Editor's Note: Distinguishing between a manufactured and modular home is vital to your work but sometimes not so easy to do. An appraiser-expert in these housing types clears up the confusion on how to tell them apart.
Manufactured or Modular Home?
By Jo Ann Meyer Stratton, IFA, SRA
A manufactured home is
constructed in the factory to the national HUD building code and remains a
manufactured home forever regardless of how it is installed, what type of
foundation and skirting it has or anything else that is done to
it. Classification by the local assessing/tax office or other governing
agency doesn't change a home constructed to the HUD building code either.
A modular home is
constructed in the factory to whatever local building code is applicable for
the location it will be installed. An "off frame” chassis/undercarriage
modular home does not have any metal structure to support the home. While
under construction in the factory, a steel frame is used as a work table and
used to transport the home from the factory to the site, where the home is
picked up with a crane and put in place on a prepared foundation. The frame
then goes back to the factory for construction of the next "off
If it is an “on frame” modular, it will not be eligible for a Fannie Mae loan because of some quirks in their guidelines. Fannie Mae classifies anything with a steel undercarriage as a manufactured home--which would include mobile homes constructed prior to June 15, 1976, manufactured homes constructed after that date and “on frame” modular homes. The eligibility section of their guidelines state that to be eligible for the mortgage to be purchased by Fannie Mae, the manufactured home has to be constructed to the HUD building code--which eliminates mobile homes and “on frame” modular homes. If you are appraising an “on frame” modular home, be sure and have the information in the report that it will not be eligible for Fannie Mae. It is eligible for Freddie Mac, FHA and VA. Of course, with the proposed changes at Fannie Mae and Freddie Mac, future regulations are uncertain.
Regardless of what type of factory built home you are appraising or inspecting (or selling), take photos and make notes of all insignias, labels, tags, data plates, etc. that you find on the exterior and in the interior of the home. Include those photos and information in the report. Appraisers research the tax situation, report what you find and if the factory built home is not currently taxed as real property, explain what needs to be done prior to close of escrow for it to be taxed in the future as real property.
Remember too that the
original building code from the factory while the home was under
construction has to be verified prior to completing the appraisal
assignment. The original building code is the only answer to whether a home
is a manufactured home or a modular home. Occasionally in some
factories, manufactured homes, on frame modular homes and off frame modular
homes are all constructed in the same factory, on the same assembly
line, with the same floor plan, materials, options, amenities. Once the
construction is complete, someone looking at the homes can not tell which
home was constructed to which building code.
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