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Topic: Mobile Home Guidelines
New Loan Guidelines
June 12, 2003
Provided By
Mendocino Mortgage
Your Local Loan Professionals
707-937-3938
Recently there have been indications that financing of manufactured homes is changing. On June 3, 2003 FannieMae amended their guidelines for financing manufactured homes. This change was made because FannieMae has determined that the foreclosure rate is higher for loans secured by manufactured homes on land then with traditional site built homes. In addition, FannieMae has experienced problems in the foreclosure process as some loans secured by manufactured homes that were, in reality, personal property and not a part of the real estate. Below are those changes that we feel it is important for you to know.
1. FannieMae identifies a manufactured home as a dwelling unit on a permanent chassis or metal under carriage. Other factory built homes such as modular, prefabricated, panelized or sectional are not considered as manufactured homes under the new guidelines.
2. The manufactured home must be built with compliance with Federal Manufactured Home Construction & Safety Standards that were established June 15 1976. Compliance with these standards will be evidenced by the presence of a HUD Data Plate that is affixed in a permanent manner near the main electrical panel. If your seller does not have the official HUD numbers, or the home was build prior to June 15, 1976 there will be financing difficulties.
3. The home must have the characteristics of a site-built home.
4. The manufactured home must be, at least 12 feet wide and have a minimum of 600 square feet of gross living area. There are no requirements as to roof pitch.
5. The home must be attached to a permanent foundation system ( built with permits and according to local codes) and permanently connected to septic, sewer and other utilities.
6. First lien mortgages secured by primary residences or second homes are allowed. The types of loans allowed are 30 year, 20 year and 15 year fixed rate mortgages and adjustable rate mortgages having an initial fixed period of 7 or 10 years. INVESTMENT PROPERTIES ARE ELIGIBLE.
7. The maximum loan to value for a primary residence is 95% and a second home is 90%. Only a 20 year amortization is allowed with a 95% LTV. A 30 year amortization is only allowed for LTV’s of 90% or less. Cash out refinances are only allowed for a primary residence. The LTV cannot exceed 65% and the loan must be amortized over 20 years. Therefore, a buyer with modest or borderline income and only 5% down must qualify based upon a 20 year amortization. And access to a borrower’s equity in their property is restricted.
8. All loans require a minimum down payment of 5% which must be the borrower’s own funds.
9. Appraisal guidelines are much more restrictive. FannieMae suggests that appraisers that appraise manufactured homes need specialized skills and experience. The format of the appraisal will change and the liability on the appraiser increases. This means that it may be more difficult to obtain an appraisal on a manufactured home.
10. These guidelines are for loan applications taken on or after August 24, 2003. Loans based on applications taken before August 24, 2003 must be eligible for delivery to FannieMae by October 31, 2003 to be accepted under the existing guidelines. Do not count on closing your escrow near the Oct. 31. date and have it work under the old guidelines. Each lender takes different amounts of time after close of escrow to package and sell their loans to the investor. Cost of this loan will be, at least, an additional ½ point.
Although these guidelines are currently only applicable to loans sold to FannieMae, the industry most likely will follow their lead. FreddieMac and other investors often create guidelines that are very close to those established by FannieMae and FreddieMac.
Susan Weaver – Owner/Broker * Rudy Solano – Loan Agent
This Newsletter is intended for the use of real estate professionals only.
Rates, Fees & Programs are subject to change without notice
Real Estate Broker, California Dept. of Real Estate License No. 01015740
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