Although manufactured homes can be used as collateral to obtain a reverse mortgage, there are certain guidelines that must be followed to qualify the property.
A manufactured home must have been built after June 1976. On that date, certain guidelines took effect that determined how a home had to be manufactured, how the foundation had to be built, and how the home had to be strapped to the foundation.
If your client’s home was built prior to June 1976 don’t even try to do a reverse mortgage.
The U.S. Department of Housing and Urban Development (HUD) requires a foundation inspection by a qualified engineer, or state licensed architect. The latter must be licensed in the state where the property is located. If you work in a rural area where it may be difficult to locate an engineer, you should contact either a mobile home manufacturer or seller because they may be able to steer you to a qualified engineer.
FHA guidelines require that a HUD tag be attached to the manufactured home. Usually an appraiser can locate the tag and the ID number. If no tag is visible—for example, if a senior has added siding or a room addition—a loan officer can verify whether one was issued by going online to HUD’s web site.
If the manufactured home is bound by a lease (i.e. leasehold) that can cause problems, because the title may be in the name of the builder, instead of the senior.
A manufactured home must be taxed as real property, not personal property, which seniors do quite often, because the taxes are cheaper. If the latter happens, the property must be re-titled as real property, which can delay a closing depending on what the state requires.