Need Advice About the Purchase of Manufactured Home.

[Devil Dog]

Complete novice, and asking for help.

I found a 1998 M.H. for sale here in Council Bluffs, Iowa. Sitting on a slab. When we went to the bank to get approved for a mortgage, we hit a snag. The listing agent said we could use a FHA loan, then changed her mind and changed to a Conventional loan with 20% down.

I have the down payment but the bank person told us that because I have no credit { started paying cash years ago } and altho my patrner has a very good credit report...my income couldn't be counted towards a Conventional loan.

Also a question about an inspection report on this house. From what I've read I will need a liscensed engineer ??

Thanks,
Dee

 

[CANative]

An inspection by a licensed, professional engineer is required to verify that the foundation system in place meets the requirements found in HUD Guidebook "Permanent Foundations Guide for Manufactured Housing (4930.3G)" http://portal.HUD.gov/hudportal/HUD?src=/program_offices/administration/hudclips/guidebooks/4930.3G


It's required for all manufactured homes.

As a side note, in my experience it's very unusual for a manufactured home to be set up on a concrete slab. "The listing agent said we could use a FHA loan, then changed her mind and changed to a Conventional loan with 20% down." If it's on a slab and the agent changed his/her opinion about the financing options I'm wondering if this house has been moved from a different location. One of the requirements for a HUD/FHA loan on a manufactured home is that it cannot have been moved from it's original location.

 

[Jo Ann Meyer Stratton]

FHA financing requires an inspection by a licensed engineer to the requirements in the link that CANative provided. Conventional loans do not require that inspection, but the installation and foundation are required to meet local guidelines--city, county, state. By the way a listing agent does not make the determination of which financing you can obtain. That depends on the lender's underwriter at the bank or mortgage company. Unless you are in down town Council Bluffs you might have USDA as a financing source, as well as conventional or VA if you are a veteran. You need to have a long consultation with your loan officer first of what you can qualify for and which loan product would be the best way to go. Since you have been paying cash up till now, you probably haven't developed a credit history. Some lenders will take rent, utility payments, etc into consideration--but those are few and far between. Same thing happened to my son two years ago. After meeting with the loan officer, then you can make your plans of what to do next. And because you lack a credit history, the mortgage will probably have to be in your partner's name. After the loan goes through and everything is recorded, you could record a deed with you and your partner's name on it. But the mortgage will remain in your partner's name only.

 

[VolcanoLvr]

With due respect to my fellow west coastie, full slabs are common in some MFH installations. I see them up here in paradise frequently.

There are primarily two types of 'foundations' for MFH....the full slab under the full perimeter of the dwelling, or concrete 'runners' under the home I beams, meaning 4 runners for a double-wide home. It is quicker to form and pour a full slab instead of the 4 runners, but the concrete cost will be more. Some installers say the costs basically off-set.

Financing a MFH is harder than a site-built home. You will need to find a lender who has access to funds for MFH loans.

 

[Jo Ann Meyer Stratton]

Here in Arizona because the water level is at 600' below the surface and the frostline at the top of the grass, 2" square concrete slabs or pretreated wood are placed on the ground, then the metal jacks sit on top of that. Once in a great while stacks of concrete block or wood blocks create the pier that is resting on the slab/board. Jacks are popular though since they can be adjusted evenly and easily.

 

[Eminent Domain]

FHA financing requires an inspection by a licensed engineer to the requirements in the link that CANative provided. Conventional loans do not require that inspection, but the installation and foundation are required to meet local guidelines--city, county, state.

Jo Ann, I understand that the foundation has to meet these requirements. Where is the reference in the FHA appraisal protocol to requiring the appraiser to call for this inspection or is this left up to the lender to make this call since they hopefully know they are lending on a manufactured home?

BF

 

[CANative]

I know you asked Jo Ann, but I can probably clear this up too.

See HUD Handbook 4150.2, Chapter 8.

The home must be erected on a permanent foundation in
compliance with the Permanent Foundation Guide for
Manufactured Housing. All proposed or newly constructed
manufactured homes must meet the standards set forth in the
Permanent Foundation Guide. A licensed professional engineer's
seal and signature (certification) is required to indicate
compliance with the Foundation Guide. The lender should
furnish the appraiser with a design engineer's inspection of
the foundation prior to the appraisal.

See HUD Handbook 4150.2, Appendix D, Page D-60:

Permanent Foundation System
• Mark the applicable box. To be eligible for a FHA-insured financing, the design of the permanent foundation must be in compliance with FHA criteria as evidenced by an engineer’s certification verifying such compliance.
• The appraiser should indicate if a copy of the required engineer’s certification of compliance of the design of the permanent foundation was provided.

Then, on to Page D-70:

Mark this box
“subject to a required inspection”
when the appraisal calls for a required inspection to:
• Certify the condition and/or status of a mechanical or structural element of the property
• Protect the health and safety of the occupants
• Protect the security of the property
• Meet FHA Minimum Property Requirements or Minimum Property Standards
More than one box may be marked depending on the assignment and property conditions.
The appraiser must indicate the reasoning for any required inspections and note this in the appropriate section of the appraisal, or in the “additional comments” section, or in an addendum, under the heading of “Reconciliation – Required Inspection ” listing the required inspections.
The value “subject to completion per plans and specifications”, “subject to the following repairs or alterations”, or “subject to the following required inspection” must be consistent with the subject property condition(s) described.

So, unless the lender provides a set of plans with an original seal and signature the appraiser must condition the appraisal on verification of compliance with the foundation requirements.

 

[Eminent Domain]

I know you asked Jo Ann, but I can probably clear this up too.

CANative,

Thanks for the information. I have CB4ed those in the past but I have a lender which is questioning this. You know when dealing with this they want some type of regulation stating we as an appraiser are required to make this request.

I read section 8 prior to posting and it was not clear as to whether it applied only to 1 year old or less manufactured housing or all. However, I understand that it states it "must" be erected on a permanent foundation and since most of us are not qualified to make that call we should prudently recommend an inspection and let them make the call.

I believe I have it right. Thanks for the help.

 

[Mr Rex]

Its on page D-60


Permanent Foundation System
• Mark the applicable box. To be eligible for a FHA-insured financing, the
design of the permanent foundation must be in compliance with FHA criteria
as evidenced by an engineer’s certification verifying such compliance.
• The appraiser should indicate if a copy of the required engineer’s certification
of compliance of the design of the permanent foundation was provided.

 

[CANative]

CANative,

Thanks for the information. I have CB4ed those in the past but I have a lender which is questioning this. You know when dealing with this they want some type of regulation stating we as an appraiser are required to make this request.

I read section 8 prior to posting and it was not clear as to whether it applied only to 1 year old or less manufactured housing or all. However, I understand that it states it "must" be erected on a permanent foundation and since most of us are not qualified to make that call we should prudently recommend an inspection and let them make the call.

I believe I have it right. Thanks for the help.

It sounds like your client is inexperienced in doing HUD MH loans. This would not be an issue for a lender that knows what they're doing. They would anticipate this requirement as soon as they knew the property had an MH on it.

They probably fear that either a) the foundation system does not comply; or b) that it is a monumental, time consuming and expensive task to get an engineering certificate.

There are a lot of engineering firms that can inspect and certify for a nominal cost and if the foundation doesn't meet the requirements they can retrofit it at a pretty nominal cost in little time.

Perhaps you should have THAT conversation instead of trying to document the requirement?