Refinance -- Now It's the Foundation, Sigh...

[BarbP]

We have been trying for 2 years to our dream home, which is a 20-yr old very nice Palm Harbor doublewide on 2 acres, with a detached large stick-built "addition" that includes a 2-car garage. The home was a short sale, after our first financing attempt (FHA) fell through, we invested $20,000 to pay up the seller's unpaid mortgage amount to keep the property from going into foreclosure, and the price was accordingly lowered for us. We also paid to have some fixes done to satisfy appraiser as the seller could not afford them. When our second financing attempt (VA) also fell through, and foreclosure was again looming, we went with a private lender just to get the purchase "done". That lender charges 12% interest, so our monthly payments are so high that we are in a tight box as we are retired and on Social Security. All our payments only go to interest, nothing to principal. So by now we have about another $22,000 into this place.

After 6 months from purchase, we tried to refinance -- that also fell through, we found out after the fact that most lenders don't want to refi until owners have a year in the home.

We are now 1-1/2 years living in the home and applied in August to refinance (FHA).

We have had 3 previous appraisals. The first 2 were done before we bought the place via the private lender, and they came in at a fair value for this property. The 3rd appraisal came in at exactly what we paid for it (not counting the $20,000 we had already paid in -- it came in at just the amount we borrowed from the private lender). The current and 4th appraisal came in at just $2000 higher than what we paid for it. So the last 2 appraisals have been at least $20,000 lower than what we would conservatively expect the value to be. If the current lender application does go through, we'll be paying almost another $10,000 out of pocket to close the deal.

The recent appraiser put conditions on his appraisal. He wants the security bars taken off all the windows, says they are a violation of HUD. The bedrooms have quick release security bars, and we think he is wrong that the bars are a HUD violation. So that's one thing.

Secondly, he wants a certification that the "addition" is not attached to the manufactured home. It is built up against the mfg home, but is not attached, it is unfinished on the interior but was built to code and had passed all inspections up to the time the seller had to stop work on it. This "addition" is on its own separate foundation. Previous 3 appraisers have also raised concerns that the "addition" was attached, which is the reason the 3 previous deals fell through. We thought that the inspection records should be enough to prove that it was not attached, we didn't know that we could get an engineer to come and certify that or we would have done it up front. So in that sense this appraiser has done us a favor by wanting the engineer to certify ... too bad it cost us for 3 previous appraisers to find this out.

Thirdly, this appraiser wants the foundation of the mfg home to be certified. We had that done by a civil engineering firm for our first financing application -- well, the bank had it done and we paid for it. That engineer certified that the foundation of the mfg home, also the foundation of the "addition" and the foundation of the front porch/deck all met HUD requirements, etc. But the present bank wants it done again because the previous certification is 2 years old.

So an engineer came out to give us an estimate for the certification he can provide, and he says that if there are no tie-down straps for the mfg home, we will have to have "tapcons" (type of screw) done around the base of the mfg home where it connects with the solid cinderblock foundation walls. We looked under the mfg home and we don't see any tie-down metal straps. The home was affixed in 1994 and is in Arizona, not in a hurricane or particularly high-wind location. It is on a pier/beam foundation with metal supports every 6 feet. Those supports rest directly on the ground, and when we've looked at mfg home foundation pictures on the Net, it looks like most such metal supports sit on a piece of concrete.

So we could do the tapcons that the engineer mentioned might be needed -- he would charge $600 to do them, but we can do them ourselves for way less. But we are kind of concerned now about the pier/beam thing -- is that going to be an issue when the engineer actually sees it?

By now too, we are practically running on "empty" in terms of finances, we don't have much money left to take care of things that appraisers/lenders may require.

Any helpful thoughts or information?

[David Oxhandler]

YOU say that the garage is detached. Is there any space between the home and the addition? If not The questions about how the addition is supported might be resolved from local building permit records. If the addition was un-permitted. or added on as long as 20 years ago there my be no records. You may have to to hire a licensed engineer to submit a sealed drawing of the existing situation.

The foundation's effect on refinancing depend on where you live. There are some refinance programs that do require the most modern type of foundation. Different lenders have different requirements.

If the old foundation is doing the job it was designed for, I would be reluctant to make drastic changes. The cost of moving your home onto a new foundation could easily exceed the difference in what you would save in interest for the next several years.

Moving any framed structure off its foundation and on to a new one after 20 years will very likely cause cosmetic damage and possible structural damage, Local building permit offices may require you to pull multiple permits because you may need to disconnect and reconnect the water sewer and electric service to the home.

DO your homework before you put down any money. Visit the local building department and find out just what they will require. How much you can do yourself and what parts of the project will require licensed contractors pull permits.

For more thoughts on refinancing and appraisal problems, read these recent threads started by a homeowner in a similar situation.

Appraisal for re-finance
Update on status for refinance---not good
SUCCESS on refinancing

You are welcome to return and ask any question that remains unanswered.

[BarbP]

Thanks for the reply!

The garage and "addition" combo are in fact DETACHED from the mfg home and on their own foundation. The west wall of the "addition" is set up about 3 inches from the east wall (end wall) of the mfg home. The "addition" was designed and constructed to pretty much snug up very close to the end wall of the mfg home, but does not touch it. The roof of the "addition" sits above and over the roof of the end wall of the mfg home and is supported by I-beams that rest on the frame of the addition, so that nothing rests in any weight-bearing way on the mfg home. This can be easily seen by anyone who knows construction. The gap between the height of the roof of the "addition" and the lower roof of the mfg home is sealed with Tyvek and other roofing materials so that it blends into the roofing materials of the mfg home, but this was not done with nails or screws -- this can also be easily seen. Engineer #2 has seen it and has no problem certifying that the two buildings are not attached.

As for the foundation issues, I talked today with Engineer #1 who did the foundation cert two years ago, and he said he is certain he would not have certified the foundation if there were no tie-downs. He gave us some clear instructions on how to find the tie-downs and said they are not easy to find sometimes, so we will check under the house again tomorrow with his information to go by.

Engineer #2 is the one our lender wants to do a certification right now, and he has not even seen under the home but says he is sure the foundation does not meet FHA critera. He has a business that will "retro-fit" foundations for mfg homes that don't meet HUD/FHA code, so he has something of an interest in finding something "wrong" that he can charge us for fixing. He is not saying that the foundation needs to be replaced, home lifted off or anything, just that he can apply a method of "tie-down" so the foundation will meet HUD/FHA requirements. We believe it already meets those requirements, based on what Engineer #1 who did the original certification says.

So the issue is the tie-downs and we feel that WE need to find them so we have proof they are there, rather than rely on Engineer #2 who could say "anything" and have us end up paying for something we don't need done.

I did read the topics you recommended ... boy, these situations can be such a mess!

[rmurray]

Sounds to me that the bank officials need to know more about the conflict he engineer has. This sounds like VERY unethical business and probably a violation of the rules for engineers in your state..

[David Oxhandler]

FHA foundation requirements are often more burdensome than HUD requirements... they are not one in the same. FHA loans often require foundation modification for older homes to bring them up to modern FHA standards.

Our rule is "If it is not broken don't fix it". Updating the foundation will be expensive and add no benefit to you except FHA loan eligibility. Talk to your mortgage broker or loan officer about other loan program that might be available with out the expense of updating the foundation. You may be required to make a higher down payment for other loan types. Compare the total out of pocket expense and go with the plan that costs you the least.

Most important do not put any money into loan required modifications until you have a FULL approval letter, from the lender stating the lenders stipulations for the loan.