If your are having problems with seller disclosure about moving a manufactured home, you may have a legal case against the seller.
Q: We have a problem. My son purchased a manufactured home last year at the age of 21 and obtained an FHA mortgage on the home. It appears that he should have never received the FHA loan due to the home.
Due to their failed marriage, my son and his ex-wife hired an agent to sell the home. The agent discovered that the home was a 1997 manufactured home moved from its original located. As a “moved” home, the home is not eligible for FHA financing. (We have also discovered that even conventional loans will not be made on a home that does not pass HUD requirements.) Now, we have found out that the home is nearly impossible to sell.
We have information that indicates the listing agent that sold the home to us knew the home should not have qualified for FHA financing, yet the agent never said anything to us. We believe the lender was negligent in performing proper due diligence in approving the loan and we think the lender should get the deed to the home without harming the credit of the borrowers.
This situation has left several professional bankers (including from the lending bank) agreeing off the record that this loan never should have happened and the borrowers should not be held liable for this loan. However, the lender denies any wrongdoing on their part and insists that the borrowers are responsible for the loan.
The lender claims they didn’t have any information that the home had been moved at the time the loan was made. But we’ve found tax records, appraisal records and other information to show that the home had been moved. We believe the lender failed to provide proper due diligence and was negligent in their actions.
The lenders should have been under a duty to the borrowers to disclose that the home was ineligible for an FHA insured loan. There was a disparity of education pertaining to banking regulations and business experience regarding this situation as the homeowners were purchasing their first home at the age of 21.
At the very least, negligence should be strongly considered. The bank failed to disclose an existing fact, the omission was significant, the lenders failed to meet duty of care resulting in the borrowers suffering damages. The borrowers are now stuck for the next 29 years because they can never refinance, relocate or sell the home. Who should be held responsible for this loan?
A: We’re going to address your question in two parts. The first part addresses the issue of the responsibility when you buy a home and the second on the loan itself.
We take exception to your statement that there was a “disparity of education” in the transaction. We don’t even know what this means. If you’re talking about your son and his wife failing to educate themselves in advance of the single largest purchase they’d ever make, that’s their problem.
In any purchase/sale transaction, you can always claim one person took advantage over the other. Your son and his wife wanted a home and then bought it. They should have hired a professional home inspector to go over the home before he purchased it. He could have hired an attorney to help him out in the transaction.
Your son should take responsibility for his actions – or rather, his lack of actions. If his issue with the home was that the soil was causing harm to the home, that the home was termite infested, that the home had major structural deficiencies or any other physical issue, you shouldn’t blame the lender. Instead, you should blame your son for not taking his home buying seriously and taking care to make sure he was protecting himself and his wire.
You should know that a lender never has a “duty of care” or a duty to disclose matters to the borrower. The lender’s duty is to itself: to make sure that the loan it underwrites meets its own guidelines for the loan. If the lender makes a mistake, the lender will suffer its own consequences for that mistake.
Keep in mind that the lender probably has more at risk with this loan than your son does. Your son may have paid fees at closing and may have put down a small down payment towards the purchase of the home. The lender put down the rest of the money.
If the loan defaults, the lender will be at risk of losing quite a bit of money. Your son may have his credit history and credit score damaged, but his monetary loss in the immediate future will be significantly less.
On the other hand, if the seller had a duty under the seller disclosure laws of your state to disclose those issues relating to the status of the manufactured home, your son may have a legal case against his seller.
Your son should talk to an attorney and discuss this issue. If it turns out the seller failed to disclose this and it is deemed a “material issue,” your son may be able to force the seller to buy back the home. That’s a lot of “ifs” and your son and his attorney must determine if this is a viable legal option.
We aren’t aware of any law that would require the lender to take the property over, even if the lender made a mistake in granting the loan. Your son would have to talk to an attorney whose general practice area might be in the residential mortgage lending area with knowledge of federal lending practices, rules and laws. That attorney could then determine if the lender has any responsibility in your situation.
Your son was probably quite happy to have received the loan and may have continued to be happy up until the day that he found out there was a problem with the loan. We wonder what would have happened if you didn’t have this issue and FHA and other lenders had decided after the purchase of the home that they would no longer furnish loans on properties like the one your son purchased. Your son would be in the same situation as he is in now with the lenders having changed their position on these types of loans after his date of purchase.
One last note: While you are operating under the assumption that the home couldn’t be moved after its initial installation, we took a quick look at the U.S. Department of Housing and Urban Development guidelines for manufactured homes. That document indicates that you are permitted to relocate the home from one location to another.
