Relates to manufactured homes certificate of title and the conveyance and encumbrance of manufactured homes as real property

• Democratic4
• Republican1

◆ The sponsor's argument

Why the sponsor says this is needed

Currently, manufactured homes - even if attached to real property - are not treated as a regular house that can easily be mortgaged and sold. For a mortgage secured by a manufactured home and land ("Land-Home Mort- gage") to be eligible for sale to Freddie Mac, the land and the manufac- tured home must be real property under state law. Freddie Mac's eligi- bility requirements, for example, state specifically that "The Manufactured Home must be legally classified as real property; it must be a 1-unit dwelling that is permanently affixed to a permanent founda- tion in a way that makes it part of the real property." Freddie Mac Single Family Seller/Servicer Guide § 5703.2(a), 5703.7(a). Other inves- tors, such as Fannie Mae and HUD, have similar eligibility requirements. Fannie Mae Single Family Selling Guide § B5-2-05; 24 C.F.R. § 203.43f. New York law currently provides that 1995 model year and newer manufac- tured homes are not classified as real property, even when affixed. Investors also require the home be covered by a policy of title insur- ance with an ALTA 7.1 manufactured housing rider. See, e.g. Freddie Mac Single Family Seller/Servicer Guide § 5703.7(f); Fannie Mae Single Fami- ly Selling Guide § B5-2-05. Under current law, these policies are not readily available in New York. Current New York law does not provide a procedure for a surrender of the certificate of title. This amendment makes the necessary changes to allow lenders to comply with the investor requirements that the manufac- tured home be real property under state law, making it possible for investors to purchase New York Land-Home Mortgages without exception. While many manufactured homes are financed as personal property, the ability to finance land and home with a mortgage is an attractive option for many homeowners seeking more favorable financing terms. Without the support and involvement of entities such as Freddie Mac and Fannie Mae in this market, the availability of Land-Home Mortgages is limited. Currently, 43 states utilize a certificate of title process to establish ownership of, and to perfect a security interest in, a manufactured home. All states but New York also provide a formal statutory procedure for electing to convey and encumber a home as real property. Satisfying this conversion procedure legally converts the home to real property for all purposes. This bill would establish a process in New York State, similar to the process that exists in the overwhelming majority of states, providing for the ability to surrender a certificate of title to and convert a manufactured home to real property. This process will meet the guide- lines and requirements of secondary market mortgage investors and there- fore help ensure that affordable mortgage financing remains a viable option. The bill, throughout, recognizes that for most purposes, existing law adequately governs the conveyance and encumbrance of manufactured homes. Accordingly, the bill generally does not change the current provisions of the Uniform Commercial Code and the New York Vehicle and Traffic Law that govern conveyance and encumbrance of homes that are consumer goods or fixtures. Similarly, the bill does not purport to overrule case law construing those provisions. In deference to this law, existing business practices, and practical considerations, the bill permits, but does not require, use of the conversion procedure for homes covered by a certif- icate of title. The heart of the bill is a new Article of the Real Property Law setting forth the procedures for converting a manufactured home to real proper- ty. The central document in the conversion process is the "Affidavit of Affixation," The manner of completing, recording and filing the Affida- vit of Affixation, 'and, consequently, the time when conversion occurs, depends on whether the manufactured home is covered by a certificate of title, and whether the home is subject to any security interests at the time of the real esta

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.