Did Wells Fargo Home Mortgage apply your NFIP Flood Insurance or Disaster Insurance toward your mortgages unpaid balance?
By Murray Wennerlund published 11-3-2022 updated 11-3-2022
By Murray Wennerlund published 5-17-2022 updated 10-21-2022
The OCD-DRU published in 2019 the first Manufactured Home Unit (MHU) replacement program the state of Louisiana has ever had. It was clearly not well thought out leaving homeowners to deal with financing low cost units because the allocations and cost share the state provided fell short to what actual MHU's cost.
Now, the year 2022 arrives and the state picked up the phone to call a few local MHU dealers and asked what the cost of a new singlewide and doublewide would cost completely setup on the homeowners rental or private property. This new policy should have been the states policy all along and thankfully those responsible with the pricing for the Great Floods of 2016 are gone from the program or have be enlightened to what real costs MHU owners have to face.
If you have repaired your Manufactured Home Unit (MHU) and are going to be seeking reimbursement for the costs you'll have to review the programs policy for what the state will allow you to rebuild. The state's has formally issued the following policy for Solution 3 Reimbursement applicants.
"Applicants who have already begun to repair their disaster damaged Manufactured Housing Unit (MHU) or stick-built home and for whom the Program will replace the MHU or reconstruct the stick-built home, will not be eligible for reimbursement. However, applicants in these situations will be afforded the possibility of receiving credits for work performed as part of the award calculation process. Additional detail about this situation can be found in Section VIII (C) (ii)."
The bold part relates to MHU owners. If you repair your MHU and then opt to have your MHU replaced you will not be reimbursed the amount of money you put into the repairs of the damaged MHU. If you used FEMA IHP funds for repairs those funds you used will be considered a duplication of benefits and the state will deduct the total amount of your FEMA IHP Grant from your replacement MHU grant awarded. Even if you didn't apply IHP to the repairs of your MHU the program will treat any structure repair grant funds as a duplication of benefits and deduct that amount from your new award. It's always best to not spend grant money before you understand all that you can do with it and all the strings attached to the grant.
Your grant awards for replacement of your damaged MHU are capped at the amounts listed here.
iii. Manufactured Home Replacement Maximum
The Program established maximum allowances for replacement manufactured homes are based on the type of unit damaged, less any duplication of benefits:
Let's say you spent $10,000 of FEMA IHP grants repairing your old MHU and your repairs were not qualified repairs to have a reconstruction reimbursement. Your Grant award as listed above would be reduced by the $10,000 you used. But, if you used your personal cash or a credit card to do your repairs your full grant award would be available because your personal cash or personal line of credit is not a duplication of benefits. In fact, in most cases of repairs it would be a Solution 3 reimbursement amount. But you will not be able to ask for reimbursement of repairs you made with cash if you are replacing your MHU under the replacement program.
i. Repair Maximum
The MHU exterior repair only option will also be determined by an assessment of work to roof and exterior siding wind damage remaining to be completed at time of program inspection.
IBHS Fortified Roof option for both stick built and MHU’s would have a maximum addition of $3.75 per sq. ft. allowance for materials and labor with a maximum of 2 Fortified Roof (IBHS) inspections. This option will be presented at the contractor selection stage of the process. If chosen, your award will be recalculated.
Solution 2 Manufactured Housing Unit Repair Option or Full Replacement.
"If the damaged MHU is less than 10 years old, does not have interior water or flood damage, and has siding and/or roof wind damage repairs that are less than or equal to $18,000 for single-wide manufactured home or $23,000 for double-wide manufactured home, the applicant may choose to repair the roof and/or the siding. IBHS Fortified Roof option for MHU’s would have a maximum addition of $3.75 per sq. ft. allowance for materials and labor with a maximum of 2 Fortified Roof (IBHS) inspections. This option will be presented at the contractor selection stage of the process. If chosen, your award will be recalculated and you will need to abide by the Fortified Roof (IBHS) standards.
Based on previous program experience, RLHP has determined it is more cost-effective to replace rather than repair older and water damaged manufactured housing units. This determination was founded on the goals of best serving the long-term housing needs of Louisiana’s disaster-affected citizens and protecting homeowners from potential latent environmental health hazards.
