Manufactured Home Refinance With FHA Loans Part 2
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In part 1, we noted that many manufactured homes are purchased with loans which have terms that make refinancing an absolute necessity. Owner financing or bank financing with high rates and/or balloon notes need to be refinanced as quickly as possible.
Let’s now explore the qualification and processing requirements for using an FHA insured loan to refinance a manufactured home. Most of these items should be handled by your mortgage professional, however it is useful for you to be aware of the guidelines yourself.
The first step is to determine whether the home was built after 1976 according to HUD Code. This is very easy. For each section of the home, you will find a HUD certification label attached to the end of the home. Adherence to the HUD code is the major difference between modular homes and manufactured homes.
This label will look like this:
There will be an identification number stamped into the label and later, the FHA appraiser will be required to verify that this label is affixed to the home.
Sometimes, the label has been removed or covered over by new siding. If this turns out to be the case, there is no reason to panic. The Institute for Building Technology and Safety (IBTS) keeps a record of all HUD label numbers. You can access their website at http://www.ibts.org/label_req.htm and have them retrieve the label information for a cost of $50 or $75 if you want it done in a rush.
Now that you know the home was built according to HUD guidelines, the next step is to determine whether the foundation meets guidelines. This step is a little more complicated since HUD’s “Permanent Foundations Guide for Manufactured Housing” is over 400 pages long! The highlights of the requirements are that the home must anchored down appropriately, the tongue and wheels must be removed and the home must be on an enclosed permanent foundation. An engineer’s certification that the foundation meets the requirements is required. A common mortgage processing hold-up occurs when the engineer’s letter of certification does not specifically state that the foundation meets the requirements of the Permanent Foundations Guide for Manufactured Housing. To avoid being overcharged, make sure that the engineer understands that you are asking for a foundation certification and not a more extensive inspection.
HUD has set out some of the most common problems which prevent the home from being eligible for FHA financing on their website. (link updated 11/11/08) Here is the list:
The most common permanent foundation errors delaying the approval of an FHA-insured loan for a manufactured home are:
- The foundation footings aren’t set below the frost line
- Dry-stacked piers are used instead of required piers with mortared head and bed joints
- The use of ground anchors – because FHA doesn’t accept these as a permanent attachment
- Any permanent foundation lacking an engineer’s certification, even if it complies with all other elements
- Vinyl skirting used as an enclosure that doesn’t meet ALL of the following FHA requirements:
- Properly enclosed crawl space with a continuous permanent foundation-type construction (similar to a conventionally built foundation, i.e., concrete, masonry or treated wood)
- Designed to resist all forces without transmitting the building superstructure to movements or effects caused by frost heave, soil settlement, or the shrinking or swelling of expansive soils
- Adequately secured to the perimeter of the unit to exclude entry of vermin and water
- Allowance for proper ventilation of the crawl space
Problem number 2 above – dry stacked piers – is one of the most common problems. Manufactured home dealers frequently skip paying for this when they know the purchaser is using conventional financing. The cost to bring this up to standards can be easily be in the $500-$600 range. However, this can often be financed into the loan and the lower 30 year fixed interest rate is well worth it.
In the next installment, we will cover how an FHA manufactured home mortgage is impacted by the borrower’s credit, loan to value and other borrower qualification factors.
Carl Pruitt is an FHA mortgage expert with 23 years experience in the mortgage/real estate businesses.
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Tagged with: manufactured home • permanent foundation
Filed under: Manufactured Homes
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I am trying to buy a doublewide home on two acres of land. I spoke with the FHA loan officers assistant before looking at the house about the foundation. She said that vinyl skirtting was OK IF, the wheels and axles were removed, it was anchored down and was up on blocks. The listing realestate agent thought it was not on a permanent foundation because the foundation was not solid block, so on the listing she said it was not FHA approved for that reason. When we went to talk to the loan officer she looked at the listing that the realtor had done and denyed the loan(she also said there was 35,000.00 min loan amount or something), saying that it had to be totally block foundation with a door built in it to make a crawl space. The home has vinyl skirting all the way around with no open space. It is up on stacked concrete blocks, and is anchored to the ground with metal straps that connect to rods in the ground. Who is right? Does the vinyl skirttting deny the FHA loan? And if it is the assistant also said you could pay to have it put on a permanent foundation then get a FHA loan… could I get some INFO on that? THANKS
It is possible that the home does meet the guidelines even with vinyl skirting, but the only way to know for sure is to have it inspected by an engineer. This usually costs somewhere from from $300 to $500. That is the reason most people don’t even try when dealing with a vinyl foundation. Many engineers also have contacts who can help with the foundation costs. It is possible to get the owner to have the foundation installed and paid for at closing out of the sellers’ proceeds IF they can get a contractor to do that.
Keep in mind that you can also have a new manufactured home installed on land with an FHA loan.
There is no FHA minimum loan amount set by HUD, but many lenders do not lend less than that due to trouble selling the loan on the secondary mortgage market.
We are also having problems with refinancing our manufactued home via FHA. The lender said that it wouln’t meet standards due to the fact that it is dry stacked and the tie downs are screwed into the ground instead of concreted into it. We do have a block foundation with a door leading to the crawl space.
They have said that we must have an engineer’s report before they will know if it meets approval. We don’t want to spend $300-600, if the loan will not go through anyway due to the blocks and tie-downs.
Is this correct information?
Thanks!
Piers with mortared head and bed joints are required. Dry stacked supports are one of the most common problems. And the tie downs would not meet the standards. If I were you the first thing I would do is call someone out to give an estimate to bring these inline. Often this contractor will be able to help you with the engineer’s report.
Carl,
NYS Law indicates that a mfr home that was manufactured after 1994 is considered personal property even if \permanently\ affixed to property and requires DMV registration to secure a lien. It is my understanding that a Reverse Mortgage can’t create any personal liability for the borrower. So, in this instance how are the financial institutions obtaining liens on Mfr homes manufactured after July 1, 1994??
I would appreciate any assistance you may be able to give.
Thanks
Trish
Reverse mortgages are not my specialty, however according to my sources this does not affect the eligibility. It just creates an extra step for perfecting the lien.
Are there lenders that will accept the certification from IBTS or must all manufacturing financing require the orginal HUD tags?
More lenders accept the IBTS certification than don’t in my experience. Taylor Bean and Whitaker is one lender that I know has accepted it many times.
We own a 1999 Skyline Mfr. Home that was Repoed previous to our purchase. We have since poured a ton of cash into fixing it back up. Now we are trying to refinance to get our of having to worry about our interest rate ballooning at three yrs. We’ve run into the constant issue of our home not “being on a foundation”. We have 8′deep cement Pilings w/anchors/tiedowns. We also have vinyl skirting surrounding the base of the home. Wasn’t an issue when we originally purchsed the home in 2000, but after the hurricanes…we’ve found it more than difficult to find a mortgage company that would finance a home like ours. We don’t have a whole lot of extra money to continue pouring into this place in order to qualify for refinancing. What are our best options???
The Mfr. home that we own is a Triple Wide, if that is a contributing factor.