California Mobile Home Financing

A GUIDE TO
PURCHASING MOBILE and MANUFACTURED HOMES
July, 1998
Compliments of
SENATE SELECT COMMITTEE ON MOBILE AND MANUFACTURED HOMES
Senate Select Committee on Mobile and Manufactured Homes
1020 N Street, Room 520
Sacramento, CA 95814
(916) 324-4282
The material contained in this Guide was assembled by the Committee from information provided by the
California Department of Housing and Community Development and from the California Health and Safety Code
and the California Code of Administrative Regulations.

Introduction
Advantages & Disadvantages of Living in Manufactured Housing
Finding a Location for a Manufactured Home
Who Sells Manufactured Housing?
Dealer Sales: Knowing Your Rights
What the Contract with the Manufactured Housing Dealer Should Include
Escrow Rights and Responsibilities
Disclosure
Special Conditions to Keep in Mind in Buying a Manufactured Home
How Manufactured Homes are Taxed
Registering and Receiving Title to the Manufactured Home
The Warranty on a New Manufactured Home
Repair of a New Manufactured Home Under Warranty
Improper Installation of a Manufactured Home
Consumer Services

Financing a mobile or manufactured home many think is next to impossible. In many cases that may be true. However, our vast years of experience has shown that many of the obstacles can be addressed and in many cases rectified prior to getting the dreaded "turn down notification letter." Before the dreaded notice is a reality consult with an experienced mortgage broker with solid references.

On June 15, 1976, the U. S. Government enacted significant legislation regarding the construction and safety standards for manufactured homes. This federal act has become the major dividing line concerning the registration, regulation and financing of manufactured homes. Without getting too technical, here are some of the major points of this act that are significant to consumers thinking about buying a manufactured/mobile home:

1. Homes manufactured after June 15, 1976, (post-HUD), have a "data plate" permanently affixed to the outside of the home. Among the number of things required to be on this data plate are:

a. The name and address of the manufacturing plant.

b. The serial number and model designation, and the date the unit was built.

c. A statement that the home was built to comply with Federal Manufactured Home Construction and Safety Standards in force at the time it was built.

d. A list of the major factory-installed equipment and/or appliances.

The above are some of the major provisions. Practically, what they mean to the consumer are:

a. California, through the Department of Corporations, maintains a record of post-HUD units, similar to what title companies do for real property. You can find out a lot of information. Pre-HUD homes may have little or no information regarding the unit's identification numbers, construction, manufacturer and what the home came equipped with. Result-you know more about what you are buying with a post-HUD.

b. Perhaps as importantly, because of this HUD system, a few conventional lenders will finance "qualified" post-HUD units as real estate. Pre-HUD units are financed as chattels, or personal property. There are fewer lenders, qualifying is usually more difficult, and rates and terms are not as attractive as post-HUD units. As a final comment, pre-HUD "single-wides", as opposed to double-wides, are almost impossible to finance.

Bottom Line: Because of the problems associated with pre-HUD homes, some of which are enumerated above, these homes built prior to June 15, 1976, have become "bargains." They are often very attractively priced for one simple reason. They can't be, or are very difficult and/or expensive to finance. If these homes can be financed, often potential purchasers simply can't qualify under the stricter lender guidelines. Thus, the market for these types of homes has become a "cash on the barrel" market. People who bought pre-HUD homes for cash, or perhaps found a lender some years ago, when financing was more available, now find themselves unable to sell their home, or they must reduce the price, or even carry back a loan on the property in order to move it. CAVEAT EMPTOR!

Jack Weiglein is a member of the State Bar of California, and a licensed real estate and mortgage broker. Jack's undergraduate degree is in accounting, and he has held positions as a federal auditor, and was the Territory of Guam's first legislative auditor. Jack has also been a professor of law, specializing in government affairs. You may find additonal information at his business blog at: http://www.squidoo.com/californiamobilehomefinancing Jack is also an avid fly fisherman and BMW motorcycle rider.

Article Source: http://EzineArticles.com/?expert=Jack_Weiglein

INTRODUCTION
During the last 30 years, mobilehomes have substantially changed. Trailers that were once towed behind the family automobile have been replaced by complete housing units designed to be permanent residences.
Throughout this guide, the terms "manufactured housing" or "manufactured home" are used instead of the more common term "mobilehome." The change reflects the evolution of the mobilehome to a more conventional home built in a factory but seldom moved after its initial installation. However, you will still find some references in this guide to "mobilehome" where the term remains in law, or continues as a prevailing description, such as "mobilehome park."
As manufactured housing offers California residents an alternative to conventional housing, prospective home buyers should be familiar with the various aspects of purchasing and owning a manufactured home.
Like buying a conventional home, buying a manufactured home is an important decision. Prospective manufactured home buyers will encounter many of the same things that conventional home buyers encounter: looking for the ideal home, disclosure, shopping for the best price, and securing the best financing. But there are also unique differences from conventional housing.
This guide explains some of the important facets of buying and living in mobile and manufactured housing.

