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#1840 - 05/19/01 04:42 AM Flood - Manufactured Homes
Angel Eyes Offline
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Angel Eyes
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I have been reading the flood guidelines and regulations and still have the following question: Does a mobile home located in a mobile home park fall under the flood determination requirements?
This home is not "permanently" affixed, as a manufactured home placed on a true foundation. But in reality it is usually kept in that spot and is not a "recreational vehicle."
Thanks for your help!

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General Discussion
#1841 - 05/18/01 05:36 PM Re: Flood - Manufactured Homes
Sheila Steck Offline
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Posts: 16
Winona, MN
Jennifer, you can argue that mobile homes are "affixed" to the property by virtue of water and sewer. Of course, you could also argue that they are not "permanent". In any event, it's easier just to check for flood. It's not really an issue here since none of our mobile home parks are in a flood zone so we document the file with a SFHDF and we're done.

Also, FYI, our examiners (OCC) have checked for flood determinations on mobile home loans in prior exams.


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#1842 - 05/18/01 06:06 PM Re: Flood - Manufactured Homes
David Dickinson Offline
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David Dickinson
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Central City, NE
This has been an area of debate because of the lack of a definition for "affixed to a permanent site." I have been down this road several times. Here are my thoughts. The following are some definitions to review:

Building means a walled and roofed structure, other than a gas or liquid storage tank, that is principally above ground and affixed to a permanent site, and a walled and roofed structure while in the course of construction, alteration or repair

Mobile home means a structure, transportable in one or more sections, that is built on a permanent chassis and designed for use with or without a permanent foundation when attached to the required utilities. The term mobile home does not include a recreational vehicle. For purposes of (the Flood Disaster Protection Act) the term mobile home means a mobile home on a permanent foundation.

So, just what is a permanet foundation? I like Sheila's rule that if the MH is attached to utilities, water, sewage, etc., it probably is not going to move very quickly. You might note that a MH cannot be insured for flood unless the MH is tied down. Here is a quote from the FEMA Flood Insurance Manual:

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

My discussions on this with the FDIC took me all the way to Ken Baebel in Washington, D.C. who said "Borrowers must provide tie downs if necessary to obtain flood insurance if a mobile home is located within a SFHA" (he told me I could quote him).

Imagine that you tell a borrower that their MH is located in a Zone A Flood Hazard Area. They go to the insurance agent who refuses them insurance because the MH is not tied down. They come back to you and say that they cannot get the insurance. If you let this go, I think you run a huge risk. Instead, you tell them that they can get insurance if they tie the MH down and that is just what they need to do.

Interestingly, most insurance providers (American Family, State Farm, etc.) will not issue hazard insurance on a MH unless it is tied down. Are you going to let them go without hazard insurance too?

Whew! That's all I've got to say about that! I hope this helps.

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http://www.bankerscompliance.com

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#1843 - 05/18/01 06:18 PM Re: Flood - Manufactured Homes
Andy_Z Offline
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I have read in the rules somewhere that tied down meant permanetly affixed. I can try to locate that if someone needs it. That rule made it easy for me because in my market, if someone is living in one it is tied down. The only time I have seen these not tied down is when they were on a lot to be sold, being moved, or used for storage.

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Andy Zavoina
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#1844 - 05/18/01 06:48 PM Re: Flood - Manufactured Homes
Tom Easterday Offline
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Orange County, CA
Per FEMA's Flood Insurance Manual, mobile homes fall under the mandatory insurance rules.

To be insurable, a mobile home must:
1) Be affixed to a permanent foundation. A permanent foundation for a mobile home may be a poured slab or foundation walls, or may be piers or block supports, either of which support the mobile home so that no weight is supported by the wheels and axles of the unit.
2) Be anchored to the foundation to resist flotation, collapse or lateral movement by providing over-the-top or frame ties to ground anchors; or in accordance with manufacturer's specifications; or in compliance with the community's floodplain management requirements.

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Tom Easterday, CRCM
Opinions stated are my own and not necessarily those of my employer!

[This message has been edited by Tom Easterday (edited 05-18-2001).]

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#1845 - 05/18/01 07:09 PM Re: Flood - Manufactured Homes
Andy_Z Offline
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That is it. Thanks Tom.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#1846 - 05/18/01 08:04 PM Re: Flood - Manufactured Homes
Angel Eyes Offline
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Angel Eyes
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Thank you all for your responses. I think I have a much better understanding now!
HAVE A GREAT WEEKEND!!!!!!!

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#1847 - 07/13/01 02:09 PM Re: Flood - Manufactured Homes
Jan94 Offline
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Posts: 828
USA
We have a lender who is taking a mobile home park as collateral. Can he just do the one determination for the entire park? If flood insurance was required, would each MH need a separate policy?

Also, a MH sits on a piece of land, but only the land is collateral, is this still considered improved property for purposes of the determination requirements? Thank you.

[This message has been edited by Angela (edited 07-13-2001).]


