As most of the experienced Realtors know, manufactured homes can be difficult to close so here is a great reference blog that you should keep for your next manufactured home transaction. This blog contains a wealth of information about how we process these properties for you and your business.
1# Question: Is it a Singlewide or Doublewide? (FHA is the only option for singlewide homes)
Additional guidelines that you need to understand to determine if you should be moving forward:
1. It must be secured to a permanent foundation (with no tongues or wheels) Foundation system must meet the soil conditions for the site and meet local and state codes. Masonry blocks on under-grade cement footers (not sitting on the ground which is how many homes are set up, unfortunately).
2. Land must be owned and deeded as real property and cannot be in a mobile home park.
3. Not more than 5 acres...exceptions if common to the area
4. The home can't have been built before June 1976.
5. The home has never been moved from the original location if going FHA.
6. There is a minimum of 5% down payment required from the buyer or 3% (into the transaction) FHA or 0% for VA.
7. We will need 3 comps of similar style manufactured homes within a 6 mile radius or 10 mile radius for rural areas. (Do your homework on this to make sure that we have 3 recent sales within last 12 months to support the value before we start ordering the appraisal)
8. Manufactured home information (model and manufacturer name, serial and HUD cert label numbers must be affixed to the home and viewed by the appraiser.
9. Appraisals must be completed on form 1004c for manufactured homes.
10. There is no minimum loan amount except for FHA loans which are county specific according to FHA requirements.
11. The home has to already be set-up on the permanent foundation before we can finance. Get us involved after it has been moved and set-up correctly.
General Issues:
Well and septic and private roads are common to manufactured homes. We need for the agents to help get the inspections for both well and septic. For any private roads, we will need a road maintenance agreement. If no agreement has been made they will need to create a recordable agreement which is simple unless you have a resident who refuses to sign.
Above ground pools attached to decks or unattached decks are not given any value. No value can be given for those metal freestanding carports either because they are considered portable. This applies to stick-built houses too but I seem to run into this more with manufactured homes where the value is so hard to obtain. Appraisers know this but the sellers usually don't.
Many manufactured homes go into foreclosure, which are sold for half of the normal market value to cash buyers and these may be the only comps that the appraiser can use. Because of this, you need to help set their expectation before the sellers start thinking they have something that they really don't. One appraiser told me that he will not appraise a mobile home because he doesn't like getting yelled at by the agents and sellers!
Skirting Requirements:
Generally, metal or masonry is required but other materials can be reviewed on a case-by-case basis.
FHA Requirements:
Minimum of 400 sq ft. - Land to property value cannot exceed 30%...exceptions can be made if common to the area. We will see this issue on the beaches and resort areas. Acreage, more than 10 acre will need 2 comparable comps of same or greater acreage zoning, anything other than residential, the appraiser will need to indicated residential is the highest and best use.
Well inspections are no longer required on FHA unless appraiser calls for it or its community or shared well. When well inspections are required, there are minimum distances for both the well and the septic. Waivers are available but hard to get approved. Waivers require a lot more documentation like a water test, well driller's log, etc.
An engineering report has to be done by a registered engineer to make sure all HUD requirements are within guidelines. Customers need to be aware that there is a fee for the engineer's report that is an out of pocket cost not associated with our closing cost. Their fee is usually around $600.
If there is an attachment to the home, (deck - addition or modification) the engineer will also have to confirm it meets the FHA guidelines for manufactured housing. These must also be taxed through the proper permitting process.
VA Requirements:
Engineer reports are not required on VA unless the appraiser calls for it. Customers need to be aware that there is a fee for the engineer's report that is an out of pocket cost not associated with our closing cost. The fee is usually around $600.
The installation of the mobile home must be done in accordance with "proposed construction guidelines" even though the home is not new because it is being moved to a new location.
Conventional Loan Requirements:
We can finance with only a 5% down payment for primary residence! & 10% for second home! Minimum of 600 sq ft for our "Landscape" conventional loans (must still be double wide and comps should be similar size). Please note that we cannot finance a manufactured home as investment property.
We will need inspections for any wells and septic systems. For any private roads, if no agreement is created to buyer will need a letter acknowledging the private road and the appraiser will need to indicate the road is being maintained along with 1 comp from another development care for in the same manner and comments from the appraiser regarding accessibility of emergency vehicles.
Engineering Reports are not required for the Landscape/Conventional products.
Modular Home Requirements:
We treat these just like regular stick-built homes as long as built as "off frame". I toured 2 modular home manufacturers recently and was impressed with the materials and building practices being used. Instead of using 2x4's on the exterior walls, they use 2x6's. The roof pitches were either 5 on 12, 7 on 12 or 12 on 12 which are a far cry from typical mobile home construction. Other materials and specifications being used were equal to or better than that used by conventional builders. And, everything is erected under-roof (out of the weather) with jigs, etc to ensure perfect square and plum walls, etc. Because they have to be transported, glue is used on much of the drywalls to hold tight against the studs which also eliminates nails that have to be smoothed over with plaster.
The appraisers should know by now that all of the appraisals are single-use forms and that all single family detached homes, off-frame modular homes go on 1004 forms and manufactured homes and "on-frame" modulars should go on 1004c's. Fannie's definition has changed and some appraisers are still going by "if it was manufactured in a factory it's classified as manufactured" then should be on the 1004c. Sometimes we have to do additional education with appraisers to make sure these type properties are recorded properly to make sure your loans close on time without any issues.
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Since manufactured homes attract many buyers with no money, low income and bad credit, most cannot get approved. However, many prospects that we try to pre-approve for a manufactured home can get pre-approved for a stick-built which doesn't require the down payment! Just send all of your buyers my way and I will do everything I can to get them approved for SOMETHING and get them closed for YOU!
Have a great week!! Call me if I can help you with that!
Sam Thompson - PHH Mortgage - "Still Financing Mobile Homes" We want to be your single source for all of your mortgage needs in all 50 states.
http://samthompson.phhmortgage.com/
