Our bank is considering making a loan where we will be taking a mobile home lot as collateral. None of the mobile home inventory is considered affixed structures by state law. However, there is one mobile home that is being used as an office that would qualify as affixed. If we did not want to require the borrower to get flood insurance would our only way to not require flood be for the wording of our mortgage to specifically exclude the building from our collateral?

Hummm, interesting, that might be one way; as you essentially are not taking the structure as collateral. I've seen some people have buildings or houses carved out of a deed, but that could cause potential issues if you had to take the property back in foreclosure.

You may want to look at taking different collateral for your loan if any exist.

I'm guessing that you've pulled a flood and the property came back in a flood zone.

You can do that. I would advise you to consult your attorney the first time for the proper language to use is case your state has specific language that must be used.

I don't read the rules as making it optional to purchase insurance if the MH isn't affixed. You have a MH. It is in SFHA. You MUST have flood insurance. To get the insurance, the MH must be affixed. Do what you need to do to qualify for insurance.

The FEMA Flood Insurance Manual states:
A mobile home located in a SFHA must be anchored to a permanent foundation to resist flotation by providing over the top or frame ties to ground anchors.

I got the following, in writing, from the FDIC - Washington:
Borrowers must provide tie downs if necessary to obtain flood insurance if a mobile home is located within a SFHA [Ken Baebel, FDIC – Washington, D.C.].

If you want to avoid the insurance, you'll need to not take the MH as collateral.

But in order to not take the MH as collateral we would have to specifically state that in our collateral description correct? If there is an improvement on a piece of collateral we are taking and the collateral is in a flood zone, don't we have to insure each improvement on the collateral despite the fact we might not explicitly state that we are taking each improvement as collateral?

If it's titled and you don't have the title to the MH, then you don't have it as collateral. If it's part of the RE, then you have the MH, if you have the RE.