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#1848 - 07/13/01 02:55 PM Re: Flood - Manufactured Homes
David Dickinson Offline
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David Dickinson
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Central City, NE
The instructions for completing the SFHDF state:
MULTIPLE BUILDINGS
If the loan collateral includes more than one building, a schedule for the additional building(s)/mobile home(s) indicating the determination for each may be attached. Otherwise, a separate form must be completed for each building or mobile home. Any attachment(s) should be noted in the comment section. A separate flood insurance policy is required for each building or mobile home.

If you only have bare land (as the MH is titled collateral) you do not have improved real estate. Therefore, the Flood rules do not apply.

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#1849 - 07/13/01 03:02 PM Re: Flood - Manufactured Homes
Richard Insley Offline
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Toano, VA
Angela- The FDPA of '73 is designed to prevent "liquid collateral" and the resulting losses to the taxpapers who would be asked to bail out (no pun intended) the fools who built their homes or parked their mobiles next to a river. Anything that could be damaged or washed away must be insured in order to protect both you and the taxpayer. If your D/T on the mobile park includes buildings or any mobiles owned by the borrower, then you need insurance.

Land is never insurable--improved (golf course, for example) or raw.

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#1850 - 07/13/01 03:36 PM Re: Flood - Manufactured Homes
RVFlyboy Offline
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Soaring over Georgia
Actually, I believe golf courses are insurable, but only through the private insurance market. Such insurance is not available through the NFIP, nor is it required under the flood regs. But from a business practicality standpoint, a lender making a loan on a golf course better make sure that there is some recourse (pun intended) if the course floods and is unplayable for an extended period of time.

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Jim Bedsole, CRCM, CBA, CFSA

Opinions expressed are my own, and do not necessarily reflect those of my employer.

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#1851 - 07/13/01 03:42 PM Re: Flood - Manufactured Homes
Richard Insley Offline
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Toano, VA
Jim, you are exactly right! I always forget private coverage because it is outrageously expensive. The last time I checked, Lloyds of London was the only interested player and the annual premium was 1/3 the face value of the policy. It's probably a lot cheaper now, but it's tough to find a company that will insure against bad weather.
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#1852 - 07/13/01 06:44 PM Re: Flood - Manufactured Homes
Jan94 Offline
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Joined: Mar 2001
Posts: 828
USA
Dave - the instructions for the SFHDF form says the schedule would list the determination for "each". Does this mean there would still need to be a separate determination completed on each MH in the park? I suppose part of the MH park could be in a SFHA?

Please indulge me one more question,how does this apply to a builder developing a new subdivision? Would the lender wait until the actual construction of the homes begins to get the determination? Thank you for all your assistance.

[This message has been edited by Angela (edited 07-13-2001).]


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#1853 - 07/13/01 07:36 PM Re: Flood - Manufactured Homes
David Dickinson Offline
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David Dickinson
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Central City, NE
First question: I understand the instructions to state that one determination will suffice, but each building must be itemized on the 1 SFHDF.

Second question: This is a bigger question than you may realize. A SFHDF must be completed before the construction loan is closed (not when the improvements are made). If the new building will be in a flood zone, you must provide a notice to the borrower(s) wihtin a "reasonable period" of time before closing. The problem is purchasing the flood insurance on a building that doesn't exist yet.

Although, the National Flood Insurance Program (NFIP) permits policies to be purchased prior to the actual construciton of a building, many insurance agents don't like to sale the policy until the footers are in because they claim they must know the elevation of the footers before they can sale the insurance.

Here's a quote from the OCC's Handbook "Flood Disaster Protection" (CCE-FDPA, August 1996, page 5):
The NFIP covers improved real property or mobile homes located or to be located in an area identified by FEMA as having special flood hazards, including:
Loans for buildings under construction where a development loan is made to construct insurable improvements on the land. In this situation, flood insurance coverage should be purchased to keep pace with the new construction ... (emphasis added).

Flood insurance may be purchased within 90 days after construction has commenced, but before the bulding is walled and roofed.

Whew!! I hope that helps.

[This message has been edited by David Dickinson (edited 07-13-2001).]

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#1854 - 07/13/01 08:45 PM Re: Flood - Manufactured Homes
Jan94 Offline
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Joined: Mar 2001
Posts: 828
USA
In the FDIC's Interagency Q&A on Flood Insurance (FIL-77-97), question #2:

"2. Are loans secured by raw land that will be developed into buildable lots subject to the Regulation?
Answer: No. Acquisition and development loans would not be subject to the Regulation beacuse they donot meet the definition of a "designated loan." However, when the final construction phase of an ADC (acquisition, development, construction) project is commenced, the Regulation becomes effective. This will require lenders to determine whether the property is located in an SFHA. If the building securing the loan is located or to be located in an SFHA, the other requirements of the Regulation will also apply. As noted above, the NFIP permits policies (subject to certain conditions and restrictions) to be purchased prior to the actual construction of a building."

So I may have answered by own question about the subdivision development. Once the final phase of this project begins, then the lender would need then need to get a determination on the individual lots. Would this be a good understanding? Thanks again!


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