Can You Lose Your Manufactured Home? Foreclosure & Repossession Explained

A "manufactured home" is a type of housing that's delivered to a destination and, once there, is sometimes secured to the ground or a foundation. If you default on your manufactured home loan, the lender might be able to take possession of it through repossession or foreclosure.

If you're worried about losing your manufactured home because of missed loan payments, you should learn about the difference between manufactured home repossession and foreclosure. These processes are different and provide homeowners with different rights.

Whether your manufactured home is classified as personal property or real estate, this article explains what happens if you default on your manufactured home loan, the repossession and foreclosure processes, and what options you have to keep your home.

What Is a Manufactured Home?

The terms "mobile home," "manufactured home," and "modular home" are frequently used interchangeably, but these housing types are different.

Laws Covering 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. Before the Act, mobile homes were built with little uniformity regarding construction or safety standards. Two years later, HUD established the Manufactured Home Construction and Safety Standards (the "HUD Code").

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."

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

Mobile Home vs. Manufactured Home vs. Modular Homes: Key Differences

The term "manufactured home" typically means a unit constructed under 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, 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 and then connected by local contractors.

Can My Manufactured Home Be Taken Away?

If the borrower defaults on loan payments for a manufactured home, the creditor can repossess or foreclose the home.

Foreclosure vs. Repossession: Key Differences

Foreclosure and repossession are two distinct legal processes. Repossession generally applies when the manufactured home is personal property and foreclosure applies when it is real property. The legal procedures, rights of the homeowner, and lender's remedies vary based on this classification.

Personal vs. Real Property: Why It Matters

Again, whether a manufactured home will be repossessed or foreclosed depends on whether the home is classified as personal or real property. The creditor usually repossesses the home if the home is personal property. If the manufactured home is officially considered part of the real property, the creditor forecloses on the manufactured home.

However (and here's where things get complicated), if a manufactured home is wrapped up with the land as collateral for the loan, the lender will likely foreclose, even if the manufactured home is still classified as personal property. Here's a more detailed explanation of what happens after a loan default if a manufactured home is classified as personal or real property:

• Manufactured home is personal property. If the manufactured home is classified as personal property (meaning it still sits on its chassis with wheels and axles and isn't permanently affixed to the land), then falling behind on payments can lead to the lender repossessing the home.
• Manufactured home has been converted to real property. If the manufactured home has been converted to real property by permanently affixing it to land (such as removing the wheels and axles and legally titling it as real estate), then the loss of the home due to unpaid mortgage payments follows the foreclosure process, similar to a regular home foreclosure. This process involves a judicial or nonjudicial foreclosure where the lender seeks to sell the home to recover the loan amount.
• Manufactured home is classified as a fixture on land owned by the homeowner. If the manufactured home is classified as personal property but has become a fixture on land owned by the homeowner (and there's a land mortgage), foreclosure on the land can also lead to the loss of the home. That's because the manufactured home is part of the real property.

Converting a Manufactured Home to 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 don't use a certificate of title, a security interest in a manufactured home is perfected (made) through a UCC filing. Although a manufactured home is considered personal property initially, a homeowner can usually take steps to change the classification from personal property 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 the topic.

Generally, a manufactured home must be permanently affixed to the land to be classified as real property. 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 also own the land. (Sometimes manufactured home owners own the land on which the home is situated, but in other cases, the manufactured home might be located on rented land or a leased space in a manufactured home park.)

What Are the Requirements for Converting a Manufactured Home to Real Property?

Typically, the requirements for a manufactured home to become real property 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 aren't permanently affixed to the land or where proper procedures haven't been followed to convert the manufactured home to real property remain classified as personal property.

How to Tell If a Manufactured Home Is Titled as Real Property or Personal Property

Generally, if the home has been permanently affixed to the land and the home's vehicle-style certificate of title has been canceled or surrendered, plus the homeowner has filed an affidavit of affixture with county or state offices, then the home is real property. If the home isn't attached to the land, can be moved, and has a certificate of title similar to a vehicle, then it is personal property.

So, you can check state and local property records, such as the DMV and county recorder's office, for a certificate of title or affidavit of affixture (or similar document) to verify the home's status. Homes classified as real property will appear with land on county or local records.

Also, if you pay property taxes on both the land and home combined, it's likely classified as real property. If you pay separate taxes, it's considered personal property.

How Does Repossession Work for Manufactured Homes?

If the manufactured home is considered personal property, the creditor can repossess it, most likely using a replevin process.

Repossession (Replevin) Process Step by Step

To repossess a manufactured home, 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.

Before the replevin process starts, the lender will probably provide a formal notice of the impending repossession, giving you the chance to catch up on payments. If you don't pay the overdue amount, the lender will file a lawsuit. If the court finds in favor of the lender, it will grant an order, allowing the lender to repossess the home. After the repossession, the lender sells the home, often at auction, to recover the outstanding loan balance.