ADVANTAGES AND DISADVANTAGES OF LIVING IN MANUFACTURED HOUSING
Approximately one million Californians live in manufactured housing today. Living in a manufactured home has both advantages and disadvantages which you should be aware of if you are considering purchasing one.
Advantages
* Cost: The initial cost is usually lower than a conventional "stick" built home.
* Warranty: New mobilehomes and manufactured homes have a one year factory warranty.
* Federal and state code standards: From September 1, 1958 to September 15, 1971, state law regulated only electrical, heating, and plumbing equipment in manufactured
homes. Manufactured housing built in California after September 15, 1971 also must meet minimum construction and safety standards. The manufactured home must have the insignia of approval, or the Federal Housing and Urban Development (HUD) label which indicates the home was manufactured to specific construction, fire safety, electrical, mechanical, and plumbing standards after June 15, 1976.
* Maintenance: The manufactured home may need less maintenance than a conventional home. Generally, there is less yard area to care for. However, you still must provide for reasonable maintenance of appliances and the structure itself.
* Built to suit: Unless you buy a manufactured home right from the dealer's lot, you can often select the color scheme, furnishings, and appliances you want from the manufacturer's brochures. The appliances will arrive already installed in the manufactured home.
* Options and conveniences: Manufactured homes may be placed in rental mobilehome parks or under specific circumstances may be installed on conventional residential lots. Many mobilehome parks and manufactured housing subdivisions have special recreational facilities and amenities for their residents.
Disadvantages
* Financing: You may find that financing terms and interest rates for manufactured homes are not as favorable as those for conventional housing.
* Rent increases: If you live in a mobilehome park, you probably rent the lot. Depending on the jurisdiction, some park rents are subject to rent control, but many parks offer long-term leases exempt from rent control, and buyers are usually required to sign a long-term lease as a condition of tenancy. If the management raises your rent beyond what you can pay, it is much more difficult to sell or move than if you were living in an apartment.
* Moving problems: continued below

* Moving problems: Moving a manufactured home can be expensive. Mobilehome park spaces are increasingly scarce in some areas, so you may have difficulty relocating your manufactured home. Contrary to popular belief, once installed, 95 percent of all manufactured homes will not be moved again. If you have to move from the park, you may need to find a buyer for your home rather than take it with you. However, finding a buyer quickly, who wants to buy a used manufactured home at your asking price, may be difficult. Additionally, the fact that park management reserves the right to approve your buyer before he or she can move in can sometimes complicate a transaction.
* Rules and regulations: Some parks have rules which some may like, but others may find to be a disadvantage. The most common rules limit residency to seniors, prohibit pets, limit the time guests may stay with you without paying an extra fee, and require you to pay to maintain and repair the driveway and landscaping. The management can also change the rules without the consent of the homeowners with only a six month notice (six week notice regarding recreational facilities). Violation of a park rule can lead to termination of tenancy.

FINDING A LOCATION FOR A MANUFACTURED HOME

Before you buy your manufactured home, you should identify where you are going to put it. You will have to shop around and decide whether you want the home on your own land or in a mobilehome park.
Your Own Land
California cities and counties must now establish residential zones for manufactured homes. Those manufactured homes must be certified for installation on a foundation system. Cities and counties may require standards for setbacks and separations, enclosures, access, vehicle parking, aesthetic and square footage requirements. Architectural controls imposed on a manufactured home are limited to roof overhang, roofing and siding materials.
The local planning or building department can advise you whether or not a manufactured home can be placed on a specific lot under local zoning requirements. Once a site is located, do not purchase it until you have checked local laws regarding manufactured homes. Also, check local laws regarding utilities, including water and sewage hook-ups. These hook-ups can be expensive, especially if you have to drill your own well or put in a septic system. To avoid this expense, find out if established water and sewer facilities are accessible at the site. A building permit from the city or county is required before installation. A school impact fee may also be applicable. Contact the city or county building department for permit requirements and various fees and costs

Mobilehome Parks
If you decide to place your manufactured home in a mobilehome park, keep the following factors in mind.
* Location: What kind of neighborhood surrounds the park? How far is it to stores, schools, and your job? Check the availability of water, utilities, and mail service.
* Condition: Are the community areas clean and well kept? In case of heavy rain, how is the drainage system? California law requires mobilehome parks to meet certain health and safety standards. Construction features of the park--including lighting, drainage, sewage disposal and grading--are regulated by state law.
* Facilities: Are there extra storage areas and second car parking if you need it? Are the recreational facilities and the laundry area adequate? If you have children or pets, do the park rules permit them? Are play areas adequate?
* Utilities: It is important to out find out about the park's utility system. California law regulates how the park management bills you if a "master meter" utility system with sub-metering to each lot is provided by the park. With this system, the park management must give all residents their own beginning and ending meter readings and individual bills for what each homeowner owes each billing period. The management must post in a conspicuous place the residential utility rate scheduled published by the serving utility and charge the resident the same amount as the utility company would if it were to bill the resident directly. In a few parks, the utility company provides individual meters for each resident and bills you directly. If you have any unanswered questions about your utility charges, contact the service representative of the utility company serving your park.
* Rules and regulations: Is reasonable landscaping of your manufactured home space required? Does your manufactured home have to be a certain style or have skirting and awnings? What are the hours for using the recreational facilities? Is residency limited to persons 55 and older? Are pets permitted? The park management may not discriminate tenants on the basis of race, sex, religion, color, nationality, marital status or sexual orientation.
* Rental Agreement: The park management must give you a written rental agreement which must contain
-- The term of the tenancy and the rent charged;
-- The park's rules and regulations;
-- A copy of the Mobilehome Residency Law;
-- A description of the physical improvements and services that will be provided.

