St. Louis Real Estate – Mortgage News – Manufactured House Blues

Manufactured Home Manufactured Housing by Chris Scheer, Branch Manager, Cornerstone Mortgage, O’Fallon, MO

So why is it so hard to get a loan for a manufactured house?

Over the past month I have had the opportunity to work a loan that was on a manufactured house that had been repossessed by HUD. The client came to me saying they wanted to buy this house without having sold their current home so they could have time to fix it up before moving in. The borrower was self-employed and he felt his tax returns would not support him owning 2 homes. Based upon his excellent credit I told him we had a way to do the loan if he put 10% down. We would allow him to state his income and then when he sold his current home and was ready to pay down the mortgage on the new home we would refinance him. Things were going along swimmingly until the file hit underwriting. Even though the guidelines I had for the investor said they would do a conventional loan using stated income on a manufactured home, the information the underwriter had said otherwise. At this point most loan officers would take a pass and deny the loan. I chose to switch the loan to an FHA loan and ask the borrower for the documentation to support the income needed.

When I met with the client and reviewed their tax returns I found that they did indeed have enough income for two houses. I will be the first to admit that I made the mistake of not taking charge initially and getting all the documentation upfront and being the expert. Instead I let the client lead me down a path that was a dead end. We switched the appraisal to an FHA appraisal and requested that the realtor change the contract to an FHA contract. The listing agent, being a representative for HUD said that if the loan went FHA a work escrow would be required to repair some items they had found when they did their walkthrough after repossessing the house. The work escrow seemed minimal and the client agreed to fund the work escrow themselves.

In the meantime I contacted our investors to see who would purchase an FHA loan on a manufactured home. I found one of our investors that were willing to purchase the loan and then we sent it to their underwriters. As luck would have it, they denied the loan because it had a work escrow. Now we were in a quandary, we couldn’t do an FHA loan on a HUD repo because there was a work escrow required and we couldn’t go conventional stated with the first investor because they wouldn’t do a loan on a manufactured home. So now, I am sure most loan officers would have told the clients that they could not help them. However, I realized that the realtor involved was counting on the commission from the sale and the borrowers were truly buying a great home for them to retire to. There had to be a way to get the loan done!

We then switched back to a conventional loan and found just 1 of our investors that would purchase a conventional loan on a manufactured home. This investor had some strict guidelines on the information needed on the appraisal, including the HUD Plate and the Manufactures serial number, make, model and year manufactured. In reviewing the appraisal we found that the appraiser did have the HUD Plate information but was lacking the rest of the required information. For 2 weeks we kept asking the appraiser for this information. He continually said that it was not available. The night prior to the loan closing I Googled the term “HUD Plate” and on the third website showing in the search I found the information for the IBTS, a company that who will get the information for you that was needed if you have the HUD Plate information. They charge a $50 fee for normal processing or for a rush they charge $75. We FAXed them the form and had the information within 2 hours. We then gave the information to the appraiser for him to add to the appraisal. By 1:00 that day we were clear to close and the borrowers had their new home.

If you can tell me why a home that is manufactured but is permanently attached onto a foundation with a basement is any different than the quickly built subdivision houses that are thrown up across the country I would be happy to learn. Contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com .

Tags: St.+Louis+Real+Estate, St.+Louis+Mortgage+News, HUD, FHA, Manufactured+Home, IBTS

This entry was posted on Thursday, December 27th, 2007 at 6:18 pm and is filed under First Time Home Buyer, For Buyers, For Sellers, Mortgage News, Real Estate News, Relocation Buyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.