13.11 LOAN CLOSING FOR MANUFACTURED HOUSING (03/09/16)

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

In general, loan closing procedures are the same whether the guarantee is made for the purchase of a manufactured home or another type of single family home. However, the lender should be aware of the following requirements.

 A. Warranty Requirement

 A dealer must provide the borrower with a copy of all manufacturers’ warranties. The warranty must identify the unit by serial number. The dealer must certify that the unit sustained no hidden damage during transportation.

The borrower will contract with a licensed homebuilder to complete the access, set up of the unit, utilities, appendages, etc. The general contractor will be responsible for providing the borrower with a warranty that meets the requirements of new construction outlined in Chapter 12 of this Handbook and HUD for new manufactured homes on permanent foundations. If the home was manufactured in separate sections, the contractor will certify that the sections were properly joined and sealed according to the manufacturer's specifications. Additionally, the contractor will certify the home sustained no hidden damage during transportation and erection.

A copy of all warranties and certifications will be retained in the lender’s permanent file.

B. Certification Requirements

Lenders may utilize Attachment 13-A to document manufacturer dealer certifications required of this Chapter and Attachment 13-B to document contractor certifications required of this Chapter.

C. Lien Release Requirements

The dealer must furnish a manufacturer's certificate of origin indicating that the unit is free and clear of all legal encumbrances. A copy of the manufacturer’s statement or certificate of origin should be retained in the lender’s mortgage file.

D. Real Estate Tax Requirement

Whether manufactured homes are considered personal or real property may vary state-to-state. When the loan closes, the unit and site must be taxed as real estate by the jurisdiction in which it is located, if such taxation is permitted under applicable law. If applicable state law so permits, any certificate of title to the manufactured home must be surrendered to the appropriate state government authority. If the certificate of title cannot be surrendered, the lender must indicate its lien on the certificate.

E. Title and Lien Requirements

Both the unit and the land must be evidenced by a recorded mortgage or deed of trust. A combination of a chattel and real estate mortgage is not acceptable. The manufactured home must be legally classified as real property under applicable state law and if state law permits, any certificate of title to the manufactured home must be surrendered to the government authority. If state law does not permit, the certificate of title must reference the lender’s lien. A standard real property insurance and any other manufactured home endorsement requirement in the applicable jurisdiction is required. The borrower must execute a written statement acknowledging that the unit is a fixture and part of the real estate securing the mortgage. Documentation will be retained in the lender’s permanent file.

F. Eligibility of Manufactured Homes in SFHAs

The finished grade level beneath the manufactured home shall be at or above the 100-year base flood elevation and is subject to the requirements of Section 12.10 of Chapter 12 of this Handbook.