As part of Solution 2 Manufactured Housing Unit Replacement, applicants must provide a Purchase Agreement that includes full unit set up including removal of damaged unit (if applicable), site prep, elevation if required, mechanical, electrical and plumbing installation costs. The Purchase agreement must be presented for approval by the Program, prior to grant execution. The Program will issue payment though a single-party check to the MHU dealer once a final inspection by the Program is passed."
Most of you that own MHU will take the replacement option for several reasons.
Any water that was trapped in your MHU for any length of time could cause what the state references as "potential latent environmental health hazards". This is mostly related to mold and other material surface and airborne contaminates caused by water intrusion.
Do your best to have your FEMA inspection detail your water damage inside your unit due to your damaged roof on your MHU. You must have a FEMA inspection or you will have to really push hard for any evaluation by the state OCD-DRU agency which is under the Governors Executive Branch.
The state published in it's policy the following information which is true and I sincerely wish everyone is told this from the first day after the disaster.
"HUD rules prevent RLHP from reimbursing funds invested into the rehabilitation of a home when application of the Program’s policies and procedures results in the replacement of the damaged housing unit with a new unit (manufactured or stick-built). Applicants who have already used FEMA, SBA, NFIP, or other funds to rehabilitate a manufactured home or stick-built home that will be reconstructed are not eligible to be reimbursed for those expenditures."
The state using the following mythology to calculate size of your current MHU. This is not a calculation of your market value or additional living space you added beyond that of the original MHU design.
Start State OCD-DRU new Policy as of 10-5-2022
x. Manufactured Home Estimates
Calculation of an applicant’s eligible award for manufactured home replacement is based on the size category (single wide or double wide) of the damaged structure. If any portion of a structure is a manufactured home, the entire structure will be classified as a manufactured home for purposes of the RLHP. Manufactured homes where the homeowner has constructed attachments, no matter how extensive such attachments may be, will be treated as manufactured homes, either singlewide or doublewide, regardless of the additions."
ix. Solution 2 Manufactured Housing Unit Replacement
All prospective replacement of manufactured homes will be completed under the Solution 2 – Homeowner-Managed Program when prospective replacement is the eligible RLHP construction activity in the following situations:
Prospectively replacing a damaged MHU with a new manufactured home. Used manufactured homes will only be allowed if they were issued by FEMA as temporary housing. (FEMA issued travel trailers are not eligible.)
Prospectively replacing a damaged stick-built structure with a new MHU when the Program determines that reconstruction is the only Program option. Used manufactured homes will only be allowed if they were issued by FEMA as temporary housing. (FEMA issued travel trailers are not eligible.)
Prospectively replacing a damaged MHU with a stick-built structure.
MHU replacement must be on original footprint and may not be increased by more than 2’ in any direction from the original footprint or will be considered new construction and require additional environmental clearances prior to start of MHU site prep.
RLHP will not reimburse for repairs to damaged manufactured homes performed prior to demolition and replacement. Applicants with damaged MHUs that are less than 10 years old, do not have interior water or flood damage, and have siding and/or roof wind damage repairs that are less than or equal to $18,000 for single-wide MHUs or $23,000 for double-wide MHUs will be offered a repair option through the Program. (See section B, Solution 2 Repair Projects, for construction standards.)
If any portion of a structure is a manufactured home, the entire structure will be classified as a manufactured home for purposes of the RLHP. Manufactured homes where the homeowner has constructed attachments, no matter how extensive such attachments may be, will be treated as manufactured homes, either singlewide or doublewide, regardless of the additions.
Applicants will enter into a grant agreement with the State for their eligible Program funding which includes a maximum allowance for demolition/removal of the damaged unit, a new base model, delivery, standard site prep and standard mechanical, electrical and plumbing (MEP) hookups. Raw land relocation site prep and MEP hookups are the responsibility of the applicant. Owners of manufactured homes will be eligible for replacement funding up to the lesser of the actual costs documented by the Purchase Agreement or the Program maximum allowance, less any duplication of benefits. There must be proof of funding or financing for the difference between the Program MHU allowance and sales price/installation. Purchase Agreement and proof of additional funding (if required) must be submitted to the program prior to award execution. Copies of an applicant’s permits must be provided to the Program prior to or at the final inspection.
