Have you ever had a potential borrower approach you about taking a loan on their manufactured home? Here’s what you need to know about these types of properties.
A manufactured home (formerly known as a mobile home) is built to the Manufactured Home Construction and Safety Standards according to HUD Code. The home must display a red certification label on the exterior of each transportable section. Manufactured homes are built in the controlled environment of a manufacturing plant and are transported in one or more sections on a permanent chassis.
A manufactured home is considered personal property, just like a vehicle. Once any loans against the manufactured home have been satisfied, an original title will be provided. Even if the loans against the home are paid, it will continue to be personal property until the proper steps to convert it to real property have been completed.
Process and guidelines vary by state. Conversion of title may be completed before or after closing, depending on lender or state regulations. The completion timeframe can vary depending on local or state guidelines. Fees may apply.
-All liens must be satisfied in order to obtain original title. Conversion of title cannot begin without original title.
-Real property taxes may already be assessed and paid without the completion of the title conversion process.
-Here are HUD’s guidelines regarding manufactured homes:
-The home must have a floor area of no less than 400 square feet.
-The home must have been constructed on or after June 15, 1976.
-The home must be classified and taxed as real estate.
-The manufactured unit must not have been installed or occupied previously at any other site or location.
-The mortgage must cover both the manufactured unit and its site, and have a term of no more than 30 years from the date amortization begins.
-The finished grade elevation beneath the manufactured home—or if a basement is used, the lowest finished exterior grade adjacent to the perimeter enclosure—must be at or above the 100-year return frequency flood elevation. This requirement applies wherever manufactured homes may be installed, not just in locations designated by the National Flood Insurance Program as areas of special flood hazard.
-The home must have permanent utilities installed and be protected from freezing.
-The home must be permanently attached to the foundation.
-The towing hitch or running gear must be removed (including tongues, axles, brakes, wheels and lights). The chassis must stay in place. A chassis that has been removed from a manufactured unit is unacceptable.
-There must be a properly enclosed crawl space with a continuous, permanent foundation-type construction.
-The label (metal plate) number of the unit as shown on the Federal Manufactured Home Construction and Safety Standard Data Plate must be on the exterior of each home.
Megan Hafenstein is the VP of Allegiant Reverse Services. She has been serving the reverse closing and mortgage industry since 2005 and oversees business development and client services, working as the liaison between ARS and clients to streamline processes. She has been highlighted in multiple industry articles, been a key speaker at conferences, and has held numerous training sessions regarding reverse mortgage title and settlement solutions.