Are Mobile Home Loans more Difficult than Real Property Loans?
Many people are curious, or stumped, when it comes to the differences between loans for mobile homes and loans real property site built homes. A lot of lenders that finance condominiums and single family real property homes do not lend on mobile homes, and a lot of people do not understand why. Well, there are some big differences in the properties themselves, and these differences affect the types of loans that can be done on the homes.
Basically, when you are looking at getting a loan, you need to put down collateral for that loan. The collateral for your loan is going to be the main factor where there are differences between a Mobile Home and Manufactured Home Loan and traditional “stick built” home mortgages. Just like how getting a loan for your vehicle and getting a loan for your business are two different types of loans, so are loans for mobile homes and real property site built homes.
In the United States, a mobile home loan is also referred to as a “chattel mortgage”. Chattel mortgages are securitized transactions, governed by Article 9 of the Uniform Commercial Code. The lender on a chattel loan secures the loan with a mortgage over the chattel, or the Mobile Home. Because chattel is defined as personal property, movable or immovable, for example, a book, a coat, a pencil, growing corn, a lease, a mobile home is considered a piece of personal property that could, for all intents and purposes, be moved; often times mobile homes are considered as riskier collateral than a real property, site built home.
Traditional homes that are built on site and include real property are a bit different from chattel, or mobile home loans. A mortgage loan for this type of home is a loan secured by real property through the use of a Note, which is a document that evidences the existence of the loan. Real property mortgages can and should be additionally evidenced by a Deed of Trust document, which is recorded with the County Recorder. The Recorder is a county official that insures that instruments are recorded, giving public notice of such transactions. The Deed of Trust will be recorded with the County Recorder of the County where the real property is located. Because there is no real property ownership involved with a mobile home loan, a lender cannot record any documents against the title to a mobile home, to further secure the loan.
Mobile Home Mortgages are not recorded or secured in the same fashion as real estate, or real property loans. The title information for mobile and manufactured homes is maintained by agencies directed by The United States Department of Housing and Urban Development. In the State of California, The Department of Housing has “Registration and Titling” offices that are specifically assigned to maintaining the title information on Mobile and Manufactured Homes. The homeowner, or purchaser, of a mobile home shall be shown on the title as the registered owner, and the lender shall be shown as the Legal Owner to the mobile or manufactured Home. When a mobile or manufactured home is encumbered by a Legal Owner, the actual Certificate of Title to the mobile home is issued to the lender, or legal owner. The homeowner, or borrower, is issued a Registration Card, which evidences the homeowner´s Registered Ownership interest to the mobile home. With site-built, real property homes, the homeowner retains a Grant Deed to evidence their ownership in the home, and the lender maintains the Note and Deed of Trust to evidence their ownership interest in the real property home.
It´s helpful to understand these title and security differences, as they play a major role in determining the actual loan type, qualifying agents and the loan process itself. Manufactured Homes and real property site built homes are not only built differently, but titled differently and mortgaged uniquely as well.
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