Manufactured Home Park Communities remain the most popular setting for manufactured homes. Although many parks are rental and leasehold, for loan and collateral purposes, lenders generally require that the owner of the home also own the land upon which the home sits. This is a land-home transaction. Until recently the park also had to be classified as a Subdivision or a Planned Unit Development in order for manufactured homes to qualify for FHA-insured loans. Good news because condominium-classified parks are now eligible if the park has also been HUD-approved. To see if a park is on the HUD approved list, click here. All other requisite conditions for any manufactured home loan must also be met.
OnTheLevel is constantly updated on the latest information and will be able to assist borrowers and realtors understand the approval timeline.
Q. Does our condo park and association need to become approved by FHA or HUD before FHA reverse mortgages can be insured?
A. Yes. The HUD Mortgagee Letter issued new guidelines for manufactured housing that included eligibility for manufactured homes in condominium projects. According to the letter “all manufactured housing project approval requests must be processed by the Home Ownership Center (HOC) that has geographical authority over the property to be insured.”
Q. Why should our HOA consider getting HUD approval?
A. Without approval, individual homeowners in your park cannot obtain any FHA-insured loans which include Reverse Mortgages. Especially now, in the current mortgage crisis, FHA guaranteed loans are the principal means to qualify for and afford a low cost, low interest home loan. FHA loans can be used for home purchase (both forward and reverse). These loans may also be used by your current homeowners for the purchase of new manufactured homes to replace old units that do not qualify for FHA loans. In the current economy many homeowners are struggling to make ends meet.
Q. Does FHA/HUD require our HOA to carry the homeowner’s insurance policy on the individual units in our park?
A. No. The individual homeowner is responsible to carry his or her own insurance policy. In cases where the condominium homeowners association carries a blanket policy for the common areas that also covers the risk for individual units, that insurance would be acceptable (assuming adequate coverage).
Q. What is the reserve account requirement for FHA approval?
A. A current reserve study must be submitted with the application that shows that the reserve account is separate from the association’s operating account and that it is at least 60% funded.
Q. Can individual homeowners submit applications for reverse mortgages through a lender before the condominium approval is issued by HUD?
A. No. Individual reverse mortgage application case numbers may not be assigned until the condominium is placed on the approved list. Individual homeowner application dates must occur after the date the condominium is placed on the approved list.
Q. What are the foundation guidelines that must be met?
A. The standard foundation requirements of all other FHA-insured loans must apply which means an engineer’s certification is required on every foundation.