Manufactured Homes Take a HIT!

By
Mortgage and Lending NMLS #94045

In the wake of Taylor Bean Whitaker being disowned by HUD and shut down on August 4th, (they were the 3rd largest FHA lender in the nation prior to their closing) we are getting the inevitable announcements from other Government lenders about new restrictions.

Today several major FHA/VA lenders announced they have ceased funding Manufactured Housing. Considering these loans were largely funded by FHA and VA due to the guarantees that limited the lender's concerns about defaults it is hugely unlikely many investors will step up with decent financing options for manufactured housing, at least for the foreseeable future. Sure there are specialists and local banks who can fill the gap but the reason these properties are so risky is two fold: cheaper housing attracts a borrower who by definition are at higher risk to default. Banks are particularly wary of having foreclosed manufactured homes on their books because they can't sell them as easily and now...well, without financing who will buy?

News Update: 09/10/09: I was told today by a specialist manufactured lender they offer 12% interest rate to manufactured home loans. They are extremely busy picking up the pieces even at those interest rates (!) Since August, the government mortgage lenders were selling their FHA Manufactured Home Loans to Taylor Bean now have no place to sell them...so the question lingers: who will buy and service them in this market?

Expect a rash of foreclosures to accellerate among manufactured home owners. Now the owners of manufactured homes will have no easy refinance method such as the FHA streamline. With no loans, no sales. Prices will plummet! The only manufactured home at the present time that will benefit from USDA lending is a new manufactured home (that has never been lived in). So what will that home buyer do if they decide to move in a few years and the lenders have evaporated so their home can't be funded by a new buyer? Give them away?

Manufactured homes could actually be considered a liability to a property!

The manufactured housing industry could really be taking a hit The sheer domino effect of this drastic reluctance to fund manufactured housing could have some very big downsides to rural economies in particular where the majority of manufactured homes provide the predominant housing. What if you have a manufactured home plant in your area? Did anyone consider this when they pulled the plug on their own bank eliminating manufactured loans? Are we trying to control the quality of housing by eliminating this entire sector? One wonders what the entry level rural buyers in regions like ours will do. While I have always tried to steer folks toward higher quality housing there is no doubt the manufactured home has provided an important boon to home ownership. What next government lenders?

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SUSAN TEMPLETON IS A LICENSED LOAN ADVISER IN WASHINGTON

NMLS# 94045

                 

 

Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits. Loannetter is a private brand owned and copyrighted by Susan Templeton.

 

 © 2005-2015 susan templeton copyright

 

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Topic:
ActiveRain Community
Location:
Washington Whatcom County
Groups:
Mortgages
Posts to Localism
The FHA Mortgage Group
VA Loan Group
HUD RURAL Loan
Tags:
manufactured housing
mobile homes
fha limits
va limits

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Ambassador
675,758
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Susan: We also got this memo. There are banks (Sound Community Bank, for example) that you might be able to broker to. Good luck!

Aug 20, 2009 03:19 AM #1
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hey Paul, I appreciate the suggestion. We have put out the APB and our FHA/VA lenders are all diving for cover. Thanks for your support!!!

Aug 20, 2009 06:29 AM #2
Ambassador
675,758
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

You're welcome! This isn't really my market but I'm pretty sure there are still options. The rates may be quite a bit higher though. Good luck!

Aug 21, 2009 03:15 AM #3
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Paul we found one portfolio lender and yes the rates are 1% or more higher. Wish it weren't my market but so many folks own manufactured home in rural areas.

Aug 21, 2009 05:45 AM #4
Rainer
67,579
Jay-Paul Lowry
Riverside, CA

We were funding these as well and delivering them to US Bank until yesterday. We had a mad dash to lock all loans since the notice came out 15 minutes before they closed their lock desk. Its sad we used to do a ton of these in New Mexico and Idaho.

 

JP Lowry--President--Preferred Financial Funding, Inc

Aug 21, 2009 08:27 AM #5
Rainmaker
66,965
Susan Templeton
Bellingham, WA

JP, US Bank was one of the first bulletins we received, then others followed. What do you think will happen to the value of manufactured homes in your area? Who will buy them without funding options?

Aug 21, 2009 08:57 AM #6
Rainer
67,579
Jay-Paul Lowry
Riverside, CA

Over the last year funding options have been dwindling for this niche. I remember Wells Faro was one of our biggest buyers for this property type. There are still a couple of players around in California that i know of funding this stuff. We are invloved in HUD REO's in Southern CA with another company we own called Arrowhead Escrow and most of the homes that fall under HUD REO program are Manufactured so it could end being real bad for FHA as well. But most are being sold to investors for cash. It will more than likely have a large impact on the market. A big help could come from GNMA. Currently the securities guidelines from GNMA that governs manufactured is different from regular SFR and that has an impact on liquidity. If they would align manufactured with SFR in regards to servicing it could help a little but not a lot.

 

JP

Aug 21, 2009 09:36 AM #7
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Nice idea:  These days they don't even honor exisiting guidelines!

Aug 21, 2009 09:56 AM #8
Rainmaker
171,072
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Susan - while you wrote this post a few months ago, sadly things have not gotten any better. Here in northern Indiana where are dominate manufacturing labor force is Manufacturing housing & RV's. We are running 11-17% unemployment in a 4 county area and have watched about 8 housing manufactures close down in the past 2 years. I'm also guessing that about 1  in 4 foreclosures in our area are Manufactured homes. We have virtually no investors taking these homes.

Mar 13, 2010 06:57 AM #9
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi Greg,

Yes, the situation won't improve until the risks are reduced. Unlikely on two fronts: 1. the degree of foreclosures in this category and 2. the fact that general modest priced housing tends to attract buyers who are most likely to default. I know portfolio lenders who loan to people who don't need the money or are buying a lot which happens to have an MFD on it with plans to remove and build a stick built home. Hope things improve in your area.

Regards, Susan

Mar 13, 2010 07:26 AM #10
Ambassador
681,324
John DL Arendsen
CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS - Leucadia, CA
Crest Backyard Homes "ADU" dealer & Contractor

Hi Susan, I know I'm way late to this party and hope you are still engaged in the Factory Built Housing Industry. If you are and would like to join an Active Rain group that's all about FBH we'd love to invite you to join us.

 

http://activerain.com/groups/manufacturedhomes

Feb 01, 2014 01:19 AM #11
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