|The Differences between Chattel Mortgages and Traditional Real Property Mobile Homes Loans|
Tue 08/18/09 07:59:16 pm
by Josh Ladick
The recent changes in the American banking
system have made the distinction between a chattel mortgage and tradition real
property financing more important than it used to be. When buying a mobile home
or manufactured home, the first thing your broker will ask is if you will be
buying with land or home-only.
Everyday I am asked about
the differences between mobile home loans and real property site built homes,
and how these differences affect the mortgage loan processes for these
Generally speaking, a manufactured home mortgage is
a written document which gives a creditor an interest in the property of a
borrower to secure payment of a loan debt. While this broad definition blankets
all mortgage loans, the different types of homes, or collateral, are what draw
differences between manufactured home, or chattel, loans and traditional stick
built home mortgages.
In the United States, chattel mortgages are
referred to as secured transactions. Such transactions are governed in most
states by Article 9 of the Uniform Commercial Code. When obtaining a loan for a
manufactured home, a borrower will be entering into a chattel mortgage. The
purchaser or home owner is borrowing funds for the purchase or refinancing of
movable personal property (the chattel or manufactured home) from the creditor.
The creditor then secures the chattel loan with a mortgage over the manufactured
home as chattel, or the manufactured home itself. The Legal ownership of the
chattel is transferred to the creditor, and the registered ownership is given to
the purchaser, or the homeowner, when the loan transaction has been
Mortgages for traditional homes that are built on
site and include real property are a bit different from chattel, or mobile home
loans. A mortgage for this type of mobile home is a loan secured by real
property through the use of a Note, which is a document that evidences the
existence of the loan. Real property mortgages and loans can and should be
additionally evidenced by a Deed of Trust document, which is recorded with the
County Recorder. The Recorder is a county official that insures that instruments
are recorded, giving public notice of such transactions. The Deed of Trust for
the mobile home will be recorded with the County Recorder of the County
where the real property is located.
Manufactured home mortgages, or chattel
loans, are not secured in the same fashion as real property loans. The title
information for manufactured homes is maintained by The United States Department
of Housing and Urban Development. In the State of California, The Department of
Housing has "Registration and Titling" offices that are specifically assigned to
maintaining the title information on Manufactured Homes. The homeowner, or
purchaser, of a manufactured home shall be shown on the title as the registered
owner, and the creditor shall be shown as the Legal Owner to the manufactured
home. When a manufactured home is encumbered by a Legal Owner, the genuine
Certificate of Title to the manufactured home is handed to the mortgage
creditor, or legal owner. The manufactured home owner is handed a Registration
Card, which evidences the homeowner's Registered Ownership interest in the
manufactured home. With site-built, real property homes, the homeowner retains a
Grant Deed to evidence their ownership in the home, and the
creditor maintains the Note and Deed of Trust to evidence their ownership
interest in the real property home.
It's helpful to understand these title and security
differences, as they play a major role in determining the actual loan type,
qualifying agents and the loan process itself. Mobile homes and real property
site built homes are not only made differently, but titled differently and
mortgaged uniquely as well. For more information on mobile home titling, visit
The HUD website.
About the Author: Josh Ladick is with the San Diego Mortgage
Group , a mortgage
funding and brokerage firm, with a specialty in mobile home loans.
They are located in San Diego, and have financed hundreds of loans across
California, however they can finance loans for chattel mortgages across the USA.
For more information: || San Diego: Mobile Home Loans or Refinance ||
California: Manufactured Home Loan
|| United States: Manufactured Home
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The Differences between Chattel Mortgages and Traditional Real Property Mobile Homes Loans