Don't move that home!

I cannot tell you how many people find out from me that their "great idea" was really a huge mistake. I am talking about moving a manufactured home. People find a nice piece of land and put a used manufactured home on it and think they made a great decision when in fact, it was not.

You see, once a manufactured home has been moved (other than the first time when it is set up on the property) it is no longer eligible for Fannie Mae, Freddie Mac or FHA financing. Those 3 make up the majority of manufactured home lending. Only VA (and not all lenders) will accept a home that has been moved (with the exception of some lenders like Wash Fed that keep their loans in their own portfolio).

What is wrong with moving a manufactured home and why are the lenders not lending on them? To answer the first question, if done properly, there is nothing wrong with moving a manufactured home. It will not affect the structural integrity of the home. You can move a stick built home and it is still eligible for financing. The real questions is, why will lenders not lend on them. The answer is, they were all sold (except the VA who did not go along with it) on the fact that moving them not only affects the structural integrity but will lower the value of the home. Fannie, Freddie and FHA bought it and now, no longer will they accept a home that has been moved.

But who would sell them on this and why? It wouldn't be an engineering group, they know better. There is only one group it could be and when I was told who it was (by someone who was part of the lobby), it made perfect sense...manufactured home dealers. Think about it for a minute. If your choice was to move a used home on to your lot but in doing so, reduces your buyers to only people paying cash it essentially makes your home unsaleable. So do you move on a used, unsaleable home or do you just put a new home on your lot that you can sell with financing down the road. You are going to put the new home on the lot and who benefits from that? The manufactured home dealer.

Now that hasn't stopped the market for used manufactured homes. They are often purchased and moved into a park where the financing is a Chattel loan and not conventional real estate mortgages. For those of you who have always wondered why you cannot finance a manufactured home that has been moved more than once, now you know and most importantly, now you know why.