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Is your manufactured foundation acceptable to lenders?

Why the California HCD433 isn't evidence the foundation is ok for lenders

Many agents and buyers/sellers erroneously assume if a HCD433 (California form) has been recorded against the property it is evidence of a manufactured home having been properly installed on a foundation that's acceptable for all loan programs. This common misconception can cause frustration and possibly end with a cancelled transaction.


What's a HCD433?

The HCD433 is a set of California forms with 2 very different versions we'll discuss here. When a 433 is recorded it accomplishes one and possibly 2 things. The first is to convert the manufactured home from personal property to "a fixture improvement to real property" thus the improvements and land would be taxed as real property by the respective county. If the correct lender required HCD433A is used, this indicates the home was installed on a foundation system---but does not prove it's a foundation acceptable to lenders.


A different type of HCD433 -- the HCD433C -- only confirms the transfer of the manufactured home to the real property tax rolls-and does not certify it was installed on a "permanent" foundation system. Occasionally property owners and even county recorders get these 2 types of HCD433s confused.


Below are copies of a HCD433A and a HCD433C -- both older and the newer versions of each.



So if the 433 isn't proof, how do you know a manufactured home's foundation system is acceptable to lenders?

Potential problems can also arise based on the type, current condition and construction quality of the foundation used. In my 30 plus lending years financing hundreds of manufactured homes -both new construction and resale-- I have experienced a variety of different foundation systems, some acceptable to lenders at the time of installation--that are not now--and others that experienced a substandard foundation installation and are now in need of repair/modification to be acceptable to a lender.


Conventional loan

On conventional loans, an appraiser typically must include in the appraisal report their opinion the home was installed in accordance with the manufacturer's requirements for anchoring, support, stability and maintenance and the foundation system is compliant with Fannie Mae and/or Freddie Mac standards. If the appraiser is unwilling to state this, an engineers' inspection and foundation certification letter would be required.


VA loan

VA requires the appraiser to state the home is permanently affixed to a foundation system conforming to the VA's Permanent Foundations guide for manufactured Housing Standards. Again, if the appraiser is unwilling to confirm this an engineer's inspection and foundation certification letter would be required.


FHA and USDA

On FHA and USDA loans a licensed engineers' foundation certification letter is required. Occasionally this engineer's letter can be a previous one, however it depends on how old the certification is, along with any improvements/changes made to the home after the date of the certification letter. FYI--currently as of June 2024, in California, only new manufactured homes are eligible for the typical lender provided guaranteed USDA loan. USDA direct--a program USDA runs directly and for very low income borrowers-- may be a source for financing older manufactured homes. About 20 other states participate in a USDA pilot program that allows manufactured homes older than one year to be financed-but California isn't one of them.


How to get an engineer's Foundation certification

An engineers' foundation certification letter --sample below-- can be ordered from any licensed engineer, however most experienced manufactured housing lenders will have a source to order from. Cost varies based on location and complexity of the foundation/home, but a typical fee is about $600 to as much as a $1000 or more in our area. Timeframe from order/payment date to receipt is about one to two weeks depending on property location. If upon inspection, the engineer can't issue a certification they typically will provide a report of what needs to be done to make the foundation compliant.



In my experience, any foundation repair or retrofit to meet lender's standards can typically cost hundreds to thousands of dollars depending of course on the scope of the work needed. Once the work is completed a reinspection is typically required with an additional inspection fee.


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