually a good sign. If the HUD label is missing, usually a label verification letter from the Institute for Building Technology and Safety (IBTS) www.ibts.org giving the provenance of the home will suffice.
• The foundation system must meet the guidelines published in the Permanent Foundation Guide for Manufactured Housing, dated September 1996. A certification attesting to compliance must be obtained from a licensed professional engineer.
• The manufactured home must be classified and taxed as real estate. A long-term lease may also be acceptable in certain instances. States vary on how the real estate classification is accomplished so this is another important aspect to understand.
• The axles and tongues must be removed from the chassis.
• The manufactured home must have an adequate perimeter enclosure with appropriate ventilation.
• The manufactured home must not have been installed or occupied previously at any other site or location.
• Must have a floor area of not less than 400 square feet.
• Built and remains on a permanent chassis.
• The finished grade elevation beneath the manufactured home shall be at or above the 100-year return frequency flood elevation.

Since manufactured homes are such a special animal, borrowers should deal with specialty performers, lenders www.themanufacturedhomelendingsource.com that understand and focus on the intricacies of the manufactured home loan process and engineers and contractors www.onthelevelcontractors.com that are knowledgeable about the Permanent Foundation Guide for Manufactured Homes, dated September 1996.