If you request one, the park management must offer you a written rental agreement for at least a 12 month period. The charges for rent, utilities, or incidental reasonable service charges for the first 12 months must be the same as would be charged for a month-to-month tenancy. Long term leases over 12 months exempt from local rent control may also be offered and sometimes are a requirement of residency. Normally, you must sign a rental agreement as a part of escrow before taking possession of the home.
* Check it out: If you are considering living in a park, talk with the park residents. Ask if they are happy with the park, what problems they may have and how they get along with the owner and manager. Before you sign any lease or rental agreement read it, and the park rules, very carefully. If you don't understand it, get advice from an attorney or a knowledgeable person.

WHO SELLS MANUFACTURED HOUSING?
Sellers of manufactured housing fall into four groups:
1. Brokers: Real estate brokers may only sell used manufactured housing registered in California for at least one year or homes installed on a permanent foundation system. The broker is not required to have a sales lot with various homes on display and probably will not have a repair facility. Brokers are regulated by the Department of Real Estate (DRE).
2. Private Owners: Manufactured homeowners may sell their own homes, just as a conventional home would be "for sale by owner." If you buy a manufactured home from its previous owner, be sure the entire agreement between you and the seller is in
writing. Prior to signing, an attorney who is familiar with contracts should review the document to ensure that the previous owner's title is clear and that all necessary items are in the contract. This category includes park owners who acquire mobilehomes in the "ordinary course of business" of operating a mobilehome park.

1. Contractors: Contractors may sell five or more manufactured homes if they are placed on a permanent foundation in a single subdivision that is developed within one year.
2. Dealers: Most manufactured homes are sold by dealers and salespersons. Manufactured housing dealers and salespersons must be licensed by the California Department of Housing and Community Development (HCD). These licenses must be displayed in a conspicuous place at the business. A manufactured housing dealer may sell both new or used manufactured homes. If you are buying a new manufactured home, you should find a reliable dealer. Your dealer can help you decide which manufactured home is best for you; may arrange financing for you; and will, with the manufacturer, be responsible for repairing defects in a new manufactured home after delivery. When you are considering a dealer, always:
* Shop around.
* Check the dealer's business reputation. Ask the dealer for a list of former customers and talk to them. Ask them if they are satisfied with their manufactured home and the service and if they would recommend the dealer.
* Inspect the sales lot, offices and service facilities. Do they look "permanent?" Do the personnel seem competent? Is there an emergency supply of replacement parts for the manufactured homes they sell? Does the dealer have a service agreement with the manufacturer?
* Watch the sales techniques. The salespersons should be willing to answer questions, and you shouldn't be pressured to "sign now before it's too late." Once you sign, the purchase contract is not revocable. You should feel comfortable to go home and think it over. The salespersons should also take the time to discuss the pros and cons of all the models they sell, and explain the basic structure (e.g., wood paneling, color coordination, appliances, etc.).
* Compare the prices with other dealers in your area. While you should definitely look for a "good buy," the lowest price isn't always the best deal.
* Examine the manufactured home's warranty. A notice stating the existence of a one year warranty must be displayed in the dealer's office. All new manufactured home warranties run for at least one year from the date of delivery.
* There is more to "negotiate" than the price. Many dealers help with financing, so you can check their interest rates. Also, the amount of the deposit (which may be non-refundable) and the cash down-payment may vary.

DEALER SALES: KNOWING YOUR RIGHTS
When buying a manufactured home, you have rights under California law regarding the truthfulness of advertised claims.
* A dealer or salesperson cannot make any statement or advertising claim, verbally or in writing, which is untrue or misleading.
* An item pictured in an advertisement must be the item for sale.
* Any specific manufactured home advertised for sale by a dealer must be identified by its serial number.
* All new manufactured homes sold by dealers must bear a label which indicates the make, model and manufacturer's suggested retail price.
* A dealer cannot refuse to sell a manufactured home at the advertised price, excluding sales tax (if it is a used manufactured home), title and document preparation fees.
* An advertised price must remain in effect until the manufactured home is sold, unless the ad specifies a time limit.
* Deposit/down payment checks shall be made payable to an escrow company. Do not sign the purchase contract if it contains any blank spaces. Oral promises are not valid unless contained in the contract in writing.

