Manufactured Home Loans in Condo Park Communities
Park communities represent the most popular setting for manufactured homes. For loan purposes, lenders generally require that the owner of the home also own the land upon which the home sits. Until recently the park also had to be classified as a owner-owned Subdivision or a Planned Unit Development in order for manufactured homes to qualify for FHA-insured loans.
Many mobilehome parks and manufactured home communities began as land lease developments but as residents desired a greater control over their living situation and costs associated with their residences, many parks converted to resident ownership. Most of these used the process of the condominium conversion. Unfortunately, because of the classification, this property type was ineligible for FHA-insured loans including Reverse Mortgages or HECM. Fortunately, the Housing and Economic Recovery Act of 2008 (HERA) granted authority to add individual manufactured housing units located in condominium projects to HUD for FHA insurance but the process from Congressional authority to actual loan processing is still unraveling.
Recently with the issuance of Mortgagee Letter 2009-16 Manufactured Housing Policy Guidance http://www.hud.gov/, condo parks have now been eventually neglared eligible for FHA-insured financing. Or at least according to HUD they are now eligible! But one shouldn’t jump to fast! First, lenders have not yet announced they are ready to accept the product and thusfar there are no announced guidelines or underwriting procedures for handling these loans. Remember, even though FHA is accepting the product for insurance, FHA is not the actual funding source, only the insurance entity. Until there is clarity from the individual lenders how they will process the loans, everything remains at a standstill. Lenders may impose additional guidelines above and beyond what is required by HUD.
HUD’s announcement states that until they can send out updated condominium project approval guidelines for manufactured condominium projects, that the project approval is subject to the requirements found in HUD Manual 4150.1, Chapter 11. The Mortgagee Letter goes on to specify that their “Spot Loan Approval” process is not available (as outlined in Mortgagee Letter 1996-41) and that all manufactured housing condominium projects must obtain full approval by the applicable Home Ownership Center (HOC) for HUD that has authority over the geographical area where the project is located. Since none of the condo projects are on a HUD approved list, the approval process may take months.
Chapter 11 of the 4150.1 manual is approximately 32 pages long and encompasses everything from owner occupancy requirements, to common facility completion requirements; legal review of the condominium documents to phasing eligibility; review of the insurance of the project to management agreements and operating budgets and much more. The homes must meet all the other FHA loan requirements
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