With the increasing popularity of the Reverse Mortgage loan product for those homeowners 62 and older, loan processors are dealing more and more with manufactured homes in their portfolios. Many seniors have chosen the manufactured home communities as a retirement refuge and the community and recreational atmosphere lend itself well to word-of-mouth referrals and the spreading the news about FHA and Reverse Mortgage Loans benefits. However, the manufactured home loan presents a new set of criteria for the loan officer and loan processor as well as the borrower so be prepared ahead of time. Certain criteria are absolutes:



1.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) which will give the provenance of the home will suffice.

2.The Manufactured homes and FHA Insured Loans is classified and taxed as real estate. A long term lease may also be acceptable in certain instances.

3.The axles and tongues must be removed.

4.The manufactured home must have an adequate perimeter enclosure with appropriate ventilation.

5.Must have a floor area of not less than 400 square feet

6.Built and remains on a permanent chassis

7.The finished grade elevation beneath the manufactured home shall be at or above the 100 year return frequency flood elevation.

8.The home must sit on a permanent foundation.

AND

All foundation systems, new and existing, must meet the guidelines published in the HUD Permanent Foundations Guide for Manufactured Housing, (HUD-7584), dated September 1996. A certification attesting to compliance with this handbook must be obtained from a licensed professional engineer and included in the insuring file.

This last requirement can throw the loan processor into a quandary if they have never expedited a manufactured home transaction previously because this request will often show up at the 11th hour of loan closing. Nine times out of ten the appraisal report will show that the home is on a foundation system so the processor or loan officer won't have alarm bells off of worry going off when they receive this condition. Unfortunately, the appraiser often simply determines "permanence" strictly on the basis that the tires and axles have been removed or some other vague set of standards, not on the basis of the foundation attachment.

The reason for this requirement is to establish a national standard of consistency amidst inconsistent state installation standards. While manufactured homes have standardized preemptive structural, plumbing, and electrical standards that need to be met before leaving the factory, installation standards vary from county to county, state to state. Additionally, manufactured homes are unique in that they can either be titled either as personal property (chattel) or real property. In some states the distinction between personal and real property is determined by the type of foundation and underpinnings that support the home. Since the individual jurisdictional requirements vary signficantly, the Engineer Certification Letter helps to provide a standard for excellence. This is generally an underwriting requirement for all FHA insured loans, which also include Reverse Mortgages.

If an existing home is already on a foundation, an engineer can provide a certification attesting to the fact that the home meets the guidelines. If it does not meet the HUD guidelines, there are a variety of proprietary or approved engineered foundation Retrofitting systems in combination with the existing structural components. As in any industry, one size does not fit all in the engineering landscape and engineers that specialize in the manufactured home industry and the HUD inspection specifications are even rarer still. Because there are a vast array of proprietary products that have been introduced into the national marketplace, knowledge about these systems is also an additional benefit since these have all been pre-engineered and stamped delineating all of the system specifications. This also means if the foundation does not meet the FHA-insured criteria for a permanent foundation, the engineer does not need to re-invent the wheel with a repair recommendation---there are a plethora of products available for the retrofit contractor. Therefore finding the right combination of an engineer and contracting team that understands the FHA lending process so the engineering certification does not impair the loan lock timeline, is familiar with the availability of proprietary systems that can resolve the repair issues if they are necessary and are able to liaison with both lender and borrower to provide turn-key solutions. On The Level www.onthelevelcontractors and Pacific Consulting Engineers collectively team to comprehensively resolve FHA-insured loan certification and foundation repair issues for the manufactured home borrower and lender.