WHAT THE CONTRACT WITH THE MANUFACTURED HOUSING DEALER SHOULD INCLUDE
The sales contract you make with the manufactured housing dealer is an important piece of paper. Any promises that you are given should be put in writing. Remember, oral agreements are very difficult to prove. Before you sign a contract, take your time, read it and understand everything that it says.
* If you don't understand the contract, ask someone to explain it to you. You may wish to consult an attorney.
* Make sure the contract has no blank spaces.
* Make sure the necessary changes are made on the contract and that everyone has initialed the changes.
* Make sure that your copy is the same as the dealer's.
You should find out before you sign the contract if and where you can get financing and under what terms and conditions. Remember to shop around--the dealer may not necessarily offer the best financing terms available, compared to a bank or another financial institution. But, if you should later get into financial trouble and be subject to foreclosure, if you obtain your own financing you may be liable for a deficiency judgment if you owe more on the home than it is worth.
You should determine before you sign the contract who is to arrange for transportation and installation of your manufactured home. Usually the dealer will arrange for transportation and installation and whether these services are included in the price of the home. Be sure and get the agreement in writing.

ESCROW RIGHTS AND RESPONSIBILITIES
When a contract, purchase order or security agreement for the retail sale of a new or used manufactured home (one installed on a nonfoundation system) is signed, the dealer must put the entire down payment and/or deposit, including any cash equivalents, into an escrow account within three working days. The conditions of sale are written into mandatory escrow instructions and require the buyer's signature. Among other things, the escrow instructions shall specify the conditions of delivery for a manufactured home. These escrow rules only apply to the retail sale of manufactured homes. Manufactured homes sold for installation on foundation systems are subject to escrow requirements similar to those of site-built homes.
* An escrow for the sale of manufactured homes by dealers is required by law. Escrow protects the consumer, so if you are told that you can save money by not using an escrow, take your business elsewhere.
* The escrow instructions should state the date escrow is to close. The purchase documents should also include this date. If, for some reason, it is not possible to close escrow by this date, it is possible for both parties to sign written escrow instructions extending the date.
* The value of each accessory in your home must be itemized in the escrow. This is important for your protection. For example, the manufactured home is ready to be occupied, except the air conditioner, which costs $2,500, has not arrived. If you have paid your entire down payment or deposit on the home and your lender has sent the funds to escrow, escrow could close, you could move in, and your $2,500 would remain in escrow until the air conditioner is delivered and installed. However, if you had not specified the amount of the air conditioner, the escrow agent would not know how much money to hold until installation is complete

* Know the difference between a "deposit" and a "down payment." A down payment is always refundable and must be returned to you automatically if you decide not to purchase the home. A deposit, however, can be held in escrow pending a resolution of any dispute which may develop between you and the dealer. The amount placed as a "deposit" is negotiable and is not set by law. It is to your advantage to have your money characterized as a down payment and as little as possible characterized as a deposit. For example, suppose you have given a dealer $1,000 toward the manufactured home and have agreed to characterize $500 of it as a deposit and $500 as a down payment. If you change your mind about buying the home, the $500 down payment would be returned right away. The $500 deposit, however, would remain in escrow until you and the dealer agreed on all or partial release or until a court decided and ordered the escrow agent to pay out those funds.
* The dealer must deposit all money and cash equivalents into the escrow account within three working days. To ensure protection, make the check payable directly to the escrow company. The dealer cannot, by law, withdraw funds from escrow prior to its close. Make sure the escrow instructions state how the money is to be used.
* If your home is located in a mobilehome park, escrow cannot close until you sign the park rental agreement. A fully executed rental agreement or statement that the buyer agrees to the terms of the rental agreement must be placed into escrow. Otherwise, the buyer does not have rights of tenancy.
* Escrow should not close until the home has been delivered and passes inspection. The only exception is if the buyer installs the home. The escrow instructions must indicate the delivery destination, and after the delivery, escrow may close.
* Do not sign any agreement which limits your escrow protection. Any agreement which limits your escrow rights is prohibited by law, and any dealer who violates any provisions of the Health and Safety Code can be subject to license disciplinary action by the Department of Housing and Community Development (HCD), a lawsuit by the purchaser or both.

DISCLOSURE
Mobilehomes and manufactured homes located on private parcels (not in mobilehome parks) which are placed on a permanent foundation and classified as improvements to the real property are subject to real estate disclosure upon resale. The seller must provide buyers with a real estate disclosure statement (TDS) prior to close of escrow which discloses the features and amenities of the home and any problems and code violations affecting the property. The form is found in Civil Code Section 1102.6. A dealer or real estate agent can assist the seller in completing the TDS.
Beginning January 1, 2000, mobile and manufactured homes classified as personal property (on rental land or in mobilehome parks) will also be subject to a resale disclosure requirement.

SPECIAL CONSIDERATIONS TO KEEP IN MIND IN BUYING A MANUFACTURED HOME
* Since manufactured homes may be built in one area and shipped to another, make sure the construction of your manufactured home is appropriate to your location. Manufactured homes built after June 15, 1976 must have a compliance certificate in the home indicating the geographic zone for which they were designed and insulated. You should check the capacity of the furnace and air conditioner and, if necessary, whether or not the air distribution system is designed for the addition of air conditioning equipment. If you are going to live in snow country, be sure the roof has the capacity to hold the expected weight of the snow. Also, you should consider having maximum insulation installed, along with storm windows. These options will not only save energy but will also make your manufactured home more comfortable.
* Usually axles and wheels are removed when owners place their manufactured homes in mobilehome parks. Dealers often will keep the axles and wheels to be recycled and used again unless the homeowner does not agree.
* If a new manufactured home is to be displayed for retail sale in California, the law requires that it must have a label containing the following information:
--Make, model and serial or identification number.
--Final assembly point.
--Name and location of dealer to whom it was delivered.
--Name of city or unincorporated area to which it was delivered.
--Manufacturer's suggested retail price, which must include the price of:
a. the basic manufactured home unit;
b. extra construction features and materials;
c. the total price of the manufactured home; and
d. a statement of whether the price includes or excludes the towbar, wheels, wheel hubs and axles.
The removal or alteration of the label from the manufactured home by anyone except the buyer is prohibited. However, the label can be removed if a new manufactured home has been attached to a foundation system

