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Real Property versus Personal Property~Mobiles and Finance

There have been a few times this year that I've come across issues with agents and clients over the distinction between Real Property and Personal Property when it comes to mobile homes. In the eyes of many, mobile homes are just that...homes!

But, there is a clear distinction between a mobile home that is eligible for Real Estate Financing, ie: a home loan, and one that isn't...What is it? Whether the dwelling is PERMANENTLY FIXATED TO A FOUNDATION!

If a bank is going to lend money on a mobile home, the mobile home MUST BE fixated to a foundation, period! Why? It's simple, the bank is loaning money on the home. In the event that the homeowner decides not to make payments on the home, the bank wants to make sure that they can foreclose on the home to recoup their money and/or possible losses. If the home isn't permanently fixated to a foundation, what's to say that the borrower doesn't pack their bags, hop on the wheels and run for the dickens? So, here is the difference...

This is an example of a mobile home that is fixated on a foundation. The underwriter will look at the appraisal to make sure that the home is fixated to the property and by what method. As a sidenote, even though it isn't part of the topic, be sure to confirm that the ID number on the dwelling runs hand and hand with the paperwork!

This is an example of a home that is sitting on a foundation, but...it isn't fixated to the property. Notice the wheels below the home! Yea, banks don't like that :)

So, if you're looking to list or purchase a mobile home, be sure that the property is going to be fixated to a foundation like the property above before you list it or purchase it and plan on getting Real Estate financing against the property.

Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com

Blog: http://activerain.com/blogs/lendingmagician

"You find the perfect home, we'll find the perfect loan!"

Posted by Scott Gormley on 11/26/2006 02:32 AM

Comments (14)

mobile, home, financing, real, estate, loan, mortgage, agent, realtor, buyer

14 Comments on Real Property versus Personal Property~Mobiles and Finance

NOV

2006

Have any of you run across this issue?

And yes....The baby is up right now...lol

Great point and excellent post!

Best regards,

Ricardo Bueno

Don't forget - if it's not fixed to the ground AND you won't also own the land- what you're looking for is a car loan!

Scott, In Florida we have tons of mobiles and also manufactured homes. In addition to what you have pointed out, in order for a Realtor to be able to list and sell the sellers must own the land. If not, we can't touch it.

We can sell mobil homes in rented parks but in order to get financing the mobil home must be newer than 1976 and there can not be wheels or a tongue on the home either. Interest rates seem a lot higher for these types of homes. A little easier to sell if the yare on their own parcel of land.

Thanks Jay

Scott, like Bryant, we have a ton of manufactured homes up here in Washington State. Not only do they need to be pernanenetly fixed to a foundation, there are specific requirements for how they are fixed. Here, it's called "Ribbons & Tiedowns." There needs to be a permanent foundation around the perimeter of the building and tiedowns that secure the home to the foundation. Here is a really excellent report on the subject:

"Guide to Foundation and Support Systems for Manufactured Homes."

What I have always wondered is, what prevents an owner from "un" fixating the home from the property and hauling it away after they get the financing?

Scott,

I agree with you, what's what my appraiser told me, it is a risk for the lender to lend on personal property,

Ray Saenz

Affadavit of Affixture is what is needed here in Arizona - and it's definitely a niche lending market. We know of two lenders that focus exlusively on this product.

Scott, your first picutre may be fixed to the ground. But one could try to hide the wheels with a skirt, similar to what is in the first picture. The only way to tell is to physically look under the house. If their is a skirt, you need to look behind it. On a side note, if the house fixed to the land, make sure the owners have had the license plate removed before the appraiser shows up if they have not removed it already.