If we are ONLY taking as security a number of manufactured homes that are dealer inventory and not permanently affixed to the land, is flood insurance required?

I think you don't need it here. The dealer is not going to have the MH's affixed to land; therefore, the MH's don't qualify for flood insurance.

Hmmm. Not sure about that. Just because the mobile home is not anchored, I'm not sure that the flood insurance requirements are waived. That is not the case when a person owns the mobile home, but would need to do some research.

I understand Randy. Here's my logic:
The MH's won't be attached to utilities. Therefore, they can't qualify for flood insurance.

If I have an individual who owns a MH, I can make them anchor it because it needs to be to qualify for flood AND hazard insurance. Loan contracts require MH's to be insured. Anchoring them is a requirement to carry out the contract requirement.

This is where the definition of "improved real estate" & "mobile home" exempts dealership inventory.

208.25(b)(3) 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.

208.25(b)(6) 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 this section, the term mobile home means a mobile home on a permanent foundation. The term mobile home includes a manufactured home as that term is used in the NFIP.