HOW MANUFACTURED HOMES ARE TAXED
Sales or Use Tax
Manufactured homes, upon sale, may be subject to sales or use tax. When you buy a new manufactured home in which you plan to live, it is subject to a sales tax based on the relevant county's sales tax rate on 75% of the manufacturer's invoice to the dealer. The manufacturer's suggested retail price label, which must be on the manufactured home, lists the home's full price, including sales tax. Additional items sold with the manufactured home, such as window awnings and drapes, are subject to sales tax based on their cost. Sales tax on these items is usually stated separately in your contract.
When you buy a used manufactured home subject to an annual license fee you must pay a sales tax based on the relevant county's sales tax rate. The tax is determined by looking at a recognized used manufactured housing value guidebook approved by the California State Board of Equalization. If you buy a used manufactured home that is subject to local property taxation, you do not pay a sales tax.
If you have questions about the sales or use tax, contact your local State Board of Equalization district office. (Look in the telephone book white pages under "State of California" for the address and phone number.)
Property Tax or VLF
A manufactured home first sold before July 1, 1980, is subject to an annual vehicle license fee (VLF), unless it has been installed on a foundation system or it has been voluntarily converted to local property taxation. The license fee consists of a tax paid in lieu of a property tax, based on the home's value as established by law, plus a registration fee. The Department of Housing and Community Development is responsible for setting and collecting the VLF. If you allow the VLF fees to become delinquent for 120 days or more, you will be assessed a penalty of $50 per transportable section, and a lien will be placed on your home in favor of the state.
If a manufactured home is either first sold on or after July 1, 1980, or if it is on a permanent foundation system, the home is subject to local property tax. The tax is based on the home's assessed market value, and local county officials are responsible for determining and collecting it. Mobilehome accessories (awnings, cabana, carports, etc.) are also subject to local property taxes regardless of whether the home is subject to property taxes or the VLF.

REGISTERING AND RECEIVING TITLE TO THE MANUFACTURED HOME
Dealer Sales
When you buy a manufactured home from a dealer, the dealer must apply for the registration and title, and submit the necessary fees to HCD within 10 days after the date of sale (the day escrow is closed). In addition to submitting the application to HCD for the registration and title, the dealer must notify the county assessor in writing about the transaction.
Private Party Sales
When you buy a used manufactured home directly from its owner, the owner must give you a properly endorsed title. Then you must send the title, along with the necessary fees, to HCD to complete the transfer of ownership.
The registration card and title certificate for the home are issued by HCD. The title is issued to the registered owner of the home, if the home was not financed. If the purchase of the manufactured home was financed, title is issued to the primary lien holder. The registration is issued to all parties of record. If you are the sole owner, only your name appears on the registration. If the home was financed, all lien holders are named and each is issued a copy of the registration.
If you have not received the registration and title (if title is to be issued to you) within 60 days after the sale, notify HCD. Contact your nearest HCD office for assistance or call toll free 1-800-952-8356.

THE WARRANTY ON A NEW MANUFACTURED HOME
When you buy a new manufactured home, the dealer must give you a written, one year warranty when you sign the sales contract. This warranty from the manufacturer and dealer must be a separate written document entitled "Manufactured Housing Warranty." It states the specific legal obligation of the manufacturer and dealer. A copy of the warranty must be displayed in the dealer's business office. In addition, the dealer or manufacturer cannot require you to give up the warranty required for new manufactured homes.
For your protection, find out how extensive the warranty's coverage is, and how and by whom repair work is done. Examine the warranty for duration, terms and an assurance that the manufacturer and dealer guarantee the manufactured home to be free from any substantial defects in materials or workmanship.
A manufactured housing warranty must by law contain, but is not limited to, the following provisions stating that:
* The manufactured home is free from substantial defects in materials or workmanship.
* The manufacturer or dealer, or both, will take appropriate corrective action at the manufactured home's site to correct substantial defects in materials or workmanship. (The defects which appear within one year from the delivery date of the manufactured home to you must be repaired, provided you give written notice of the defects to the manufacturer or dealer at their business address no later than one year and 10 days after the delivery date.)
* The manufacturer and dealer will be jointly liable to you to fulfill the warranty terms, and you may notify either one or both of the need for appropriate corrective action in instances of substantial defects in materials or workmanship.
* The address and phone number of where to send written notices of defects.
* The one year warranty period applies to the structures, plumbing, heating, electrical systems and all appliances and other equipment installed in the manufactured home by the manufacturer or dealer.
* While the manufacturers of any or all appliances may also issue their own warranties, the primary responsibility for appropriate corrective action under the warranty rests with the dealer and manufacturer, and the buyer should first report all complaints to the dealer and manufacturer of the manufactured home

