Leasehold Condominium Owner Financing?
Hello,
I came across a woman who needs help getting financing for her mobile home attached to land, where she owns a long term land lease, it is kinda confusing.
I'm a note broker and wanted to set up some sort of simultaneous close for her, but I was hoping you folks could read through her explanation below and let me know any advice you have, or if I should just pass. Just not sure I understand the situation or how to handle it, or if I can handle it. Thanks! D
HER STORY
It's hard to make a long story short...but basically we have title to a long-term land lease (has 60+ years remaining) - this is bittersweet because property values are much higher here because we do not have to pay any space rent - we pay a minimal lease / homeowner's association fee. But apparantly many lenders have just recently stopped taking ANY leaseholds (probably because a lot of them do not have a lot of time left?) Somebody on another forum found this as a definition:
559.107. Definitions
Sec.7. (1) "Leasehold condominium" means a condominium
project in which each co-owner owns an estate for years in
all or any part of the condominium project if the
leasehold interests will expire naturally at the same "
Anyway, I'm not sure what you would classify what we are doing: purchase or refinance...because we have owned the land / old home for 4 years, but we have removed the old home to be able to put the new home in there with permanent foundation. The 'plan' for the loan was this: We were approved to get one loan to pay off our existing loan, pay off the dealer, and pay the contractor...all in all basically taking out a 85-90% loan to appraised value (we are also having a new appraisal done next week since home is now in place and work is almost complete...value will most likely be higher) It seems many lenders have been burned in the midwest on manufactured home loans and therefore have decided not to accept them, especially not in leaseholds..now we are stuck in this situation. As of now, I have not brought this issue to the dealer, so as not to open a can of worms...I am hoping we or the mortgage broker can figure something out before putting our problem on the table.
Please let me know if you have any ideas!
thank you
I understand that it is diffucult to get these deals done but that there are lenders that specialize in them. Are you thinking of doing the loan? In that case I wouldn't worry too much about it-- the long term land lease is perfectly acceptable and with 60 years to run you're going to be amortized out before its a problem.
You want to make sure that you have some mechanism for making sure the underlying condo association fees are paid. Recording your mortgage will require the condo association to give you notice if/when she defaults and they had to foreclose (their claim is senior to yours probably, depends on state law) but you'd like to find out before that. Its a lot like property taxes-- do you use an escrow agent for property tax payments, the same outfit could probably do this.
Ignoring most of the message to clarify one point...
If the manufactured home is installed on a foundation and the axle/wheels are removed, what is the legal status of the structure?
In OR you can convert personal property (manufactured home) to real estate if you install the structure on a permanent foundation. The unit legally is classified the same as a site build home. Hence the lenders will stop treating it as a manufactured home and consider it like a normal structure.
I am ignoring the lease issue.
John
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