Please Take This Seriously
If you are a RE Agent, Broker, Lender, Home Inspector or Appraiser but most importantly a potential HOMEOWNER and are or plan to deal with the purchase and financing of a Manufactured Home you need know about this.
HUD AUDIT REPORT:
Issue Date; Sepetember 24, 2007, Audit Report Number: 2007-KC-0004
TO: Brian D. Montgomery, Assistant Secretary for Housing – Federal Housing Commissioner, H
FROM: Ronald J. Hosking, Regional Inspector General for Audit, 7AGA
SUBJECT: More Than 80 Percent of Recently Insured Title II Manufactured Housing Loans Are on Homes With Substandard Foundations
What We Audited and Why:
We audited the U.S. Department of Housing and Urban Development’s (HUD) Title II manufactured housing loan program. We initiated this review because of the high insurance risk to the Federal Housing Administration (FHA) fund that manufactured homes have historically represented, and prior audit observations of foundation deficiencies with FHA-insured homes.
Our objective was to determine whether, and to what extent, FHA insured Title II manufactured housing loans on properties with foundations that did not meet its requirements.
What We Found:
Of the FHA Title II insured manufactured housing loans that closed from 2003 through 2005, at least 50,000 (or more than 80 percent of the financed homes) were installed on substandard foundations. This occurred because current FHA controls cannot be relied on to ensure installers follow required guidelines. As a result, FHA’s insurance fund is not adequately protected, homeowner equity and resale values are diminished, and the structural integrity and safety of the homes is questionable.
What We Recommend:
We recommend that HUD correct program weaknesses to ensure that Title II manufactured housing foundations meet FHA requirements and avoid unnecessary losses to the insurance fund of an estimated $44.9 million within the next year.
For each recommendation without a management decision, please respond and provide status reports in accordance with HUD Handbook 2000.06, REV-3. Please furnish us copies of any correspondence or directives issued because of the audit.
HUD is not messing around with this. Although instituted in 2007 HUD is on a nationwide sweep and aggressively auditing lenders who have been engaged in the financing of Manufactured Homes dating as far back as 2003.
We have been dealing with Lenders & Realtors Nationwide for over two decades and personally know of several lenders who have been or are currently dealing with Manufactured Homes who either have been or are soon to be audited. Please feel free to share this with anyone you feel might be subject to this audit and by all means feel free to contact us if you have any concerns or questions.