why is it so hard to refinance a manufactured home?

Question

They are still making manufactured or mobile homes, so why is it so hard to get them refinanced once they are on property and set up as a permanent home?

Answer 1

It is all risk related. First they do not appreciate well, so banks are unable to recoup losses if they forclose later. Also many of the people that purchase them are higher risk borrowers so there are more forclosings.
Second, it is hard to establish a value of the home. There are not a lot of mobile homes permanantly attached to land in most areas. When you try to find a houses value you compare it to other homes that sold within a mile that are similar to your house. Often you can not find a similar mobile home that has sold in the same area so you have no idea what it is worth.
Finally, manufactured homes do not stand up to time as well as traditional homes. They require much more care to keep in top condition, and can be destroyed beyond repair more easily by acts of nature (storms, fires, earthquakes).
That being said there are lenders that will work with them. I have done two of them. They do usually require a higher interest rate, and a lower LTV.

Answer 2

Because unlike traditional site-built homes, manufactured homes tend to lose value over time. They frequently have a much shorter economic life than site-built homes which further complicates the refinancing issue.

Answer 3

This situation is occurring because manufactured homes do not tend to increase in value nearly as well as do conventionally constructed homes, and lenders are discovering that they are taking a REAL kick in the backside when these properties end up in foreclosure.

Answer 4

they actually decrease in value. they are also hard to insure. its just another scam by banks and insurance co.