THE FUNDAMENTALS OF MANUFACTURED LENDING

Transcription

1 THE FUNDAMENTALS OF MANUFACTURED LENDING Last Revised: 03/09/16

2 DISCLAIMER These materials are intended for informational use only. This is neither legal advice nor a substitute for Agency Guidelines. Please do not reproduce, display, or distribute without the express written permission of AFR. This information is subject to change in AFR s sole discretion. Updated AFR guidelines may be accessed on AFR s website, All rights reserved. The AFR underwriter has the right to decline or suspend a file at their sole discretion for any reason allowed by law. AFR is an equal housing lender. NMLS American Financial Resources, Inc., 9 Sylvan Way, Parsippany, NJ,

3 PROGRAM OVERVIEW A Manufactured home is a complete dwelling designed for year-round living and substantially constructed in a factory. It conforms with a National Building Code developed in 1976 by the U.S. Department of Housing and Urban Development (HUD) COPYRIGHT 2016 AMERICAN FINANCIAL RESOURCES, INC. ALL RIGHTS RESERVED

4 AVAILABLE PROGRAMS FHA 203(b) FHA 203(b) Repair Escrows FHA Standard 203(k) and Limited 203(k) FHA Good Neighbor Next Door (GNND) FHA Streamline Refinance FHA $100 Down Program FHA One-Time Close (OTC) TPO, WS, and WD ONLY VA Home Loans VA IRRRL VA One-Time Close (OTC) TPO, WS and WD ONLY USDA Purchase New manufactured homes ONLY (refer to RD Regulations and Guidelines) Fannie Mae and Freddie Mac Fully Amortizing Fixed 4

5 PROPERTY ELIGIBILITY REQUIREMENTS ELIGIBLE INELIGIBLE Constructed after June 15, 1976 Classified as real estate Built and remain on a permanent chassis Designed to be used as a dwelling with a permanent foundation (foundation systems must follow FHA guidelines) Built with a finished grade elevation at or above the flood elevation frequency Situated in fee simple, on land owned by the borrower Not previously installed or occupied at any other site or location Permanently affixed to each transportable section evidencing compliance with the HUD Codes Singlewide manufactured housing is not permitted for Conventional, FHA, and VA One-Time Close (OTC) transactions Manufactured homes in a: Leasehold estate Park not held in fee simple ownership ( trailer park setting) Condominium project Manufactured home that has been moved or traded 5

6 FHA PROPERTY ELIGIBILITY REQUIREMENTS FHA defines a MANUFACTURED HOME as a structure that is transportable in one or more sections, and is designed and constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. All MANUFACTURED HOME units and land must be classified as real estate to be eligible for Title II FHA Insurance. FHA REQUIREMENTS FHA INELIGIBLE Greater than 400 square feet A Singlewide unit is not permitted for the FHA One-Time Close (OTC) loan program FHA Connection, Appraisal Logging Screen, must contain the Manufactured Housing Indicator Singlewide, Doublewide, and Triplewide units permitted FHA Connection, Case Number Assignment Screen must contain the appropriate two-digit Program ID Code 77 - For manufactured housing loans not processed as construction-to-permanent loans (OTC) 36 - For manufactured housing loans processed as construction-to-permanent loans (OTC) 6

7 VA PROPERTY ELIGIBILITY REQUIREMENTS VA defines a MANUFACTURED HOME as a structure that is transportable in one or more sections and is designed and constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. VA ELIGIBLE VA INELIGIBLE Manufactured homes must be, or will be prior to closing, permanently affixed to the foundation and taxed as real property Singlewide, Doublewide, and Triplewide units permitted The borrower must occupy the property as his/her principal residence A Singlewide unit is not permitted for the VA One-Time Close loan (OTC) program Manufactured Housing in a leasehold estate, in a park ( trailer park setting) not held in fee simple ownership or in a condominium project Proposed and properties under construction Follow FHA Manufactured Housing Guidelines Manufactured homes that have been moved or traded are not permitted Properties located in a Coastal Barrier Resources System (CBRS) area, as delineated on a CBRS map, are not eligible as security for a VA-guaranteed loan 7

8 USDA PROPERTY ELIGIBILITY REQUIREMENTS USDA defines a MANUFACTURED HOME as any dwelling unit constructed partially off-site and then transported to a site to be completed and attached to a permanent foundation. USDA ELIGIBLE USDA INELIGIBLE Same requirements as FHA guidelines Property must be located in an eligible rural area Manufactured homes with a manufactured date exceeding 12 months of the purchase agreement contract Cash-out Refinances Singlewide, Doublewide, and Triplewide units permitted Manufactured home must be less than 12 months old, never occupied and must include the site. The date of the purchase agreement must be within one year of the manufactured date displayed on the plate attached to the unit Mortgage Loan must cover both the unit and site 8