If the movement of the home was proper the fact that FHA has assigned a number to your loan would be good news. A subsequent buyer may use that same FHA number as a reference point.
If the home was moved, as you believe, there should be a process in place to have the home re-inspected to establish it within the guidelines of FHA. It appears that your information is from the valuation analysis for appraisers of manufactured homes. It would seem reasonable, that FHA does not want to insure a home that was moved from one location to another for fear that when it was at its first location, the lender never was paid there and the home was simply moved to a new location.
As with many other elements, your situation may also hinge on many elements relating to the construction of the home, its location, whether its foundation is now permanent, and other elements that are important to FHA. You may need further information before you can actually
Do you know for sure that a future buyer wouldn’t be able to get financing? Or, is this just conjecture? You may have missed something when researching the question. In your quest to prove the lender wrong in this transaction, there may be other information or guidelines you’ve missed that actually make the home fit within FHA lending guidelines and would allow a subsequent buyer to purchase the home.
Find out more at this HUD website.
We have a very similar situation as your son’s. In 2003, we purchased a manufactured home with an FHA loan. The sellers did not disclose that the home had been moved from its original installation point in 2002. Due to this disclosure failure, we are now in a position where we have been unable to sell to property for two years – despite asking far less than the appraised value. We received verification from the state of Texas proving that the home had been moved and have provided the information to our lender. Since the lender and I were both acting in good faith at the time of the loan, we are both victims of the seller’s negligence (or possibly fraud if it was done with intent.) I’m hoping that Bank of America will be able to help us through legal channels and I have also submitted a formal complaint through the Texas Attorney General. It is an untenable position to be stuck with a home that you can’t sell. And while renting it off-sets some of the costs for the mortgage, it is very easy to have to pay more to fix the damages they do to the property than you get for the meager off-set renters provide.
Were having the same issues with the manufactured home with 3.45 acres we purchased 8 months ago we have it up for sale but No Lender will finance a manufactured home that has been moved twice.The realtor that sold us the manufactured home and land never disclosed to us that it been moved twice the only way we can sell it has to be a cash buyer or they would have to have a large sum of money down to get financed we have called some attorneys in the town we live but no help because they are friends with the realtor we just don’t know what to do now we need to get moved back to Arizona because of Family Health problems..Please any suggestion would help
HUD allows two moves, but they can only be from the factory or the dealer (factory = 1, dealer = 2). However, you can’t even move your own property twice, nor can you prove where the mobile home came from as there was no permit and no way to document from where the house was moved, so if HUD chose, it could deny ALL reverse mortgages on manufactured housing by sticking to the literal terms of the rule.
We purchased our home in 1999 from a private seller whi had the home in a mobile home park. We purchased 40 acres & moved the home to our property. It was set on a 9’ poured wall basment & is affixed as a permanent home.
At no time was moving the home an issue up until today. Our lender at time of construction paid the previous homeowner. We refinanced for a lower rate some years back with no problem. We refinanced 4 years ago from a 30 year to a 15 year with no problem. We have just been denied a refinance as we wanted to do home improvements & pay off debt because the home was moved. We have $80,000 in equity that now apparently we cannot access. I just don’t understand any of this. We have had this home & property for 19 years & now it’s an issue??
Please contact me at karen@terraceweb.com as I have information on this issue.
My son is in the same situation. I am wondering if you found any resolution to this problem.
Also our previous refinance 4 years ago, is the same lender that denied us today!!!
We bought a relocated mobile home from a licensed dealer (why was the dealer allowed to sell it off his lot?) to put on our 5 acres as a weekender. We had to pay a impact fee, we had to get all the permits, have all the inspections, and obtain a certificate of occupancy. Now we are trying to sell the property and no one will finance it. Before this was an issue the buyer had it inspected and got an appraisal of much more then what we were asking. I’m trying to understand what the issue is with relocated finance mobile homes? We buy pre owned cars all day and get great financing. What is the issue? .
Are you still in this situation. My son and his wife bought a manufactured home in a park (new) when they married. They spent a year purchasing 2.5, had a basement dug and the home moved and affixed. They were given a conventional mortgage. Fast forward 16 years, my daughter in law changed jobs and they need to move closer. They find themselves in a very similar situation. Do you know when this ‘can’t move twice’ became effective? thank you.
