Once a Trailer, Always a Trailer...Editor's Comments: Some home loans applications don't have happy endings. This interesting real-life story reveals a problem and a remedy for you. Once a Trailer, Always a Trailer...by: Bethany D'Souza
There will always be that one home loan that doesn’t fit the mold and slips through the cracks. This happened to me not too long ago on a very difficult deal involving a single family home, a low credit score and the request for 100% financing. Editor's Comments: We don't always see the problems going in, but the best idea is to do your homework about the house. The loan seemed very straightforward and not too different from something I had worked on before. The only hint of an obstacle was the fact that this house was a double wide trailer that was set onto a foundation and had an addition of a family room and a fireplace built by the original owners. Although the MLS listing stated manufactured home, I was provided information documenting a change in status by the state of Texas for this property to be considered a single family home. I also had an appraisal which did not indicate a double wide trailer. I was in an excellent place to begin working on this financing. By stating a structure as a manufactured home, a buyer cannot receive 100% financing and the house is supposed to appraise for less. This forces a borrower to consider alternate financing such as a mortgage on the land or placing a deposit on the property to lessen the risk to the lending bank. We were given a green light on every step of the way. My client had made arrangements for movers to pick up his possessions, move all phone and utilities to the new residence, and was packing his bags for his 2 day trip to move into the area when I received the dreaded call of rejection from the final underwriter. The bank said the photograph of the property still looked like a trailer to them. They denied the loan- 48 hours before closing. This was among the most difficult phone calls I had to make in my career. This is the only closing in my career that was not met because of such a dilemma. I learned one of the most valuable lessons through this particular loan; no matter what you do to remodel or rebuild on a manufactured home it will always only be a manufactured home. If the bank I was working through to process this loan had told me this before sending this loan through underwriting, I would have saved one family from a very scary and anxious situation. I am sincerely grateful to have been lucky enough to have a rational and understanding client. My buyer’s fate turned out to be alright. He ended up blindly moving to the Dallas area to live in a hotel for 10 days. We pulled out of the contract one day before the closing, and we were able to find him a property that did match the loan he was approved for. The only difference is that house number 2 had never been a trailer. From the time the contract was written, we were able to have him into he home 4 days later. On a positive note, if you are looking to purchase acreage, look for land that has a solid structure on it or nothing at all. A manufactured home on the property can cause your rate to rise and it increases your risk to the lender. You are better off having just land than land plus a trailer. If you do live in a double wide modular home that has been placed on a concrete foundation, it is still to your benefit to have the State confirm it as a single family residence. This increases the amount you can ask when selling and changes your home insurance coverage. My advice:
Editor's Comments: Mobile home? Hey, who moves those anyway? Laws are changing and so is the lending industry. One day they will be all treated the same. Be sure to shop around for a lender who has some experience like Bethany. Follow our steps today, and be sitting on your own steps tomorrow!TM |
