Lenders reluctant to refinance loans on mobile homes Mortgages seen as too risky

December 13, 1992|By James M. Woodard | James M. Woodard,Copley News Service

Many homeowners have refinanced their mortgage loans or obtained equity loans in recent months. But there's one group of owners who are virtually blocked out of those opportunities.

These are owner-residents of mobile homes. An example is Earl O. Roe, a retired senior editor at Regal Press, a book publishing firm.

"Everyone talks about refinancing mortgages these days, but owners of mobile homes have a terrible time finding lenders who will even consider them, irrespective of their [owner's] credit status, loan repayment history and so on," Mr. Roe said.

"Why is this? Even the lender that holds my present mortgage will not let me refinance my home loan. They said they stopped granting mortgages for mobile homes a long time ago."

Most mortgage lenders consider loans on mobile homes too risky.

"Mobile homes are not real estate -- not anchored to the ground with a conventional foundation. Therefore, the owner does not have fee title to his home as real property, which makes it difficult to grant a mortgage loan," said Scott Husted, vice president of mortgage banking for a major bank.

The mortgage loan business generally has become a bit sluggish. Refinance activity is down. But loans to finance the purchase of lower-priced homes, particularly to first-time buyers, are picking up. This seems to be the case in most of the U.S.

The most popular type of financing mortgage is the basic 30-year fixed-rate loan. Also, the 5/25-year loan is popular. Under this arrangement, the interest rate is fixed for five years, then adjusts once, then remains fixed for the next 25 years -- a 30-year loan. The rate for this type of loan is considerably lower than for a straight 30-year fixed-rate loan, but more than for a typical adjustable-rate mortgage.

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