I have read all of these posts and Isabel the same problem And I think maybe the best course of action is to all join together and file a lawsuit against FHA for allowing these people to use their so called safe or protected loans for first time home owners to get financially taken but these institutions. If anyone else feels this way reply to this message and let’s join together to right these wrongs
I am new to this site! But I have a double wide solitaire manufactured home. We first moved it to in-laws property, then moved it to purchased acre 5 miles away & put on foundation & obtained a mortgage. We are putting it up for sale but after reading these complaints I’m worried we will face the same thing! If that happens I will be glad to join a class action lawsuit!
We bought ours on 2001 we have had 2 independent inspectors tell us it was built better than some track homes they’ve seen because we bought it when they first come out with quality & it was literally built like a house, real wood cabinets and same floor ceiling insulation packages as built homes and outer & inside walls as well & tape & texture! I will give update on any purchase agreements & see if they throw a wrench in it! Thanks this was pertinent information to come across!
Hi Donna,
I think Manufactured Homes can be a terrific value. Thanks for sharing your experience.
[…] Problems With Seller Disclosure: Moving a Manufactured. – Problems With Seller Disclosure: Moving a Manufactured Home. The lender put down the rest of the money. If the loan defaults, the lender will be at risk of losing quite a bit of money. Your son may have his credit history and credit score damaged, but his monetary loss in. […]
FHA loans are assumable, that might solve the problem for future buyers.
Has anyone with tried filing a claim with title company?
Yes. They denied it was their problem or withing the scope of what they do. They told us they only looked for liens against the property or things dealing with the land the house was sitting on.
So frustrating!!
Im having a very similar issue, I bought my trailer in 2017 paid cash, I want a reverse mortgage. It was never disclosed that the trailer had been moved from another location. it has been where it is since 1996. This is in Texas. Can it be granfathered into the new laws if not when did that law go into effect.
Bought a used manufactured home from a dealer in 1993 moved to our land and now trying to sell home and land. Just found out today if the home has been moved twice no one will finance.. What the heck.. Also had only one tax bill for real property up until last year and they separated my tax bills into personal and real.. Idaho has a screwy way of doing things and now I am screwed….
What part of Idaho are in you? We are in North Idaho and recently discovered the ‘dealer’ (now out of business) put a wrecked and deemed salvage on a piece of land and had it ‘declared’ by the county as real property and sold the ‘rp’ undisclosed. Dealer used a MCO (which is only to be used for new homes) when he placed the structure. He also, as a dealer, had access to the paperwork and people he needed to perfect his fraud.
We are preparing to sue title insurance (fraud and forgery are covered risk issues) and the realtor and lender for breach of fiduciary duty, and the dealer will be subpoenaed to explain his original fraud actions.
So much for requiring Idaho Code 63-304. LOL!
I swear, what do these lenders think we live in “hovels”? Its ludicrous! It’s what inspectors are for!
If they deem the home structurally sound and pride of ownership applies, what is a lenders reasoning legally? , There is no guarantee on the lenders part that a “once moved Manufactured home” from dealer site to permanent location on foundation is any more structurally sound than those moved twice, especially moved by professional Mobil & manufactured home movers!
New is far from perfect, Our friends bought a brand new double wide home & put on permanent foundation on 2 acres & obtained a land home mortgage and they have been fighting
manufacturer over defects! What the heck! Not to mention, a land home package means your owned land is rolled up in the loan! At least one deeded portion is! There is no risk to lenders in that scenario because the home is insured as any built home would be for fire, flood, contents & theft! Where is the risk? Realestate appraisers cover the assessment of value! Inspectors are hired to assess the condition & defects if any!
Where is the risk!l? I think it’s a crock! Lots of manufactured homes are moved twice! Lenders need to answer yo the discriminatory practice!
Oh and less we forget a Mobil home can be inspected for plumbing problems , electrical problems easily remedied during break down and set up! unlike a new home owner such as my daughter that found herself on a class action lawsuit because her home was sinking & cracking in a new subdivision built on unstable sand! Look it up “Los Lunas NM “I won’t name the builder! But the point is, twice moved Mobil homes don’t bare any more risk than once moved Mobil homes do! Lenders have unfounded risk assessment lending practices!
Appreciate the comment.
Here is the best I can find. Once a manufactured home is moved from the original placement site, it is considered a mobile home. You won’t find any lender willing to loan on it as a result. The author of yhe article is mistaken on this point. You might be able to do a Chattel loan or personal loan, but good luck getting a mortgage on one. The VA will allow a veteran who purchased a manufactured home to move it with a great deal of paperwork. But won’t issue a new loan on one that’s been moved.