We recently explored a real estate path we had not tried in Whatcom County. Purchasing a mobile home for our youngest son to live in.
In our quest, we visited several properties and found an older manufactured home in a nice park for under 100K. Our son and his fiancé were thrilled they could be homeowners with a monthly payment they could afford on their income.
The catch is that they needed our backing on the loan due to their income and fledgling credit. Mobile home loans are not traditional loan products, especially if the unit is in a park and not on your land. These loans are called chattel or personal property loans and function similarly to a car loan.
Our offer to purchase the home was accepted by the seller, who is also the park owner. We were under the impression that the loan application we had already started would go through smoothly as Kirk and I have sterling credit and would serve as the guarantees.
After our initial excitement, the loan officer, who neglected to mention that we could not serve as a guarantee, informed us that our loan application was rejected. Back to square one, only the rule of not allowing parents to serve as a guarantee exists in almost all chattel loan requirements.
If you ever want a raw reality to wake up call of how impossible it is for decent, hard-working people to buy a modest, older place to call home, we invite you to ride with us as we figure out how to navigate the world of obtaining a home on a limited income.
Finding a park that is not limited to 180 days of full-time living (some are 120) is hard enough. There are zero loan options for this product, possibly because there are at least ten for sale signs outside Latitude 49, a popular mobile home park in Birch Bay under the 180-day ruling.
For parks that allow full-time living, there are various restrictions regarding who can live in the unit. We discovered that if we are on the title as the guarantee, many loans and sometimes the park require us to be the tenants. We can all live together, but we are seemingly not allowed to help our kids live independently.
This rule is flexible depending on the park, but the guarantee rule apparently is not. Our son, who makes over minimum wage, and his fiancé, who makes quite a bit over minimum, cannot purchase a home, even an older mobile home, because most banks will not finance them even with our income as a security. An update to this story is that after being rejected by dozens of national loan institutions specializing in chattel loans, we were given an excellent loan with great terms by Industrial Credit Union of Whatcom County. Being local matters when you secure financing in the non-traditional loan world, and we cannot thank the great folks on their loan team for their assistance in answering our needs. They are the only ones out there solving this need, so call them if you find yourself in our position.
One should ask why the limited-time vacation rule exists with the growing need for affordable housing in Whatcom County. The reality of short-term rentals has been explored extensively regarding Air BnB and VRBO, yet what would help even more is the erasure of part-time occupancy rules in low-income mobile home parks. We allow anyone, including those openly dealing drugs and committing other crimes, to live on the street for three days. We can start to address this growing problem by opening parks up to full-time living. Fortunately, some mobile and RV parks are simply choosing not to enforce the 180-day rule, but enough are, thus causing a shortage of affordable homes and home spaces.
The other issue is that funding options are available if you live in an RV but not if you want to purchase a manufactured home. This unfairly pushes people into living in units not designed to be residential. Manufactured homes are homes that are built to higher standards and are meant to be lived in. RVs are not.
Have you ever wondered why so many people who live in mobile homes turn out to be uninsured when they suffer a total loss? This is because most insurance companies will not insure them if the rig is older than 15 years or, in the case of a park model, an RV/house hybrid without a back door. Even if a company will insure the home, the rates are so high that people cannot afford to insure themselves, so they go without. The total losses that happen disproportionately to mobile homeowners are almost always the final straw before homelessness.
Changes need to be made in several areas to open more housing for all and not just those with deep pockets. We can afford to help our kids, but most lenders refuse to allow us to. How can anyone win in this scenario?
Here is what I recommend as necessary changes to open, affordable housing:
- Abolish the 180-vacation occupancy rule throughout Whatcom County.
- Abolish the requirement that you cannot have a guarantee on chattel property loans.
- Abolish the current 72-hour rule that allows for open and notorious camping on our city streets. If we have enough spaces for people to park in with hookups, these people could relocate to permanent housing. Enrolling these folks in housing assistance to cover their space rent would allow them time to recover from their situations and give hope to the hopeless in what is now a never-ending dead end.
Many years ago, Kirk and I started our real estate journey by purchasing a single-wide mobile home, which we placed on a piece of tax foreclosure land. We dug our utility lines, borrowed money from our employers, and were given a chance by a locally owned bank that gave us a small loan. What was an 80K investment turned into a 125K property in just a few short years. The person we sold that house to over 25 years ago still lives there.
We need to stop punishing those not making over 100K a year. We must make purchasing a mobile or manufactured home easier and more transparent. We must utilize government subsidies to set up more RV parks or tiny home villages for those unhoused and living in derelict RVs. There is land to do this on that the city owns. Yet, the problem of camping on city streets persists because despite the city of Bellingham owning most of the area around Marietta, they are not developing it into what could quickly become a safe place for people to live. RVs without permanent hookups are dangerous, unsanitary, and a haven for criminal activities. Moving these units to a secure area with rules and access to clean water, electricity, and septic is humane and helps clean our streets. If people refuse to comply with the no city streets camping rule and refuse to move to a safe location, they should face what should be the expected consequences of having their rig impounded. Most people want help. Let’s focus on them and stop pretending we do not have a severe problem. Let’s come together as a community and offer housing options with realistic solutions.