Raw land loan w/MH not taken

How do you handle this situation? Customer wants to borrow against their raw land. Their primary residence, a 2wd MH, sits on the property and there is an existing mortgage on that MH to another lender. We only want to take the land as collateral - we have no interest in the MH. Can this be done? The property is taxed as real property. What about a case where there is no money owed on the MH but we only want to use the raw land as collateral?

Can this be done?

Sure, it would not be subject to RESPA - it is just a loan secured by land.

The property is taxed as real property.

I don't understand this statement. If the property and MH is considered real property, then the existing mortgage on the MH also attaches the land.

What about a case where there is no money owed on the MH but we only want to use the raw land as collateral?

See above.

We can take a deed on the land without also taking the titles to the MH as collateral. The titles have not been retired and there is a lien on the mobile home only by another lender.

If we take the land as collateral you would then assume we have a first on the land and a second lien on the MH. It is quite confusing.

If we do not list the MH as collateral would we still need to provide all of the early disclosures and give the ROR? I would assume if the MH was not pledged to another lender then we would have a first on the MH also and would need to escrow since we make HPML loans.

The titles have not been retired and there is a lien on the mobile home only by another lender.

If we take the land as collateral you would then assume we have a first on the land and a second lien on the MH. It is quite confusing.

If you do not take a specific security interest in the MH then you have no lien at all on the MH.

If we do not list the MH as collateral would we still need to provide all of the early disclosures and give the ROR?

No.

I would assume if the MH was not pledged to another lender then we would have a first on the MH also and would need to escrow since we make HPML loans.

That is an incorrect assumption. As said earlier, unless you take a specific security interest in the MH you have no lien on it and it does not secure your loan.

Thanks Dan.

Unfortunately our Third Party Examiner has said that because a MH is permanently affixed to the property by virtue of being attached to well and septic tank we are in violation of RESPA because we did not provide all required disclosures. We were told that we would have to specifically except the MH in writing on our Deed.

If we take no security interest in the MH then we should not have to pull a flood cert on the loan either, correct?

If the mobile is actually separately titled property as Dan stated, the deed will not attached the MH regardless of how it may be attached. No structure = no flood cert.

Your third party examiner is wrong......... Print and hand this post to them and then asked them for a citation to back up their claim.

Ditto Randy and Dan. If the DW is titled and you have no lien on the title, then you have no interst in the DW...just the land it sits on.

Thanks to everyone!

Can I ask one more question on this subject.

Customer has the title to his MH and we are not taking it as collateral although he owns it free and clear. The land value is sufficient to support the debt.

He has added a porch to the MH so it would "appear" that it is permanently affixed. Would it still be your opinion - no interest in the MH - No Respa, etc? Just a raw land loan.

Thanks again in advance for your opinions.

That will be a matter of state law as to whether the addition of a porch or deck would constitute the MH being "permanently" affixed and therefore considered an improvement to the real property.

Since it appears the title has not been surrendered then most likely it will not, however I can't address GA law.

Thanks so much for your input Dan!