Being Jerked Around By Lender/Title Company

[hillcountrybuyer]

The whole deal with classifying mobile home vs. manufactured home vs. modular home is tripping us up big time.

We've been approved for a loan with the USDA and the manager personally visited and approved our lot selection. We chose an on-frame modular from a dealer they've worked with in the past. All things seemed right with the deal. We've signed papers showing what we wanted built, they even had the electric and meter loop done and the lot's been cleared.

Just as we're approaching closing on the house, we get a call from the USDA saying they won't approve us because the subdivision restrictions state no "mobile homes" allowed. Of significant note, nearly the entire subdivision is populated by HUD/Manufactured homes, a look at the appraisal district's website shows this fact. The manager of the USDA's office acknowledged this on first inspection.

What's really fishy is that prior to this I got a call from one of their technicians saying they'd need to change to another title company (one near them, one they've dealt with before) because the two near us won't take their way of money transfer (wire vs. some other method). The title company they use is the one who had a problem with the deed restrictions. The one we had before stated that there would be no conflict. So there's like a team effort between the USDA's "lawyers" and their buddy-buddy title company to deny our loan. In addition to all of that, they transfered our file to another (bigger) USDA office, saying they don't handle our county anymore.

It's just a big mess now. I have my suspicions about why they won't loan to us all of a sudden. The first manager we dealt with had a problem with HUD/MOD homes, saying they don't hold value well and just wouldn't listen to anything but his preconcieved notions. I'm sure it's all about money at the end of the day.

Anyway, we're en route to getting help to fight these people and swing things back in our favor, if possible. Any suggestions on working past this road block? We've already signed with the builder and they've invested money in the construction process already with the electrical work.

[rmurray]

Title companies are getting more conservative with these tough mortgage times....You are being plagued by the old language that may have well been in the deed restrictions for some time..The term "mobile home" legally refers to home built before the HUD standards..NO MOBILE HOME has been built since mid 1975 when the HUD standards took effect..An "on-frame modular" is NOT built to HUD standards but to state housing standards there will NOT be a red HUD label on the side of the house but there WILL BE a housing certification label pasted in the electric box. Each state defines this home in its own way..Usually this misunderstanding happens with HUD/ manufactured homes...Some folks still want to call them mobile homes (When I started even we called the product "trailers") Most title companies will list exceptions to their guarantee which often the closing attorney rectifies by requiring certain documents...Often in your kind of case something about the homes certification, building permit, maybe signed releases from all adjoining property owners.. All of this is stored to help with future title law suits..I have no idea why a title company would care at all if you were in violation of the deed restricions...They cannot lose in the deal..If a neighbor sued the worse that could happen is that you would be ordered to remove the house from the land..Never would they take the land from you..

Remember USDA is a federal government agency...All of them have an appeals process...Maybe you should ask for another title company...File formal appeals to the agency rulings..In my area USDA does NOT mortgage HUD certified manufactured home but they aggressively market their programs to state certified modular homes...
You used a term that distressed me..HUD/MOD homes DO NOT exist..A factory home is either a HUD manufactured home OR a state approved/certified MODULAR homes( in GA where I am the state knew of the confusion and legally define the product they approve as INDUTRIALIZED BUILDIGS to help eliminate the confusion)..Only a Georgian could possibly think to solve confusion by inventing another legal name that means nothing to anyone..

I was a little afraid you got the term HUD/MOD from your dealer..Just remember your closing attorney should be there for you to help with legal issues in your state..

[hillcountrybuyer]

Sorry about the HUD/MOD grouping. I know HUD is HUD and modular is IRC/IBC/UBC. That's the USDA manager's mindset sneaking in. I should have known we'd have problems when he kind of brushed it off everytime we corrected him when he'd call a modular home a "mobile home".

We have the dealer working through this confusion right now. They've already invested a lot of man hours, paperwork, and even some labor into this deal. They're not going to let this deal go south, especially when the USDA is completely in the wrong.

Next step will be a formal appeal, but that probably won't be necessary.

[AZRealtor]

Good move! As I was reading your original note, I was thinking "get the dealer involved". USDA has some very traditional thought processes, not all in line with the way the world has evolved. Not many people, including USDA employees, escrow officers, even appraisers are intimately familiar with the exact differences between HUD, IRC, UBC, MOD, Manufactured, Mobile. The terms are used so loosely at times, it's no wonder there is confusion.
Your dealer should be able to get to the bottom of it, especially if they have a vested interest. Many times, the dealer ends up with all the risk, since USDA won't fund the loan until the project is 100% complete. This is done at substantial cost and investment of time.
Be patient and hang in there. The formal appeals process will be there if necessary, and your dealer involvement should help move things along.