Manufactured home...I don't understand the problem?

[Anonymous]

I don't understand why it is so difficult to get financing for a doublewide home on a permanent foundation?  FHA backs these loans NO DIFFERENTLY than any other FHA loan so why won't anyone finance them?  When I ask the lenders for an explanation they say "its just our policy"....but it's a policy that doesn't make sense since FHA insures them, how can they be any more risky?

[Anonymous]

That's a really good question. 

There are three possible issues that come up there--sometimes it is solely the property type, sometimes it is the loan amount.  The third issue is whether you are going direct or through a broker.  It's not 2003, banks don't let brokers originate the higher risk products in their portfolio.   It's like the 580 FICO, some banks will do it, but they don't want brokers originating those for them. 

As for why, here's the risk:  HUD has a thing called Neighborhood Watch.  It basically tracks the default rates of lenders--it's basically the figure that FHA uses to vote the worst lenders off the island.  The risk for a lender is not selling one particular loan, it's the risk of being on the bad end of the Watch report and losing the FHA lending going foward.

Have you been talking to brokers or lenders?

[MattH]

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@Anonymous wrote:

I don't understand why it is so difficult to get financing for a doublewide home on a permanent foundation?  FHA backs these loans NO DIFFERENTLY than any other FHA loan so why won't anyone finance them?  When I ask the lenders for an explanation they say "its just our policy"....but it's a policy that doesn't make sense since FHA insures them, how can they be any more risky?

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Unfortunately the statistical reality is that manufactured housing is higher risk for the lender.  Partly that's a function of who buys them and where they live; also it is because manufacture homes depreciate in value over time whereas conventional houses generally appreciate in value over time (except of course when the market collapses).