Modular Home - 1004 or 1004C?

[Pete Humphrey]

I received an FHA/sale appraisal order for a small home in a PUD with pool, tennis etc. in an area of stick-built non-PUD homes on mostly 1 acre properties. I noticed right away when I pulled up the tax record that the county use code was "manufactured home." Not trusting any of this I called the County zoning dept who informed me that the zoning is Rural Mobile Home (maybe once rural, but not no mo!). I went to inspect the property since all comps in the development were listed on the MLS as detached SFR's and since the photos showed homes that didn't look anything like mobile homes. I was lucky enough to discover a neighbor who had lived there from the time the homes were built. He informed me that they were delivered to the site in 2 halves and assembled on site. In other words, modular homes. I have never appraised a modular home, since they are rare in my area (I get maybe one request a year and they are usually way out in the sticks). I informed the loan officer and sales agent, neither of whom even knew they were modular since it's not all that obvious by looking at it. I'm not sure if this should be done on a 1004 or 1004-C. If it's the "C" I will need to either turn it over to someone else or get assistance. I asked the LO to check with her FHA sources. I didn't see any HUD plates anywhere and I'm not even sure that these exist for modular. Help! I'm a city dude and ignorant of this odd ball! Thanks!

 

[Rich Heyn]

The 1004C form is designed to be used to report assignment results when the home is a manufactured home (built to the HUD code).

A modular home is fully finished in a factory and it built in compliance with a code other than the HUD code. Consequently, the 1004C form would be an inappropriate reporting format.

Often, modular homes have some sort of information sheet (look in cabinets, near the electric service panel, in closets, could be anywhere) that will identify the code to which the home was built. This is the best, and really the only way, to be sure of what you have.

Another issue is the dreaded "on-chassis" modular home which is built on a permanent chassis of the type found on HUD code homes. Loans involving these homes are ineligible for purchase by Fannie Mae.

If you have not done so, I would strongly suggest you return to the property and look underneath the home. If you see a metal chassis, beware. If you see some sort of conventional wood joist framing, you are probably OK.

Incorrectly identifying and reporting a factory-built home is laden with liability for the appraiser. If the loan defaults, an improper appraisal gives Fannie the opportunity to initiate a repurchase by the lender, who may then decide they have grounds to sue the appraiser.

Be careful, friend.

 

[jtinmichigan]

Thats correct. A modular will have a wood frame. I have done several hundred of these over the years and if it has a wood frame it is a mod. Metal frame, manufactured. Typically, there will be no data sheet inside. These are treated as average quality construction, comparable to average quality site built homes.

I'm not quite sure why they are treated this way though, in most instances the case can be made that they are superior to a site built home in that they are all made from jug cut lumber, which means all the peices fit, in a quality controlled factory environment, as opposed to beat together out in the elements by a hung over carpenter who has to cut all the lumber on site as they go.

At any rate, 1004 is appropriate. You will most likely not find manufacturers data to tell you what model or who made it inside, unless the owner has this info. There are no exterior data plates either.

 

[jtinmichigan]

When I say wood frame, I mean regular floor joists, just like a normal site built. (I've never seen a wood frame that looks any different, like a manuf frame, but just being clear (er).

 

[Mr Rex]

JT, Some modulars do have steel frames (undercarriage). So not all homes with steel undercarriages are classified as "manufactured". Modular homes also are not all "average" quality, the qualities range from Low to Excellent just like site built homes.

 

[jtinmichigan]

You are correct sir, on the quality issue. There are wide variances in quality, I should have said that they should be compared to similar site built homes. I was speaking in general. Its early and the coffee has not kicked in yet.

That said, in 18 years and between mods and manufactureds I have done well over 1000 of these and never seen a mod with a metal frame, unless we are talking about a pre 1976 modular, some of which do in fact have metal frames, but these do not meet the current criteria for modular homes. I do not believe that there is a manufacturer today that makes a modular with a metal frame. If I'm wrong, please point in that direction, I'd like to be suprised and learn something new today.

 

[Tim Hicks (Texas)]

HUD code manufactured homes are delivered to the site in two halves, too. Make sure you properly identify the property. Either way, it does not appear you are competent to appraise the property HUD code or modular. Associate yourself with an appraiser who has experience in both or decline the assignment.

 

[Mr Rex]

Its been discussed many times, search some of Rich Heyn's or Jo Ann Stratton's posts in the manufactured section and you will see it over and over. They are referred to as on-frame modulars here, I have also heard frame-on modular. They mostly were an attempt by the manufactured home folks as a way to circumvent the lending challenges faced by manufactured (HUD code) homes, by making them meet state codes and thus be annointed as "modular". Some of them are "gussied up" HUD code homes that I affectionaltely call "Hudular" while others are simililar in quality to any other mod or site built homes. I have posted several pictures of 1.5 story on-frame mods that were indistinguishable from a site built home, until you see the frame underneath. In short, if it meets state code, its a modular. Manufactured homes are built to HUD code.

 

[Jo Ann Meyer Stratton]

Manufactured, on frame/chassis modulars and off frame/chassis modulars are all constructed in factories in Arizona. After the buyer chooses floor plan, exterior and interior features, options, upgrades, etc the last questions are: Do you want a manufactured home built to the HUD building code? Or do you want an "on frame/chassis" modular home built to the International Residential code? Or do you want an "off frame/chassis" modular home built to the International Residential Code? As Rich mentioned, the on frame/chassis modular home will not be eligible for Fannie Mae.

Attached is a photo of an "on frame/chassis" modular home that has just sold in my area. Has 10' ceilings, granite counter tops, laminated wood floors, 2,304 square feet--better constructed than most built on site homes in my area. But it has a steel undercarriage so it was not eligible for Fannie Mae

 

[Pete Humphrey]

Thanks for the info!

Wow - thanks for all the great input. I'm moving into my 2 year cycle with the 56 hours of CE and will definitely be taking the Manufactured Home class. Thought about taking it before, but I seriously didn't think it would pay for itself. I will get help on this one so I don't get in trouble, and hopefully the next time I'll be a pro like y'all. thx again!