Manufactured Home Foreclosures & Repossessions

If you default on your manufactured home loan, the lender may be able to retake possession of it through repossession or foreclosure.

A manufactured home is a type of housing that is delivered to a destination and once there, is normally secured to the ground or a foundation. Read on to learn more about the nature of manufactured housing and what happens if you stop making loan payments on your manufactured home or on the land it sits upon.

Understanding the Difference: Mobile Home, Manufactured Home, Modular Home

Mobile home, manufactured home, and modular home are terms that are frequently used interchangeably. However, there are differences that you should be aware of.

Mobile Homes and Manufactured Homes. In 1974, Congress passed the Mobile Home Construction and Safety Standards Act (the Act), which directed the U.S. Department of Housing and Urban Development (HUD) to put forth federal construction standards for mobile homes. Prior to the Act, mobile homes were built with little uniformity regarding construction or safety standards.

All mobile home units constructed after the effective date of the HUD standards (June 16, 1976) must have a HUD label certifying that the home has been inspected and constructed in compliance with the Act. On October 8, 1980, Congress enacted public law 96-399, which officially changed the name of this type of home from “mobile home” to “manufactured home.” The term “manufactured home” typically means a unit that is constructed pursuant to the HUD construction and safety standards, whereas a “mobile home” refers to homes built before June 15, 1976, when the federal standards took effect.

A manufactured home is structurally complete when it leaves the factory, and is transported in one or more sections. Manufactured homes are constructed on a permanent chassis, with a tongue, axles, and wheels for transport.

Modular Homes. Modular homes, on the other hand, are constructed to the same state, local, or regional building codes as site-built homes. Sections of a modular home are transported to the building site on truck beds, where they are then connected together by local contractors.

Manufactured Homes: Personal Property or Real Property?

Initially, a manufactured home is considered personal property, like an automobile. In most states, parties convey ownership of manufactured homes by a certificate of title, with security interests noted on the title. In states that do not use a certificate of title, a security interest in a manufactured home is perfected (made) through a UCC filing.

Though a manufactured home is considered personal property to begin with, a homeowner can usually take steps to change the classification from personal property to real property.

Converting a Manufactured Home to Real Property

Many states have statutes that provide procedures for converting a manufactured home to real property, while a few states have statutes that specify whether a manufactured home is considered personal property or real estate in credit transactions. Other states have a statutory scheme that establishes criteria for taxing the home as real property and certain other states have no statute on topic.

Generally, to be classified as real property, a manufactured home must be permanently affixed to the land.

In some states, a manufactured home can be converted to real property if it is permanently affixed to leased land, while other states require that the manufactured home owner must also own the land. (Sometimes manufactured homeowners own the land on which the home is situated, but in other cases, the manufactured home may be located on rented land or on a leased space in a manufactured home park.)

Typically, the requirements for a manufactured home to become real property may include:

  • the tongue, axles, and wheels must be removed
  • tie-downs must be installed
  • the manufactured home must be intended to be permanently attached to the land
  • the homeowner must surrender the certificate of title to the appropriate revenue commission, and
  • the homeowner must take whatever steps the state requires to have the manufactured home assessed as real estate.

Manufactured homes that are not permanently affixed to the land, or where proper procedures have not been following to convert the manufactured home to real property, will remain classified as personal property.

What Happens if the Manufactured Homeowner Defaults on the Loan?

If the borrower defaults on loan payments for a manufactured home, the creditor can take the manufactured home. How the creditor does this depends on whether the home is classified as personal or real property. If the home is personal property, the creditor repossesses the home. If the property is real property, the creditor forecloses on the manufactured home.

Repossession of Manufactured Homes: Replevin and Self-Help

If the property is considered personal property, then the creditor can repossess it.

Replevin. To do this, creditors often use a judicial process called replevin. A replevin is similar to a judicial foreclosure in that a creditor files a lawsuit in court and asks the court to grant an order for repossession.

Self-help repossession. With self-help repossession, the creditor retakes possession without the use of judicial process, like when a repo agent comes and takes a car away. This process is available in most states, but it is not especially practical for manufactured homes. It would difficult, if not impossible, to take the home without breaching the peace (a requirement for self-help repossession) or taking the borrower’s other belongings, like furniture or other personal property located in the home. Moreover, a few states prohibit self-help repossession for manufactured homes. (To learn more about repossession and replevin, see our Repossession of Cars & Personal Property topic area.)

Foreclosure of Manufactured Homes

If a manufactured home is part of the real property, then the home is treated as real estate and the lender must use state foreclosure procedures. (Learn more about foreclosure, options to avoid it, defenses to foreclosure, and more, in Nolo's Foreclosure topic area. Also, see our Summary of State Foreclosure Laws for more information about the foreclosure procedures in your state.)

Manufactured Home Fixture Filings

In states that do not use a certificate of title, the security interest in the manufactured home is usually perfected through a UCC filing. Then, the manufactured home is considered a fixture. In this case, the creditor can retake possession of the manufactured home through self-help repossession or replevin (if available in the state), or through state foreclosure law.

Defaulting on the Land Mortgage: Home Is Personal Property

If you own the land your home rests on and have a mortgage on the property, but you don’t complete all the steps to convert the manufactured home to real property, things can get complicated if you then default on your payments.

If Your Manufactured Home Is a Fixture

If the manufactured home sits on land you own, the home may be considered a fixture if it has been permanently affixed to the land. In this type of situation, any mortgage on the land may potentially cover the manufactured home too, if the mortgage includes improvements. If this is the case, then you cannot remove the manufactured home from the property (and you will lose it along with the land), if you stop making payments on the land.

Example. Let’s say you acquired the land first by taking out a mortgage to purchase it. You later buy the manufactured home outright and permanently attach it to the land. Your mortgage states that the land, as well as all improvements now or later erected on the property, as well as any fixtures, act as security for the debt. As a result, the mortgage on the land covers the manufactured home as well. You therefore cannot simply move the manufactured home to another location if the lender forecloses because you stopped making payments on the mortgaged land.

Generally, whether or not the manufactured home is a fixture is a question of fact. For instance, if the tongue, axles, and wheels have been removed and the home is permanently affixed to the ground, it will probably be considered a fixture.

If Your Manufactured Home Is Not a Fixture

If your home is classified as personal property, and it is not a fixture, then if you default on payments for a land mortgage, the land will be foreclosed and you can move your manufactured home to a new location.

For More Information

For more information about manufactured housing, go to www.hud.gov and enter "manufactured home" in the home page search box to find a list of relevant links.

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