9 FANNIE MAE PROPERTY ELIGIBILITY REQUIREMENTS Fannie Mae defines a MANUFACTURED HOME as any dwelling unit built on a permanent chassis and attached to a permanent foundation system. FNMA ELIGIBLE FNMA INELIGIBLE The manufactured home must be at least 12 feet wide and have a minimum of 600 square feet of gross living area Manufactured homes must be a one-unit dwelling that is legally classified as real property Doublewide and Triplewide units permitted The manufactured home must be permanently connected to a septic tank or sewage system, and to other utilities in accordance with local and state requirements Singlewide units are not permitted Manufactured Housing units in a condominium project are not permitted Trade equity is not permitted Traded units are not permitted Investment properties Units that have been moved from its original location Units in a park (AFR overlay) Units located on leasehold estates Properties that are not suitable for year-round occupancy regardless of location The borrower must own the land on which the manufactured home is situated in fee simple 9

10 FANNIE MAE AND AFR PROGRAM DEFINITIONS Fannie Mae defines a MANUFACTURED HOME as any dwelling unit built on a permanent chassis and attached to a permanent foundation system. To be eligible for a cash-out refinance, the borrower must have owned both the Manufactured Home and land for 12 months or more prior to the application date. The value for a cash-out refinance Mortgage is based on the current appraised value of the Manufactured Home and land For a cash-out refinance transaction secured by a Primary Residence, the maximum loan term is 20 years, for Mortgages with LTV/TLTV/HTLTV ratios less than or equal to 65% AFR does not permit any other risk classification other than an Approve/Eligible DU must reflect the property type as manufactured home Singlewide units are not permitted Principal residences and second home dwellings only NOTE: Investment properties not permitted 10

11 FREDDIE MAC PROPERTY ELIGIBILITY REQUIREMENTS Freddie Mac defines a MANUFACTURED HOME as any dwelling unit built on a permanent chassis and attached to a permanent foundation system. FHLMC ELIGIBLE FHLMC INELIGIBLE Built on or after June 15, 1976 Must be built on a permanent chassis Doublewide and Triplewide units permitted Manufactured homes must be a one-unit dwelling that is legally classified as real property The anchoring system must comply with the HUD codes The permanent foundation must be designed in accordance with the manufacturer s instructions or by a licensed professional engineer and meet all local, state, and federal codes The manufactured home must be at least 12 feet wide and have a minimum of 600 square feet of gross living area Manufactured homes located on a leasehold estate Manufactured housing investment properties A manufactured home that was moved from its original site and was previously occupied or installed on a permanent foundation is not permitted A mortgage with proceeds that are used to pay the outstanding balance under a land contract or contract for deed Single width units are not permitted Trade Equity not permitted 11

12 FREDDIE MAC AND AFR PROGRAM DEFINITIONS For a new manufactured home, whether it is affixed to a permanent foundation prior to or after the application date, the underwriter (UW) must obtain a copy of the manufacturer s invoice and Manufactured Home Purchase Agreement To be eligible for a cash-out refinance, the borrower must have owned both the manufactured home and land for 12 months or more prior to the application date. The value for a cash-out refinance mortgage is based on the current appraised value of the manufactured home and land For a cash-out refinance transaction secured by a primary residence, the maximum loan term is 20 years for mortgages with LTV/TLTV/HTLTV ratios less than or equal to 65% HVE s are not permitted on manufactured housing. A 1004C and 1004 MC is required Principal residences and second home dwellings only; investment properties NOT permitted AFR does not permit manual underwrites The ALTA Form 7 endorsement does not ensure the manufactured home has been properly converted to real property. If the state has statutory, regulatory, or formal administrative process for surrendering and canceling a certificate of title, the UW/Lender is responsible for ensuring that all steps necessary to convert the manufactured home to real property have been completed and documentation evidencing the conversion is in the mortgage file 12

13 APPRAISAL REQUIREMENTS AND STANDARDS REQUIRED Form 1004C appraisal form must show evidence of both the HUD Data Plate/Compliance Certificate and the HUD Certification Label The HUD Certification Label, sometimes referred to as a HUD seal or tag, is a metal plate that is affixed to the exterior of each transportable section of the manufactured home The HUD Certification Number appears on each HUD Certification Label and evidences compliance with the Federal Manufactured Home Construction and Safety Standards 13

14 HUD DATA PLATE/CERTIFICATION LABEL REQUIREMENTS What are the requirements for FHA, VA, and USDA? REQUIRED If the HUD Certification Label has been removed, compliance may be evidenced using the HUD Data Plate located near the main electrical panel or in another readily accessible and visible location For a manufactured home that has had the HUD tags removed and/or the appraisal does not reflect the photos, a HUD Label Verification Letter must be ordered through the Institute for Building Technology and Safety a/k/a IBTS ( 14

15 HUD DATA PLATE/CERTIFICATION LABEL REQUIREMENTS What are the requirements for Fannie Mae and Freddie Mac? FNMA REQUIRED FHLMC REQUIRED Presence of both a HUD Data Plate and the HUD Certification Label. If the original or alternative documentation cannot be obtained for both the Data Plate/Compliance Certificate and the HUD Certification Label, the loan is not eligible for delivery to Fannie Mae The Manufactured Home Appraisal Report (Form 1004C) must show evidence of both the HUD Data Plate/Compliance Certificate and the HUD Certification Label As an alternative to the original HUD Certification Label, the lender may be able to obtain a verification letter from the Institute for Building Technology and Safety (IBTS) Both the HUD Certification Label and HUD Data Plate must be present and legible When either the HUD Certification Label or the HUD Data Plate is not present or not legible, Freddie Mac will accept the following as evidence of compliance: HUD Certification Label: A verification letter from the Institute for Building Technology and Safety (IBTS) HUD Data Plate: A copy of the Data Plate or substitute performance verification certificate from the IBTS, or a copy of the Data Plate from the In- Plant Primary Inspection Agency (IPIA) or manufacturer 15