Can a Lender Just Take My Home?

With "self-help repossession," the creditor retakes possession without judicial process, like when a repossession agent comes and takes a car away. This process is available in most states, but isn't especially practical for manufactured homes. It would be 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. So, the lender will in all probability use a replevin process to repossess the home.

How Does Manufactured Home Foreclosure Happen?

If a manufactured home is part of the real property (or is a fixture that was intended to be included with the land mortgage), then the home is treated as real estate, and the lender must use state foreclosure procedures. The process will be through court (judicial) or it will be nonjudicial (no or little court involvement).

Fixture vs. Personal Property in Foreclosure

If you own the land your home rests on and have a mortgage on that land, 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 for the land loan.

If your manufactured home is a fixture. If the manufactured home sits on land you own, the home might be considered a fixture if it has been permanently affixed to the land. In this type of situation, any mortgage on the land might potentially cover the manufactured home, too, if the mortgage includes improvements. (In states that don't use a certificate of title, the security interest in the manufactured home is typically perfected through a UCC filing. Then, the manufactured home is considered a fixture.) If this is the case, you can't remove the manufactured home from the property and you will lose it along with the land in a foreclosure if you stop making payments on the land.

Generally, whether a 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 isn't a fixture. If your home is classified as personal property and not a fixture, and you default on payments for a land mortgage, the land will be foreclosed, and you can move your manufactured home to a new location.

What Are the Legal Rights of Manufactured Home Owners Facing Foreclosure and Repossession?

Manufactured home owners have legal rights when facing foreclosure and repossession, similar to stick-built home owners. Some of these rights include various rights during a foreclosure or repossession, such as the right to receive notice of the action, various legal protections during the process, and the opportunity to negotiate with the lender to avoid losing the home.

To learn more about the rights, process, and timeline that apply to your situation, talk to a local lawyer.

What Are the Causes of Manufactured Home Foreclosures and Repossessions?

Job loss, medical expenses, or other financial hardship can lead a person to default on a loan covering a manufactured home, leading to a repossession or foreclosure.

How to Avoid Foreclosure or Repossession of Your Manufactured Home

The options for manufactured home owners facing foreclosure and repossession are similar to those available to traditional home owners. A few of your options might include:

• forbearance agreement (your payments are suspended or reduced)
• repayment plan (you get current on the debt over time)
• loan modification (the lender agrees to change your loan's terms)
• regular sale or short sale (in a short sale, you sell the property for less than you owe), or
• deed in lieu of foreclosure (you give the home to the lender).

Forbearance Agreement: Reduce or Suspend Your Payments

With a forbearance agreement, the lender agrees to reduce or suspend your loan payments for a specific amount of time. In exchange, you must resume making your payments at the end of the forbearance period. You'll also have to make up the missed amounts.

Repayment Plan: Get Caught Up Over Time

If you've missed some of your loan payments due to a temporary hardship, a repayment plan will spread the past-due amount over time, typically three to six months. You'll pay a portion of the overdue amount along with your regular payment amount each month. At the end of the repayment period, you will be current on your payments, and you'll resume paying the normal monthly payment amount.

Loan Modification: Adjusting Your Loan Terms

A "loan modification" is a permanent restructuring of the loan where one or more of the terms are changed to provide a more affordable payment.

What Is a Short Sale?

A "short sale" occurs when the lender permits the homeowner to sell the home for an amount that falls short of the amount owed. (With a regular sale, you sell the home for at least enough to cover the debt.)

What Is a Deed in Lieu of Foreclosure?

A "deed in lieu of foreclosure" is a transaction where the homeowner voluntarily transfers the property's title to the lender in exchange for a release from the loan obligation.

Frequently Asked Questions (FAQs)

Here are some answers to frequently asked questions (FAQs) about manufactured home foreclosures and repossessions.

What are the consequences of a foreclosure on a manufactured home?

Some consequences of losing your manufactured home to foreclosure or repossession include the loss of the home, damage to your credit, and difficulty getting new credit.

How can I rebuild my credit after a foreclosure?

To rebuild your credit after a foreclosure or repossession, pay your bills on time and dispute errors on your credit reports. You can also take other steps, like getting a secured credit card and paying down certain debts, to lower your credit utilization ratio.

What if I rent the land and fail to pay rent?

If you live in a manufactured home park and fall behind on your lot rent, you could face eviction. Usually, the park owner must file a formal eviction lawsuit in court to remove you from the space. The eviction process often follows landlord-tenant laws, but might vary by state, with some states having special regulations for mobile home park evictions.

When to Talk to a Lawyer

As you can see, the laws about repossessing and foreclosing manufactured homes are complicated. If you're facing a repossession or foreclosure of your manufactured home and need specific information about your circumstances, consider talking to an attorney in your state.