Reverse Mortgage Guidelines For Manufactured Homes

A few weeks ago I received an email from someone with questions about manufactured housing.  Below is a copy of the email:

I am trying to help my mother select a used manufactured home in a senior community which will qualify for a reverse mortgage when she needs one down the road. I have searched everywhere, but haven’t found the HUD rules for which ones qualify and which don’t. The HUD website only states that some qualify. Of the 2 reverse mortgage brokers that I have spoken to, one has mentioned the removability of the axle, the other a manufactured after 6/15/76 date. I’d really like to get a look at those rules myself.

I sent an email to JB Nutter regarding the question and Mark Bradford gave me a response.  Below are HUD’s list of requirements for eligible Manufactured Homes and Mark’s response:

  1. At least 400 square feet minimum floor area
  2. Built after June, 15 1976, to the Federal Manufactured Home Construction and Safety Standards as evidenced by an affixed certification label.
  3. Property is classified and taxed as real estate and is designed to be used as a dwelling with a permanent foundation built to FHA requirements.
  4. Built and remains on a permanent chassis.
  5. Mortgage covers both the unit and its site, and has a term of not more than 30 years from date that amortization begins.
  6. Finished grade beneath home is at or above the 100-year flood elevation. 

Basically, they have to be at least 400 sq. feet, and built after June 15th, 1976.  You then have to have a structural engineer inspect the foundation, and make sure that it complies to FHA specifications.  If it isn’t, then it has to be changed to conform.   If it is, then you get the report from the engineer stating that it complies and you are good to go.  The appraiser will also verify it has the correct tags and so forth. 

It also must be tied down to a permanent foundation the way the FHA wants it.  You may want to contact a structural engineer that conducts those types of inspections, if you want more specifics on that and/or an FHA appraiser that is familiar with them.

I have done several manufactured homes and they almost never are tied down correctly and have to be done so.  Another thing is, that if the manufactured home is moved from it’s original placement, it becomes permanently ineligible to be insured by the FHA, so you will have to be careful if you buy a used manufactured home. 

If you buy the used home and move it to another site, you will not be able to do a HECM Reverse mortgage, under the current rules.  The other thing you have to look out for, and this is addressed in the other attachment, is that if it is in a flood zone, then the finished grade beneath the home, must be above the 100 year flood plane.  This condition is satisfied with a survey.  I have ran into this before also, and the finished grade had to be changed to comply with this condition.

Thanks Mark!

If you have any other manufactured housing experience, leave your comments below.

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