REPAIR OF A NEW MANUFACTURED HOME UNDER WARRANTY
If you have problems, you should act quickly to ensure that they receive attention. Normally, the manufacturer or dealer must complete any warranty service within 90 days of receiving the buyer's notice. Remember, the required warranty is good for only one year.
If your manufactured home needs repairs:
* Read your warranty.
* Make a list of all the problems--be specific, but remember that the warranty may only cover "substantial defects." It is wise to keep an ongoing list for the first few weeks or as new problems appear.
* Write to the dealer and the manufacturer immediately. Enclose your list of problems and ask that a repair person be sent as soon as possible. Be sure to keep copies of all correspondence.
* If possible, be at home when the repair person arrives.
* If the dealer and manufacturer fail to answer your first letter, write again. Tell them that you wrote before and received no reply. Set a time limit and tell them you will contact the Department of Housing and Community Development (HCD) if they don't answer. (You may want to use certified mail, return receipt requested, to prove when your letters were sent and received.)
* If you don't receive assistance, or are not satisfied, contact the HCD Ombudsman at 1-800-952-5275.

IMPROPER INSTALLATION OF A MANUFACTURED HOME
State law requires a permit to install any manufactured home that is more than 8 feet wide or 40 feet long. The manufactured home must be installed accordingly to the manufacturer's installation instructions and state regulations. An inspection and approval by the state or local enforcement agency is required before the manufactured home may be occupied. You should receive a copy of the inspection report, or a copy of the statement of installation acceptance (also known as Certificate of Occupancy).
Damage and defects caused by improper installation are covered by the terms of a new manufactured home warranty if installed or arranged to be installed by the dealer.
CONSUMER SERVICES
The state Department of Housing and Community Development (HCD) licenses dealers, licenses and inspects mobilehome parks, inspects manufactured home installations, issues certificates of occupancy, and processes and issues registration and titles for mobile and manufactured homes. Complaints concerning these matters may be addressed to the Mobilehome Ombudsman:
Telephone: 1-800-952-5275, 8 am - 5 pm weekdays.
Mail: Mobilehome Ombudsman
P.O. Box 31
Sacramento, CA 95812-0031

Financing Manufactured (Mobile) Homes

Under the Title I program, approved lenders make loans from their own funds to eligible borrowers to finance the purchase of a manufactured home and/or lot, and FHA insures the lender against loss if the borrower defaults. Credit is granted based upon the applicant's credit history and ability to repay the loan in regular monthly installments.

Title I manufactured home loans are not Government loans or grants, and are not low interest rate loans. The interest rate is fixed and is generally based upon the prevailing market rate in the area at the time the loan is made. FHA does not lend money.

Purpose of the Loan

A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. The home must be used as the principal residence of the borrowers.

Maximum Loan Amount

manufactured home only - $48,600

manufactured home lot - $16,200

manufactured home & lot - $64,800

The dollar limits for lot loans and combination loans may be increased up to 85 percent in designated high-cost areas. For further information on high-cost area limits, contact the local HUD field office.

Maximum Loan Term

20 years for a loan on a manufactured home or on a single-section manufactured home and lot.

15 years for a manufactured home lot loan.

25 years for a loan on a multi-section manufactured home and lot.

Manufactured homes are usually purchased through dealers or retailers that sell the homes. The names of lenders in your area which specialize in financing manufactured homes can be obtained from local retailers. These retailers are listed in the yellow pages of your telephone directory. They have the required application forms. FHA neither loans money nor gives grants to purchase homes. Also, manufactured homes must comply with the National Manufactured Home Construction and Safety Standards. The approved FHA lender can explain the mortgage credit and income eligibility requirements to qualify for a loan.

Consumer Protection

HUD provides two types of consumer protection. The borrower must sign a HUD Placement Certificate agreeing that the home has been installed and set-up to their satisfaction by the retailer before the lender can give the loan proceeds to the retailer. After moving in, the borrower can call HUD at (800) 927-2891 to get assistance about t

Eligible Borrowers Must:

Have sufficient funds on hand to make the minimum required downpayment of 5 percent.

Be able to demonstrate that they have adequate income to make the payments on the loan and meet their other expenses.

Intend to use the manufactured home as their principal residence.

Have a suitable site on which to place the manufactured home. The home may be placed on a rental site in manufactured home park, or on an individual homesite owned or leased by the borrowers.

An Eligible Manufactured Home Must:

Meet the National Manufactured Home Construction and Safety Standards.

Carry a one-year manufacturer's warranty if it is a new manufactured home.

Be installed on a homesite that meets established local standards for site suitability and has adequate water supply and sewage disposal facilities available.

The proceeds of a Title I manufactured home loan may not be used to finance furniture (for example, beds, chairs, sofas, lamps, rugs, etc.). However, built-in appliances and equipment and wall-to-wall carpeting are eligible for financing.

