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Modular vs Manufactured-Through the Lender's eyes

bekandbri

Thread Starter
Freshman Member
Joined
Jun 13, 2020
Professional Status
General Public
State
Florida
Good Morning. Thanks so much for accepting me into the forum. I really appreciate it and any advice you can give.

We are in the process of looking for a home in south FL and most of the newer homes are modular construction and stilted (built to withstand hurricanes). One of the homes we found is indeed modular construction, but on the Property Appraisers site, both the property class and building type is classified as a SFR R1/R1. While the bank doesn't have the address, when I reached out about a modular home, I was told it was considered a manufactured/mobile and that they may not finance it (with the current loan option we chose).

My question is, what do they use to determine their classification? In my searching, it seems like it's from the appraisal (1004C?) and possibly title records. I realize you guys aren't lenders, but hoping you can give me some insight as to how it's determine or where I could find the information.

Any info you would have be greatly appreciated!!

Thank you!!
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
The answer is, it depends. If is an on-frame modular home that is delivered on a metal frame like a HUD code manufactured home, then it is a different animal according to lenders. If it is a true modular home (typically delivered on a flat bed and placed on a foundation with a crane or other machinery), then is is considered to be comparable to a site built home in the eyes of the lender. There are a few different types of modular homes, but the key question is it on frame or off frame in construction?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Tim is right. If it has a metal frame aka manufactured home with chassis, it is a manufactured home for the secondary lenders who buy the loans. A modular is built to state standards, doesn’t have the metal frame. Look for a HUD label in the unit. Located generally on the rear exterior Walls of the units, with a paper sheet located somewhere inside the unit. That would make it a HUD-manufactured home. A modular unit should have a state tag usually located by or on the breaker box. However, here in Florida, both are very common. The biggest issue is if you tô finance one of the old units built before 1978, many of which are still found in parks. They are not acceptable to secondary lenders.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
SFR is the type of improvement - single family residence. SFR can be a condominium, a mobile home, a manufactured home, a modular home. Any dwelling type designed for occupancy by one family (as opposed to more than one family such as a duplex, triplex, fourplex, apartment, etc.) R1 is the zoning ordinance that applies to your site and generally means single family residential district.

Manufactured Home - built in a factory in sections on a permanent steel chassis after June 6, 1976. It is built to the Manufactured Home Construction and Safety Standards Act, aka HUD Code. It is eligible for financing from Fannie Mae, Freddie Mac, FHA, VA, USDA, etc. It must meet certain other requirements.


Modular Home - Built in sections in a factory on a steel "work table" that is used to transport the section to the site and then removed. The steel chassis is then returned to the factory to be re-used. These are eligible for all types of financing and for loan purposes are considered the same as conventional construction. The GSE’s like Fannie Mae and Freddie Mac view these the same as site-built homes. Modular building construction is regulated at the state and local levels the same way traditional site-built homes are.


Mobile Home – built in sections in a factory and has a permanent steel chassis. These were built on or before June 15, 1976 to various building codes or even no building code. They are not eligible for most types of financing although VA “may” accept them. Some private lenders may finance them but it’s very difficult.

On-frame/Chassis Modular – Built in sections in a factory on a permanent steel chassis. Similar to Mobile and Manufactured. The are not built to the HUD Code. These are not eligible for financing using Fannie Mae, Freddie Mac, and FHA. Some private lenders may lend on them. Very difficult to finance.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
To answer your question, the only way to know for sure is to KNOW the building code used at the factory when the home was originally built. Insist on documentation.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Deleted "CAN" said it all :)
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Short answer. If it has HUD code labels its a manufactured home. If built to a local building code, its modular.
1592148356568.png
 

Basically Rectangular

Junior Member
Joined
Mar 1, 2018
Professional Status
Licensed Appraiser
State
Virginia
Short answer. If it has HUD code labels its a manufactured home. If built to a local building code, its modular.
View attachment 46828

Note that the HUD tag (certification label) "should" be attached, but sometimes they are removed by the owner. The absence of a certification label does not automatically confirm the dwelling is not manufactured, but the presence of a certification label pretty much does confirm that it is a manufactured home.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Note that the HUD tag (certification label) "should" be attached, but sometimes they are removed by the owner. The absence of a certification label does not automatically confirm the dwelling is not manufactured, but the presence of a certification label pretty much does confirm that it is a manufactured home.

This is why someone considering purchasing an existing manufactured or modular home on a site really needs to to some due diligence.
 
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