What Park Managers Should Know When a Resident Is Financing a Mobile Home
When a resident or a buyer finances a home in your community, the lender will ask your office for three things: who has been approved to live in the home, the standard monthly rent for the space, and the term of the lease. You are not being asked to approve the loan or to vouch for anyone’s finances. Your approval and the lender’s are separate decisions, and a purchase needs both.
The requests come because the home that secures the loan sits on your land, and the space rent is part of what the borrower pays every month.
Why the lender calls the office
In a land-lease community the resident owns the home and rents the space. A loan on that home is secured by the home alone, so the lender has two questions that only the community can answer.
The first is whether the borrower can keep the home where it is. That depends on your resident approval and the rental agreement. The second is what the space costs. Lenders compare a borrower’s income with the whole monthly housing cost, which is the loan payment plus insurance, taxes and space rent, so your rent figure goes straight into the loan review.
Neither question asks for your opinion of the buyer as a borrower. What a community reviews, seen from the buyer’s side of the counter, is covered in the buyer’s guide to resident approval.
What you will be asked to confirm
Santiago Financial, Inc. uses a one-page Community Certification, listed with the loan processing forms on our printable forms page. Other lenders have their own versions, and they generally ask for much the same things.
The lender’s request, line by line
| The lender asks for | Why it matters to the loan |
|---|---|
| The name of everyone signing the rental agreement | The lender compares it with the borrowers on the loan |
| The name of everyone approved to live in the home | It shows that the people who will live there have the community’s approval |
| The home’s address, the community’s name and contact details, and the owner or management company | The loan is tied to one home in one place, and the lender knows who stands behind the answers |
| The standard monthly charge for that space, without any introductory rate or special | It is counted in the borrower’s monthly housing cost |
| Any introductory rate, promotion or arrangement made with the buyer or the seller | The lender needs the terms of anything temporary |
| The term of the lease | The lender sees how long the current agreement runs |
| A representative’s signature, printed name, title and the date | The loan relies on it as a signed statement |
This table is the whole request, so it can be kept at the desk as a one-page sheet. The form carries a warning about knowingly making false statements. Have it completed by someone with authority to sign, working from the resident’s file and not from memory.
Give the standard rent, and describe any promotion separately
The rent line causes most of the back-and-forth. The certification asks for the standard monthly charge for that space, leaving out any introductory rate, promotion or special arrangement. It then asks you to describe any such arrangement on its own line.
The lender is looking at what the borrower will pay for as long as the loan runs, not for the first few months. If the figure you give has a move-in discount folded into it, the buyer’s file is built on a number that will change.
Where the hand-offs happen
A financed sale passes between the seller, the buyer, your office, the lender and escrow, usually in this order.
A financed sale from the office’s side
- The home goes up for sale The seller or the seller’s agent tells the office. You hand out the resident application, the rules and the current rent for the space.
- The buyer applies twice The resident application comes to you and the loan application goes to the lender. Neither waits for the other.
- You decide on the buyer The decision is yours, made under your own criteria and the law that applies to your community.
- The lender sends the certification You complete it from your records, sign it and return it to the loan processor.
- Escrow sets the closing Escrow gathers the documents and the funds, and may contact the office about the closing date and move-in.
- The sale closes The home’s title transfers to the buyer, generally with the lender recorded on it as lienholder, and the buyer becomes your resident under the rental agreement.
In California, the Mobilehome Residency Law sets out management’s part in the sale of a home that will stay in the park, including the review of the buyer (Civil Code section 798.74). In Arizona, park tenancies come under the Arizona Mobile Home Parks Residential Landlord and Tenant Act, which is Title 33, Chapter 11 of the Arizona Revised Statutes. Your owner, your association or your attorney is the source for how either one applies to a particular sale. This article is general information, not legal advice.
A refinance asks for the same answers
When a current resident refinances, nobody new is moving in and there is no resident application to review. The lender generally still asks for a certification: who is on the rental agreement, who lives in the home, the standard rent and the lease term. Treat it like a purchase request and answer it from the resident’s file.
What holds a file up from the park’s side
A file that is waiting on the office is usually waiting on one of a few things, and each can be checked before the certification goes back.
Rules that surface late are the other common cause: an age requirement, an occupancy or pet limit, or repairs the community wants made to the home or the space when it is sold. Buyers and sellers need these at the start, because park rules can change a buyer’s plans and the cost of the purchase.
Questions residents bring to the office
Managers also hear the questions residents do not know where else to take. A resident who learns the community is being sold wants to know what becomes of their loan. A sale of the land does not change it, as what happens to your loan when a park is sold explains. A resident who plans to sell asks what a buyer’s lender will want from the office, and the answer is the table above.
If a lender’s request is unclear, or you want to arrange one point of contact for financed sales in your community, the contact details are on our page for dealers, agents and community managers.
