Seller Financing and Mobile Homes in Parks
Bummer . . . well, I found out that my nice little seller financing strategies don’t work on mobile homes in parks when there is underlying financing in place (the seller still owes a bank some money). If the seller owns the mobile home free and clear, or if the manufactured home is somehow affixed or attached to the land, then that’s a different story and I can work with that.
I had someone named, well . . . Dawn (the names have not been changed to protect the guilty) contact me about a situation she had in Northern California.
She had purchased the mobile home 3 years ago, expecting to stay single. She put down about $7,000 and had a first mortgage of $69,000. Everything was great, but then it happened . . .
Good news: She fell in love and she and her husband bought a fixer upper house because that makes a whole lot more sense for raising a family
Bad news: If she tried to sell in this market, she would end up being a short sale, and she doesn’t want to ruin her stellar credit
Good news: She had a friend that wanted to move in and take over the existing loan payments and space rent
Bad news: The mobile home park’s rules prohibits anyone but owner occupants . . . no renters allowed
Good news: OK, then, we’ll just leave the underlying financing in place and “wrap” the note (AITD). The friend will pay the seller and the seller will pay the bank.
Bad news: You can do this with regular real estate, but not with mobile homes in parks. They are governed by a different governmental agency, and they will not allow a property transfer unless the underlying loan is completely paid off.
Good news: There’s still the land trust idea
Bad news: It only works when the personal property (mobile home) is affixed to the land. Hmmm . . . there may be some reason it’s called a land trust after all.
More bad news: The bank won’t let the friend assume the loan, and they won’t modify the loan. They’d rather lose a lot of money foreclosing instead (Gee, I wonder why the banks are in such trouble.)
It was a great disappointment not to have a solution for these people. I refunded the consultation fee she had paid, and received this from her:
“Thank you so much for following up on this. This is a big disappointment to me, too, as I think I have exhausted all the options. I talked to the loan servicer again the other day and they said they absolutely cannot do an assumption of the loan. I will have to talk to someone about refinancing the loan and maybe putting my friend on the title as a co-buyer. Thanks again for all your help. I have learned a lot from your site and, though it didn’t help me at the moment, I have no doubt that I will be able to pass this information on to someone whom it can help at some time in the future. I would not hesitate to refer people to you. Thanks.” – Dawn
Wow, thank you.
A loan modification is a great alternative to foreclosure. LoanMod.com (aka Mizna) helped me complete a loan mod with my current lender. Of all the companies I researched to help me avoid foreclosure, loanmod.com was the most credible and even has a feature in this month’s issue of Forbes:
Two tips I would give other struggling homeowners looking to modify their loan is that (1) non-profits are hopeless and you get what you pay for, and (2) if a loan modification company does not have a mailing address on their website, then forget about it. There are so many scams going on out there that borrowers should be vigilant and not trust every company that claims to do loan mods. You want to make sure you’re working with real people who care. The folks at Mizna definitely care about homeowners and they did wonders for me. Check them out at http://www.loanmod.com
I hope this helps!