Manufactured Home Loans to Veterans
Questions and Answers on Manufactured Home Loans for Veterans
VA Pamphlet 26-71-01, Revised February 1993

The questions and answers included in this pamphlet are intended to cover major items of interest to veterans interested in buying a manufactured (mobile) home. The questions do not cover all possible situations involved in financing the purchase of manufactured homes. Full information about such situations may be obtained from VA regional offices at 1-800-827-1000.

What is a VA-Guaranteed Manufactured Home Loan?

VA-guaranteed manufactured home loans are made by private lenders such as finance companies. The guaranty means that VA will protect the lender against loss if the veteran or a later owner fails to repay the loan. The amount VA will guarantee is 40 percent of the loan amount or the veteran's available entitlement, up to a maximum amount of $20,000. The guaranty amount is not the same as the amount a veteran can borrow (see question concerning loan amounts).

Who is Eligible for a Manufactured Home Loan?

All veterans with sufficient qualifying service subsequent to September 15, 1940, including service in the Selective Reserve, and active duty service personnel who have served continuously for at least 90 days are eligible for manufactured home loans. When an ending date is set for the Persian Gulf War, those who enter on active duty after that date must complete more than 180 days of continuous active duty. Additional details are contained in VA Form 26-1880, Request for Certificate of Eligibility for VA Home Loan Benefits; VA Pamphlet 26-4, VA-Guaranteed Home Loans for Veterans; or may be obtained by contacting the nearest VA regional office or center.

How is Eligibility Determined?

A veteran may request a Certificate of Eligibility from the nearest VA regional office. This request should be made on VA Form 26-1880, Request for Certificate of Eligibility for VA Home Loan Benefits, and accompanied by the discharge or separation papers (DD Form 214), or evidence of current active duty status.

your home within a reasonable period of time after closing the loan;
You must have enough income to meet the payments on the lo

What are the Requirements for Loan Approval?

To obtain a VA loan, the law requires that:

You must be an eligible veteran who has available home loan entitlement;
The loan must be for an eligible purpose;
You must occupy or intend to occupy the property as your home within a reasonable period of time after closing the loan;
You must have enough income to meet the payments on the loan, cover the costs of owning a home, take care of other obligations and expenses, and still have enough income left over for family support (a spouse's income is considered in the same manner as the veteran's); and
You must have a good credit record.
What is the Maximum Amount a Veteran May Borrow?

The maximum loan amount for a new manufactured home is the lesser of the following:

95 percent of the purchase price of the property securing the loan, plus the VA funding fee, or
Determination of the manufacturer's invoice cost, plus or minus the cost of any items added or removed by the dealer, plus certain other costs (up to certain maximums), plus the VA funding fee.
The maximum loan amount for a used manufactured home or a lot and/or necessary site preparation is determined by appraisal.
Additional information on maximum loan amounts may be obtained from the nearest VA regional office or center.
What are the Loan Repayment Terms?

The maximum terms for manufactured home loans are: 20 years and 32 days for a single-wide unit or a combination single-wide unit and lot; 23 years and 32 days for a double-wide unit only; 25 years and 32 days for a double-wide unit and lot; and 15 years and 32 days for a lot only on which to place a manufactured home you already own.

What is a Manufactured Home for VA Loan Purposes?

A manufactured home is built on a permanent frame and is made to be moved in one or more sections. It must be built to be lived in year round by a single family and there must be permanent eating, cooking, sleeping and sanitary facilities. A single-wide manufactured (mobile) home must be at least 10 feet wide, with a minimum floor area of 400 square feet; double-wide units must be at least 20 feet wide, with at least 700 square feet of floor space.

A modular home is not the same as a manufactured home for VA purposes. Although the parts or sections of a modular home are built in the factory and then moved to the building site, the home must still be put up and completed at the building site. You may, however, obtain a loan to purchase a modular home under VA's regular home loan program. (See VA Pamphlet 26-4, for information about that loan program.)

What Types of VA Manufactured Home Loans are Available?

You may use a VA-guaranteed loan to:

Buy a manufactured home and/or lot
Buy and improve a lot on which to place a manufactured home you already own and occupy.
Refinance a manufactured home loan in order to buy a lot.
Refinance an existing VA manufactured home loan to reduce the interest rate.
Where Must a Manufactured Home be Located?

Any rental site, or lot owned or to be purchased by the veteran which has been approved by VA.

What Factors Should be Considered in Choosing a Site?

If you are placing a manufactured home on land you are buying or already own, consider how far away the utilities are and the cost of hookup. If service from a public or community water or sewage system is not available, find out if the ground water and subsoil conditions are satisfactory for an individual well and/or sewage disposal system.

If you are buying a manufactured home that will be placed in a park, find out about the rental cost, miscellaneous services, and other rules and requirements established by the owner of the park.

Remember, if you want to move your home at a later date, you will need a professional mover and the costs involved will be expensive.

How Does a Veteran Go About Getting a Loan?

You should:

Get a Certificate of Eligibility from the nearest VA regional office or center if you have not already received one from VA.
Find a manufactured home which meets VA standards.
Arrange for rental or purchase of a manufactured home lot.
Arrange a VA loan through the dealer or apply directly to a lender for a VA loan.
What is the Interest Rate?

