Manufactured homes can bring buyers into market

David Weinhold , www.venturacountystar.com - September 24, 2006

Many times, home prices are too high for consumers to realize the dream of owning a home. There is a way, however, to begin building that dream through the purchase of an affordable manufactured home.

The bank I work for has helped more than 1,900 families in the past six years purchase or refinance manufactured homes mostly in mobile home parks up and down the coast of California. Many of these loans have been to first-time home buyers who weren't able to afford the growing prices of typical single-family homes.

The manufactured housing lending program that has been so successful is based on combining Fannie Mae guidelines with common sense underwriting. Loan agents that specialize in manufactured housing have a unique understanding of the product, how it works and what to look for in qualifying a borrower. The process that the home buyer goes through mirrors that of buying a traditional home. The agents help guide borrowers through the qualification process, assist in obtaining approval for the borrower at the park, meet with Realtors and work closely with escrow and title companies.

The key to successful manufactured housing lending is that the loans are underwritten like real estate loans even though the manufactured house is technically personal property. Not all lenders handle these loans in this way; many consider them consumer loans, much like buying a car.

The reality is that the buyer is purchasing their home - the place they will live and raise a family. It may be their first home purchase and, as such, they should know the process. Some day, they may sell their manufactured home for a single-family home, and I believe that they will be better equipped to make that purchase due in part to the process they went through in buying their first "home."

To purchase a manufactured home through the program offered by my bank, the buyer needs a minimum 20 percent down payment. A termite inspection and clearance are conducted to ensure that the borrower is buying a structurally sound manufactured house.

A full appraisal is ordered to validate market value and sales price. The underwriters look at the borrower's entire picture - from credit history, to capacity to repay the loan, to collateral. Finally, the loans are closed by escrow or title companies that guarantee the transfer of title to the new owners, just as with a traditional home purchase. Since this program was developed locally, written with the bank's own guidelines, these loans typically can be approved very quickly, and the rates are competitive in the industry.

Loan terms vary to help meet the financial needs of the borrower, from interest-only, to 20- and 30-year amortized with 10- and 15-year calls, to 15- and 20-year fully amortized loans.

I am in the business of helping borrowers realize the America dream, and I get a very satisfying and rewarding feeling when I am able to achieve that by showing people that they can own an affordable home along the Central Coast of California.