FHA Manu as Real Property

[Green Hornet]

FHA Gurus,

I am understanding the FHA handbook to state that if title has not been eliminated and the manu is taxed as personal property, then it is not eligible for single family financing.

Am I reading this correctly?

Also, it states that if it is personal property, then additional certification is needed for the appraiser.

Again, I am reading this correctly?

Thank you for any input.

 

[Jo Ann Meyer Stratton]

Prior to close of escrow and funding of the loan, the title will need to be surrendered/purged, etc to enable the manufactured home being taxed as real property. Due to the scheduling of the tax year the actual taxation as real property probably will be some time in the future. But the paper work that would be necessary would have to be done prior to COE. You report the current situation and state in the report that the process to enable the home being taxed as real property needs to be done. Then it becomes the underwriter's problem to solve--not the appraisers. The report will be subject to any way--because an inspection by a licensed engineer will have to be done to determine if the foundation/skirting/installation is in compliance with the HUD Permanent Foundation Guide for Manufactured Housing.

See the stickies at the top of the Manufactured Home section where there is a link to a Fannie Mae web site that describes the process in each state.

 

[Green Hornet]

Jo Ann,

Thank you for the information.

 

[Don Clark]

Prior to close of escrow and funding of the loan, the title will need to be surrendered/purged, etc to enable the manufactured home being taxed as real property. Due to the scheduling of the tax year the actual taxation as real property probably will be some time in the future. But the paper work that would be necessary would have to be done prior to COE. You report the current situation and state in the report that the process to enable the home being taxed as real property needs to be done. Then it becomes the underwriter's problem to solve--not the appraisers. The report will be subject to any way--because an inspection by a licensed engineer will have to be done to determine if the foundation/skirting/installation is in compliance with the HUD Permanent Foundation Guide for Manufactured Housing.

See the stickies at the top of the Manufactured Home section where there is a link to a Fannie Mae web site that describes the process in each state.

Jo Ann is "The MH Guru" and I give her full credit. But there is an FHA program for financing MH's as personal property. It is in Chapter 8 of the 4150.2 Handbook. Appraisers who do appraisals under that program have to have taken a specialized course in Manufactured Home valuation and be knowledgeable in the use of the N.A.D.A. appraisal systems un less that has been eliminated. Jo Ann would know if it has or not.It is known as Title II Insurance.

 

[Jo Ann Meyer Stratton]

I agree with Don, if the home is personal property on a leased/rented site. But if the borrower owns the land and the manufactured home then the steps to have it taxed as real property have to be completed prior to close of escrow and funding.

 

[ghrousseau]

The company I work for does a fair amount of manufactured home loans for both FHA and conventional with a few select investors on the conventional loans. In VA and NC/SC I have seen many MFG homes that are being assessed by the county tax assessor as real property, where the original DMV trailer title has never been released. We currently require, in addition to the original foundation cert and any other FHA requirements, a copy of the released DMV title showing no lien, and that the title is released. There is also a document called an Affidavit of Afixation which is recorded with the deed of trust, and an manufactured home rider to the deed of trust. The issue with the release of the DMV trailer title, is that if there is any outstanding DMV lien, it is superior to the lender's new first trust deed. The lender would still be secured against the land, but technically the trailer title lien holder could foreclose and remove the home if they wanted and sell it. We also see many MFG homes, where the original trailer title was never registered with the DMV or it is lost. In those cases, the seller or owner needs to locate a duplicate copy of the title, usually from the builder, file it with the DMV, and then get it released. This whole process can be pretty tedious so the DMV title release is a prior to closing condition given upfront with the loan approval. It's gets to be a real problem when the seller is FHA and the property is a foreclosure property.