October 11, 2016
A reader asks, “Can you please state what the guides are for manufactured homes in a flood zone?”
FHA loan rules for ANY type of property include the following guidelines for flood zones:
“The Mortgagee must determine if a Property is located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA). The Mortgagee must obtain flood zone determination services, independent of any assessment made by the Appraiser to cover the Life of the Loan Flood Certification.”
Furthermore, FHA loan rules state that any type of property to be purchased with an FHA mortgage loan would not be eligible when the following circumstances apply:
-a residential building and related improvements to the Property are located within SFHA Zone A, a Special Flood Zone Area ,or Zone V, a Coastal Area, and insurance under the National Flood Insurance Program (NFIP) is not available in the community;
or
the improvements are, or are proposed to be, located within a Coastal Barrier Resource System (CBRS).”
For manufactured homes located in Special Flood Hazard Areas in particular, FHA loan rules state:
“The finished grade level beneath the Manufactured Home must be at or above the 100-year return frequency flood elevation. If any portion of the dwelling, related Structures or equipment essential to the Property Value and subject to flood damage for both new and existing Manufactured Homes are located within an SFHA, the Property is not eligible for FHA mortgage insurance unless the Mortgagee obtains:
-a FEMA issued LOMA or LOMR that removes the Property from the SFHA; or
-a FEMA National Flood Insurance Program (NFIP) Elevation Certificate (FEMA Form 81-31) prepared by a licensed engineer or surveyor stating that the finished grade beneath the Manufactured Home is at or above the 100-year return frequency flood elevation, and insurance under the NFIP is obtained.”
Where an FHA loan is permitted as per the above for any type of property, flood insurance may be required:
“For Properties located within an SFHA, flood insurance must be maintained for the life of the Mortgage in an amount at least equal to the lesser of:
-the Appraisers estimated replacement cost, less the Appraisers estimated site value;
-the outstanding balance of the Mortgage; or
-the maximum amount of the NFIP insurance available with respect to the property improvements.”
All of this information can be found in HUD 4000.1 pages 138-139. Lender standards, state law, and other regulations may also apply.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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