I pride myself on keeping abreast of the changes that affect my Buyer’s and Seller’s. These changes could be related to financing, change in county code, legislation, underwriting guidelines, real estate commission rule and form changes as well as many other areas. Recently, I was faced with an issue that I had not encountered before and I want to share my experience with you as this may save both you and your Buyer or Seller clients a lot of time, effort and inconvenience.
I recently had a 1994 manufactured home under contract. The home was purchased directly from Eagle Homes in Durango and was placed on the building site by them in 1994 and has never been moved. The foundation and support piers were also installed by them. The problem came when the lender requested a FHA Foundation Certification. When doing an FHA loan (or USDA as they follow FHA underwriting guidelines) on a manufactured home that was placed on the foundation prior to 2000 (guidelines are dated 1996 but local lenders say certifications are only being requested on pre 2000 homes), all underwriters will be requiring this certification. Below is an excerpt from the FHA Guidelines stating what the requirement is:
All foundation systems, new and existing, must meet the FHA guidelines in effect at the time of the certification. The current guidelines are published in the Permanent Foundations Guide for Manufactured Housing (HUD-4930.3G), dated September 1996. A certification attesting to compliance with this handbook must be obtained from a licensed professional engineer or registered architect. A copy of the certification must be included in the lenders loan file and the insuring binder when submitted to HUD/FHA.A. Certification attesting compliance with HUD’s PFGMH must be:1. completed by a licensed professional engineer or registered architect, who is licensed/registered in the state where the manufactured home is located;
2. site specific and contain the engineer’s or registered architect’s signature, seal, and/or state license/certification number. In states where seals are issued, the seal must be on the certification.
3. the foundation certification, showing that the foundation meets the guidelines published in the PFGMH that were in effect at the time of certification, is acceptable for future FHA loans, provided there are no alterations and/or observable damage to the foundation.B. The Certification on Foundation Compliance is not required in the loan file or insuring binder for:1. FHA to FHA refinance transactions provided that no modifications have been made to the foundation or structure from the date of the effective certification.
2. FHA/HUD Real Estate Owned (REO) Division sales.
2. site specific and contain the engineer’s or registered architect’s signature, seal, and/or state license/certification number. In states where seals are issued, the seal must be on the certification.
3. the foundation certification, showing that the foundation meets the guidelines published in the PFGMH that were in effect at the time of certification, is acceptable for future FHA loans, provided there are no alterations and/or observable damage to the foundation.B. The Certification on Foundation Compliance is not required in the loan file or insuring binder for:1. FHA to FHA refinance transactions provided that no modifications have been made to the foundation or structure from the date of the effective certification.
2. FHA/HUD Real Estate Owned (REO) Division sales.
As you can see from the above, REO transactions as well as refinances are excluded from this which I do not feel is fair. However, residential purchases are not regardless of the year that the foundation was placed (I feel they should be grandfathered in from the time the foundation was installed). The underwriting requires that the certification meet current guidelines based on the date of the certification not on the date the foundation was completed. Where this presents a major issue is the fact that most Seller’s who have a pre 2000 manufactured home do not have an FHA foundation certification in their possession and one will have to be ordered. These can be done here locally by any engineering or architectural firm such as Goff Engineering. The charge for this is about $350.00 which can obviously be negotiated as to who will pay for the certification, I am of the belief that it is a Buyer’s expense since it is a requirement of their lender.
The issue that arose with my situation is that the permanent foundation for the home that was placed there in 1994 and was certainly more than adequate for the guidelines at that time but not for current FHA guidelines. The engineer who went out and inspected our home stated that the foundation has no issues whatsoever and is in very good condition. However, the issue that came up is the fact that the piers located inside the foundation walls that help support the home were installed using a dry stack method (no mortar) as opposed to a wet stack method (mortar between the blocks). Please see the photos for reference. This caused the engineer that inspected the foundation to state that it fails FHA guidelines and he was unable to issue the certification we needed for the lender. I am sure you can guess how this ended…disappointed Seller, disappointed Buyer and two disappointed agents.
Example of dry stacked foundation piers (no mortar)
Example of Wet Stacked Foundation Piers (mortar)
The reason I share this with you is that since this happened, I have asked several agents if they have ever encountered this issue and if they did, what they have done about it. To my surprise, there have only been a handful of agents that I have spoken with that ever knew there was an issue with this. I hope that you will take this information and add it to your arsenal when you are about to list a pre 2000 manufactured home and forewarn your Seller that the possibility exists that their existing foundation may not meet current FHA guidelines. This will greatly reduce the number of buyers for the property and make financing very difficult.
There are a few solutions to the problem but none are very economical or easy. We are in the process of contacting several companies that retro fit older foundations to make them meet current FHA guidelines. The ironic part is, I called FHA to ask them if there were any recommendations from them as to how to fix the problem or if they have a list of contractors that deal with this on a regular basis and they stated they do not have any such information to provide.
Now, just for a minute think of all of the pre 2000 manufactured homes we currently have in La Plata County and how often we are going to see this issue come up in the future. If you are interested in knowing how we finally resolve the issue, please feel free to email me and I will be sure to share our fix with you once we have final resolution.
Hi,
My husband and I are going through this same scenario. We bought a ’94 man fac that was HUD owned. So we did not need a foundation cert when we purchased. This is our situation exactly! How did you solve it?
Thanks!
I have only conditioned the appraisal on an engineering certification and so far they all have been able to receive one. Please let me know if there is a more simple solution to the above problem. Thanks!
Help! I am working toward refinancing my 1997 mobile home. Please let me know what you did to make your home FHA approved for a permanent foundation.
Thanks
Joe
Hi, I have clients who are purchasing a 1988 mobile, lenders are requiring certification, if it doesn’t pass what is the cost to fix the problem?
Thanks
Kay
I am amazed at how many realtors and lenders are not familiar with this requirement. They go down the path of…get the home inspection ($400), get the appraisal ($450), then it goes to underwriting, oh, oh, it’s a manufactured home! We need a foundation inspection ($400), oops; it didn’t pass…who’s going to pay to fix it so it passes??? By this time the buyer is out $800. Don’t loan officers talk to underwriters??? The seller may, or may not, agree to fix it. The buyer can’t fix it as they don’t own the home. My problem isn’t that the seller will or won’t agree to fix something like this; it’s that the buyer is out a lot of money and way down the rabbit hole before they even realize there is a problem. As professionals, who are supposed to be well-versed on the rules, don’t you think Realtors and Lenders should know this, or at least look into it before the commit a lot of the buyer’s money and time??? We rely on them to tell us what needs to be done. Lesson learned is before you spend time looking for your dream home, make sure you first take time to look for a qualified and knowledge realtor and loan officer.
9/4/2014
I am in the process of purchasing a mobile home in Louisiana. The closing has been changed four times due to information required by the lender and title co. The latest requested was for a HUD Data Plate/IBTS certificate. The appraiser simply stated on the appraisal that the seller had removed the certificate, the seller’s says that there was no certificate inside the kitchen cabinet.
I don’t know what else can go wrong. Please advise if you can.
Thank you,
Cynthia Wheeler
Hello..We are selling our 1988 manufactured home and are running in to these same issues! I would love to hear how you solved it.. Thanks for the info and great information.