Topic: Manufactured Homes
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Does our mortgage covering manufactured homes and the underlying land need to include a description of the manufactured homes with the legal description? The manufactured homes have been converted to real property.
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We are not aware of any law requiring a legal description to reference manufactured homes that have been converted to real property. However, if your title company recommends including such a reference in the legal description, we are not aware of any reason to reject their recommendation. Additionally, secondary market purchasers of the mortgage loan…
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A borrower obtained a closed-end line of credit from us secured by a manufactured home community. The borrower intends to use the line of credit to purchase manufactured homes and place them in empty lots in the manufactured home community securing the line of credit. If the borrower is unable to sell the manufactured homes outright, they will obtain a closed-end loan from us secured by the manufactured home, and their line of credit will be paid down in an amount proportional to the closed-end loan. Would the line of credit be exempt from HMDA reporting as temporary financing? Also, if the borrower pays off the line of credit with a new line of credit secured by the same manufactured home community, would this be HMDA reportable?
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We believe that the line of credit is HMDA reportable, as the temporary financing exception would not apply to the loan you described. Additionally, we believe your new line of credit would be a HMDA reportable “refinancing.” Business or Commercial Purpose Exception Regulation C states that a closed-end mortgage loan or an open-end line of…
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We have a potential loan customer that wants to purchase a mobile home park and the mobile homes located in it. We want to extend a mortgage loan to them secured by both the land and the mobile homes they will be purchasing. Do the certificates of title for the mobile homes need to be surrendered to the Secretary of State for us to extend this mortgage loan? If so, is there an exemption from this requirement if the mobile homes are located in a mobile home park?
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We believe that it is necessary to surrender the certificates of title for the mobile homes, among other required steps, in order to extend a mortgage loan secured by a manufactured (or mobile) home as real property (with the underlying land). There is no exemption from these required steps for mobile homes located in a…
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A customer who obtained a manufactured home loan at a different institution would like us to refinance the loan. Can we do this if the manufactured home that secures the loan has not been converted into real property? The new manufactured home loan disclosure required under the Consumer Fraud and Deceptive Business Practices Act implies that we cannot.
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We are not aware of any law or regulation that would prohibit you from refinancing a loan secured by a manufactured home that has not been converted into real property — provided that the terms of your customer’s note do not prohibit refinancing. The Consumer Fraud and Deceptive Business Practices Act was amended last year…
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Does the new requirement to provide a mortgage disclosure for purchases of manufactured homes apply to loans secured by “park models” (which do not move, but are built on a chassis and often have an enclosed skirting around them)? We lend to residents of a recreational village where most borrowers own the land the park model sits on, but some may lease the land.
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No, we do not believe the new disclosure requirement applies to “park models” (also known as “park model recreational vehicles”), which we do not believe are considered “manufactured homes” under the Mobile Home Park Act. Provided that the park models are not used for permanent habitation and meet the definitions of “park model” discussed below,…
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We received notice that the Consumer Fraud and Deceptive Business Practices Act has been amended to require lenders or their agents to provide a new disclosure pursuant to Section 2WWW when offering terms for a mortgage note for the purchase of a manufactured home. Does this provision apply to banks? Section 2BB indicates that the Consumer Fraud and Deceptive Business Practices Act does not apply to banks.
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Yes, this provision applies to banks when offering mortgage loans for the purchase of manufactured homes that have not been deemed to be real property, and we do not believe the exemption under Section 2BB is applicable to this requirement. The disclosure requirement in Section 2WWW of the Consumer Fraud and Deceptive Business Practices Act…
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We have a branch in Illinois and would like to know when the new Illinois manufactured home purchase disclosure (effective January 1, 2022) must be provided — at the time of application or before the loan closing?
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We believe that the disclosure must be provided before the loan closing, as it must be provided “when offering terms for a mortgage note for the purchase of a manufactured home . . . that has not been caused to be deemed to be real property.” Based on the wording of the statute, we do…
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Does a mobile home loan need to comply with Regulation Z’s higher-priced mortgage loan (HPML) and ability-to-repay (ATR) requirements even if the mobile home is not affixed to land? If yes, how do we show compliance? Our mobile home loan is secured by only a promissory note with title and is not secured by a mortgage.
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Yes, we believe that a loan secured by a mobile home used as a residence must comply with Regulation Z’s HPML escrow and ATR requirements, even if not affixed to land. However, we do not believe a loan secured by a mobile home needs to comply with Regulation Z’s HPML appraisal requirements. Under Regulation Z,…
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Fannie Mae requires a UCC Financing Statement to be filed on manufactured homes if the state requires it. Does Illinois require a UCC Financing Statement to perfect a lien on a manufactured home, or is a mortgage sufficient? If a UCC Financing Statement is required, should it be filed with the Secretary of State or with the county recorder, and must it be filed within twenty days of the debtor taking possession of the home?
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No, Illinois does not require the filing of a UCC Financing Statement to perfect a lien on a manufactured home. Rather, for a manufactured home that has been deemed to be real property, a lender should perfect its lien by recording a mortgage. For a manufactured home that is personal property, a lender should follow…
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Our title company has advised us that title to a mobile home securing a mortgage needs to be surrendered only if the loan will be sold on the secondary market, and that any loans we keep in-house are exempt from this requirement. Is that correct?
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No, if your security interest in a mobile (or manufactured) home will be perfected by a mortgage on the home, the owner must surrender the certificate of title (or Manufacturer’s Statement of Origin, if applicable) to the Illinois Secretary of State and comply with the other steps necessary for the home to be deemed real…