RESPA and Mobile Homes

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Question:

Manufactured housing loans where the MH is permanently attached to real estate per FHA guidelines and where the MH titles have been vacated - these loans clearly are subject to RESPA. The lender is secured by a real estate mortgage as the MH is considered as being a part of the real property and is no longer personal property. Here is where some confusion lies: RESPA appears to be clear that MH loans are exempt unless the MH has been permanently affixed to the real estate, so what is the definition of permanently affixed? It used to be that for a MH to be considered as being permanently affixed to real estate, the MH had to be set up per FHA’s foundation requirements, tong, axles, etc., removed and titles vacated by the state. However, there is confusion in cases where a lender finances a manufactured home that has titles, is not affixed to the real estate per FHA permanent foundation requirements, but is simply set up per local requirements and where the lender takes a mortgage on the land where the MH is placed. A MH with land does not mean that the MH is permanently attached to the real estate, so the heart of the question is simple: if a lender takes a lien on a MH and also takes a mortgage (as additional collateral) on real estate where the MH is located, but not permanently affixed, is this covered by RESPA or not?

Answer:

In researching this, I found some areas that indicate if the wheels, axles and tongue have been removed (which means it is no longer mobile), and the foundation that has been installed meets the applicable governing agency requirements for that area, and also the mobile home has been or will be taxed as real property, it is acceptable to Fannie Mae. A manufactured home sitting on piers or jacks with the wheels, axles and tongue removed, is as permanent as a site built home on piers without an enclosed perimeter, i.e., the skirting.

I found information from many counties that indicate a mobile home is made real property by certifying that it meets code for the foundation and a fee is paid. The form is filed with the county records and the home is now taxed as real property, not personal. In FL, it seems that until this happens license plates may be required and that may be the mechanism for collecting tax payments. Other states may be similar, but generally, the mobile title is surrendered, and there is either no lien or the lienholder agrees to this, and the dirt has no lien or the lienholder agrees, and the form is filed.

It appears that Fannie Mae requires a "paper" foundation. HUD requires both a "paper" and a specific type of physical foundation. Both require the real estate taxation. With FHA it is the underwriter's responsibility to obtain a certification from a licensed engineer. With other lenders, the appraiser describes what's there and then it becomes the underwriter's responsibility to verify it with another professional of their choice if they don't understand or believe the appraiser.

HUD also accepts jack stands or piers or dry stacked blocks depending on the seismic activity in that specific area. Where they get picky is the perimeter enclosure. It has to be concrete, masonry or pressure treated wood. If the manufactured home was not constructed "basement ready" that perimeter enclosure cannot even touch the bottom of the unit, there has to be a gap of a couple of inches between the two. HUD does require tie downs that are to be embedded in concrete. Most of governing agencies in Arizona do not require tie downs of any kind, and screw in the dirt anchors are acceptable.

Making it permanent doesn’t mean it can’t be moved. Large stick built homes get moved on a regular basis, and in one or more parts. "Permanent" can be defined locally at the county or city level. I don't know if this will help for HUDs purposes as it has more than you're after, but try this.

First published on BankersOnline.com 10/04/10