The rate depends on market conditions. VA does not set the interest rate.

Can the Interest Rate be Changed?

Once a loan is made, the interest rage generally remains the same for the life of the loan. However, if interest rates on manufactured home loans go down, a veteran who still owns a manufactured home obtained with a previous VA loan may apply to a lender for a new VA loan to refinance the first loan at a lower interest rate.

Is a VA-Guaranteed Loan a Gift?

No. It must be repaid, just as you must repay any money you borrow. If you fail to make the payments you agree to make, you may lose your home through foreclosure, and you and your family would probably lose all the time and money you had invested in it. In addition, if the lender takes a loss, VA must pay the guaranty to the lender, and you will be required to repay the amount paid by VA.

If a Manufactured Home is Sold, Can the VA Loan be Assumed?

Yes. However, for loans made after March 1, 1988, the veteran is required to apply to the holder of the loan for approval of the assumption and release from liability. If the loan was obtained prior to that date, it may be assumed without the approval of the loan holder or VA, but the veteran will usually remain liable on the loan unless he or she applies to VA for a release from liability and VA grants the release in writing.

Will a Release of Liability Restore the Entitlement the Veteran Originally Used in Getting the Loan?

No. To have entitlement restored, the veteran must dispose of the manufactured home and/or lot and the loan must either be paid in full or assumed by a qualified veteran-transferee who agrees to substitute his/her entitlement for that used originally by the selling veteran. Restoration or substitution of entitlement is not automatic. You must apply for restoration of entitlement by completing and returning VA Form 26-1880 to any VA regional office or center. Applications for substitution of entitlement must be requested from the VA office that guaranteed the loan.

How Can a Veteran Get a Release From Liability From VA?

The veteran will be released from liability on the VA loan if you lender or VA determines that the loan is current and the purchaser of the property is able to make the payments, and assumes full liability on the loan and all the veteran's obligations regarding the loan. For loans closed prior to March 1, 1988, the application forms for a release from liability must be requested from the VA office that guaranteed the loan. For loans closed on or after March 1, 1988, the application forms must be requested from the lender to whom the payments are made.

Can a Veteran Get More Than One VA Manufactured Home Loan?

Yes, if you qualify for restoration of entitlement, or you have enough entitlement left to buy another manufactured home and you have disposed of the previous manufactured home.

Financing Options for Manufactured Home Buyers

Financing a manufactured home requires a slightly different approach than financing a site-built home. It is surprising how many options are available for the purchase of a manufactured home. The most common financing is arranged through the retailer from whom you purchase the home. However, potential homebuyers can choose to work with any lending institution to secure a loan for a manufactured home purchase.

Manufactured homes are usually financed as personal rather than real property when the home is being sold separately form the land. Manufactured housing lenders also provide programs for the homebuyer who will secure the purchase of their home with land, often called land-home financing.

Personal property loans typically have a higher interest rates (usually 2 to 3 percent) than a real estate mortgage loan. These higher rates reflect the manufactured home lender's higher cost of providing these loans compared to the mortgage lender's cost of providing real estate loans. Making a higher down payment or offering land as collateral for the loan may help to secure a lower interest rate, depending on the loan programs which vary by lending institution.

It is possible to purchase a manufactured home and the land together as a single real estate transaction, similar to the purchase of a site-built home. Purchasing a manufactured home and land with a real estate mortgage loan can also lower the interest rate.

Like a real estate mortgage loan on a conventional site-built home, terms for a loan to purchase a manufactured home vary from one lending institution to the next. Most lenders require a minimum down payment of 5 to 10 percent and have loan terms ranging from 15 to 30 years. While these are typical loan terms, different programs are offered by various lenders.

Federal Housing Administration-insured and Department of Veterans' Affairs-guaranteed loans, called FHA and VA loans, also may be available to manufactured homebuyers, depending on the lending institution. These types of loans may have lower interest rates or lower down-payment requirements. They require more paperwork during the credit application and approval process; consequently, approval of the loan takes longer.

The high quality construction standards of today's manufactured homes have opened up new financing options to potential homebuyers. Traditional lenders have increasingly recognized the quality construction standards of manufactured homes and are offering mortgage financing to manufactured homebuyers.

Potential homebuyers looking to get a real estate mortgage loan for a manufactured home should know that the Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, known as Freddie Mac, allow their lenders to pool manufactured home real estate loans in with other residential real estate loans. Telling a lender about these programs could help to erase any lingering skepticism about financing options for manufactured homes.

Additionally, some land-lease manufactured housing communities now offer leasehold estate financing. These loans have special prerequisites and are rather new. The home in these transactions is often purchased at the site of the community.

Conventional wisdom once said that manufactured homes were more difficult to finance. In reality, when these homes are manufactured according to the HUD Code and located on permanent foundations, they can be financed with real estate-type 30-year mortgages, as well as chattel mortgages for homes located in land-lease community settings.

Manufactured homes are factory built to stringent specifications and buyers seeking financing are likely to find that many bankers are familiar with the home and understand its value. Some mortgage lenders will offer a lower interest rate for manufactured homes that have energy saving features.

© 2007 by Manufactured Housing Institute. All rights reserved.