I get a ton of calls from homeowners asking: “Do you do mortgages for manufactured homes?” Seriously, I probably get 5 calls a day with that question.
First, what is a manufactured home?
A manufactured home, in contrast to a modular home, is pre assembled at a factory and shipped to the lot where it will sit.
A modular home is also assembled at a factory; however, it is shipped in segments and fully assembled at the site or property location.
Here’s why it’s so difficult to get a mortgage for a manufactured home.
It’s so difficult to get a conventional mortgage because the manufactured home is viewed by the mortgage investor as poor collateral.
Remember, in the mortgage world, collateral is one of the key parts in the home loan transaction.
The reason the manufactured home is seen as poor collateral is because it may not be secured to the concrete slab it sits on and the home can be moved. That’s a big deal.
Also, the land that the manufactured home sits on may be rented.
If the land is rented, when the lease expires, the landlord may want to do something else with the land, in which case the homeowner would have to move the manufactured home or leave it.
Some manufactured homes that are anchored to the ground aren’t anchored securly enough and can be moved.
During hurricanes to we see a larger percentage of damage to manufactured homes. This may have something to do with the quality of the home construction.
Also, in comparion to stick built or masonry single family homes, a greater percentage of homeowners with manufactured homes end up defaulting on the mortgage.
In conclusion, getting a mortgage for a manufactured home is difficult because:
1. the land the manufactured home sits on may be leased
2. the manufactured home can be moved
3. even if the land is owned and the manufactured home is anchored, the home can be moved
4. the mortgage default rate for manufactured homes is higher than average