16 ENGINEER CERTIFICATIONS What is an Engineer s Certification on Foundation Compliance? A professional structural engineer must certify with a seal stamped letter that the foundation of a manufactured home meets HUD guidelines specified in The Permanent Foundation Guidelines for Manufactured Homes (PFGMH) September 1996 If the foundation does not meet such requirements, foundation upgrades are typically recommended. Recommendations include approved engineered foundation systems that can be retrofitted in combination with the existing structural components of a manufactured home Manufactured Tie-Downs can provide both the necessary retrofits and/or can assist in the engineering certification process NOTE: The cost of an engineer s certification must be properly disclosed to the borrower 16

17 FLOOD INSURANCE AND ELEVATION CERTIFICATE REQUIREMENTS An Elevation Certificate is required on any property that is in a flood zone. FHA REQUIREMENTS FNMA/FHLMC REQUIREMENTS If any portion of the property improvements (the dwelling and related structures/equipment essential to the value of the property and subject to flood damage) is located within a SFHA, the property is not eligible for FHA mortgage insurance unless: A final Letter of Map Amendment (LOMA) or a final Letter of Map Revision (LOMR) that removes the property from the SFHA is obtained from FEMA If a subject property is located in a SFHA (Zones A or V) and the borrower has obtained or will be obtaining a flood insurance policy with adequate coverage, an elevation certificate is not required NOTE: The loan must qualify with the flood insurance premium included in the DTI. Flood insurance must always be escrowed, regardless of an escrow waiver for taxes and homeowner s insurance OR The lender obtains a FEMA National Flood Insurance Program Elevation Certificate (FEMA Form 81-31), if the property is not removed from the SFHA by the LOMA or LOMR 17

18 EXAMPLE OF ELEVATION CERTIFICATES 18

19 EXAMPLE OF ELEVATION CERTIFICATES 19

20 SUMMARY AVAILABLE PROGRAMS PROPERTY ELIGIBILITY REQUIREMENTS APPRAISAL REQUIREMENTS HUD DATA PLATE / CERTIFICATION LABEL ENGINEER CERTIFICATIONS FLOOD INSURANCE HOUSING ELEVATION CERTIFICATION REQUIREMENTS COPYRIGHT 2015 AMERICAN FINANCIAL RESOURCES, INC. ALL RIGHTS RESERVED 20

21 ABOUT US AMERICAN FINANCIAL RESOURCES, INC. American Financial Resources, Inc. (AFR) is a national residential mortgage lender dedicated to helping homeowners, home buyers, and mortgage professionals achieve their financing goals by delivering innovative mortgage solutions and an unparalleled customer experience. Based in Parsippany, NJ and established in 1997, we are a Ginnie Mae, Fannie Mae and Freddie Mac Seller/Servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. We provide Wholesale and Correspondent mortgage solutions by offering an extensive product catalog with competitive pricing, unique partnership opportunities, and flexible business relationships. We strive to exceed the expectations of our lending partners and nurture healthy, profitable relationships, ultimately providing a simplified mortgage process with the highest levels of customer service. COMPANY HIGHLIGHTS FULL SERVICE MORTGAGE LENDER NATIONWIDE SERVICING WHOLESALE AND CORRESPONDENT CHANNELS DIVERSE DELIVERY OPTIONS INCLUDING FHA, VA, USDA, FANNIE MAE AND FREDDIE MAC RANKED #1 IN 203(k) LENDING FOR SPONSORED ORIGINATIONS* ONE OF THE NATION S LEADING RENOVATION AND MANUFACTURED HOME LENDERS DEDICATED SALES AND OPERATIONS SUPPORT *Neighborhood Watch, US Department of Housing and Urban Development, January 31,

22 CONNECT WITH US AMERICAN FINANCIAL RESOURCES, INC. If you are a mortgage professional new to American Financial Resources, Inc. Wholesale Division (AFR Wholesale), we welcome the opportunity to discuss our programs with you. For our current Lending Partners, we want to hear from you. Please contact us directly with your comments, questions, and feedback. VISIT US AFRWHOLESALE.COM LINKEDIN FOLLOW US CALL US TOLL FREE: FACEBOOK FOLLOW US US SALES@AFRWHOLESALE.COM TWITTER FOLLOW US LIVE CHAT WITH US CLICK TO CHAT VISIT OUR WEBSITE FOR THE FULL DEPARTMENT LIST 22

23 Photography by: [lindasj2] 123RF.com [Stanislav Popov] 123RF.com 23

24 THANK YOU AFRWHOLESALE.COM