One of the most frustrating things for manufactured home owners in the last few years has been the changing emphasis on type of foundations on their understructures in order to qualify for loans. Frustrating because as of a few years ago this was not a requirement so many homeowners either bought a home or refinanced a home without the "foundation" restriction and now either they are selling or refinancing and they are finding a different lending environment. It catches many by surprise! At pace with the more restrictive lending requirements for borrower credit qualification, the manufactured home itself may also have to meet a lender's own fitness standards. Some of this has been created by the bad rap manufactured homes seem to get by the sensational press focusing on flying, collapsing or burning manufactured homes during every wind, hurricane or earthquake disaster. However, another part of the equation is the unique methodology of registration and titling of manufactured homes, in some cases leaving the lender without a security interest in the home.

Manufactured homes are the only types of dwelling units that can either be classified as personal property (aka chattel) or real property. Interesting, the determination of how the home can be classified is often determined by the type of support foundation under the home. Removal of the tires and axles is only one part of the equation. In most states, some sort of connection between the ground and the home is a requisite to title the home as real property. Depending on the state, this can range from simple to complex. In California for instance, a permit has to be pulled at the local licensing jurisdiction presenting the foundation plans that have been stamped by an engineer. It then has to be inspected by a building inspector, then a Department of Housing and Community Development (HCD) Form 433A has to be signed by the same building official and then recorded at the County Recorder's office. On FHA-insured loans the process goes a step further. The foundation must meet the guidelines of the Permanent Foundation Guide to Manufactured Homes, HUD Publication 1996 and only a licensed engineer can certify to the foundation worthiness. Therefore each understructure and its certification is done on a case- by-case basis.

It is important to understand that this doesn't mean that if a home's original installation was not done to the standard that it can't be retrofitted fairly easily and inexpensively. Thankfully, the home does not have to be raised and have new cement walls installed to support the perimeter. Manufacturers throughout the nation have created retrofit systems that often meet not only the local or state requirements for permanent affixation, but may meet the HUD standards as well.

In many cases the age of the home is at issue. Most lenders want the home to meet Housing and Urban Development (HUD) standards which means the home will at least be June 15, 1976 or newer. To signify the homes age worthiness, some lenders require proof of the existence of the HUD label (the metal plate affixed at the end of each transportable unit).

If your lender is requiring an engineer's certification, make sure the engineer is familiar or specializes in manufactured homes. If not, he/she may misinterpret the HUD Handbook or may not be familiar with the many fairly economical retrofit systems available. We have seen many engineers recommend a retrofit fix that may exceed $20,000 when a pre-engineered system might be in the range of $3,000-$6,000 depending on the size of the home. Or if the engineer is not able to discern the difference between a HUD or pre-HUD home, he or she may recommend costly upgrades that may be counter-indicated if the underwriter will turn down the home because of its age.

Navigating through the loan process these days on any loan is more tiresome. The manufactured home loan can be even trickier unless you are dealing with seasoned professionals that can balance the requirements of the building departments, the underwriters and the federal government. On The Level is such a company that partners with lenders, engineers, manufacturers and governmental agencies to get the job and paperwork done seamlessly for the borrower.