Construction Technical Advisors (CTA) will provide applicants with the information and assistance necessary to support compliance with Program rules. The Program will monitor all MHU replacement projects in the Homeowner- Managed Solution (Solution 2).
a. MHU to MHU Replacement
If an applicant replaces a damaged MHU with a new MHU, the maximum Program allowance will be determined by the classification of the damaged MHU. A damaged singlewide MHU will yield a maximum Program allowance of $85,000.00. A damaged doublewide MHU will yield a maximum Program allowance of $120,000.00. The maximum Program allowance will be reduced by any duplication of benefit. An applicant’s actual award will be adjusted to the lesser of the actual cost of the replacement MHU or the applicant’s eligible award, whichever is less, and any duplication of benefits will be subtracted from this amount. The applicant must provide the bill of sale which clearly states the VIN for the replacement unit. Applicants with a damaged doublewide MHU may elect to replace the damaged doublewide MHU with a new singlewide MHU at the $120,00.00 cap. The new singlewide MHU can be funded up to the lesser of the actual cost or the Program maximum $120,000.00.
b. MHU to Stick-built Replacement
If an applicant chooses to replace his/her damaged MHU with a new stick-built single-family home on the same site as his/her damaged mobile home or on new land outside of a Special Flood Hazard Area (SFHA), the maximum Program allowance will be determined by the classification of the original damaged MHU. A damaged singlewide MHU will yield a maximum Program allowance of $85,000.00. A damaged doublewide MHU will yield a maximum Program allowance of $120,000.00. The maximum Program allowance will be reduced by any duplication of benefit. An applicant’s actual award will be adjusted to the lesser of the actual cost of the replacement stick-built single-family structure in lieu of an MHU or the applicant’s eligible award, less any duplication of benefit. The applicant must provide proof of construction cost for the new construction stick-built home prior to closing.
c. Prospective Purchase of MHU.
Prior to receiving RLHP grant funding for the purchase of a manufactured home, applicants must provide evidence of a contract to purchase and install a new (not used) MHU. Such evidence should be provided in the form of a Purchase Agreement with an MHU seller. The purchase of a used MHU is generally not eligible, however, applicants who have received a new FEMA MHU as part of their assistance package from FEMA for the 2020 Hurricane event and who wish to purchase that mobile home unit from FEMA with their RLHP award, may do so with FEMA approval and an agreement to purchase provided. Note: FEMA issued travel trailers are not eligible for purchase under the RLHP program.
Upon receipt of acceptable documentation, the Program may issue a two-party check to the applicant and the MHU seller or lien holder for the new unit for an amount up to the applicant's eligible award. Payment will be made upon successful inspection of the manufactured home at the applicant’s site, verifying purchase and completion of installation.
d. Flood Insurance Verification for Solution 2 Mobile/Manufactured Home Replacement Projects in a SFHA
The full insurable value of a Manufactured Home Unit will be based upon the Program’s final total project cost at the time of grant execution. Evidence that the replaced MHU is covered by the Program’s required flood insurance amount must be provided prior to the final inspection.
x. Solution 2 Elevation for Mobile/Manufactured Homes
The Program will provide additional funds for manufactured home elevation, if required by the local jurisdiction. The Program will provide the lesser of the actual cost of elevation or the Program cap, based MHU elevation cost as per the MHU Elevation Cost table below. Elevation will be provided using CMU blocks, pilings, or other approved construction methods, but the RLHP will not pay for elevation by fill. Applicants who have purchased a replacement MHU within a Special Flood Hazard Area (SFHA) and have not elevated the unit to the requirement of two feet above the Base Flood Elevation can qualify for Program assistance to include elevation funding. See below for the elevation pricelist table for MHUs:
xi. Solution 2 Relocation of MHUs
Relocation of MHUs is restricted to moving the new unit outside of the floodway or floodplain, except in cases where the relocation is located in an established mobile home park within a floodplain. These exceptions will be reviewed on a case-by-case basis, and the Program will require documentation evidencing the established mobile home park through an occupational license, sewage and utility hookups, or other permitting issued by the local jurisdiction.
Applicants who's damaged MHUs are located on owned and non-owned land, including leased land, will be permitted to relocate. Applicants on owned land whose damaged property is located within a floodplain will be required to obtain and maintain flood insurance on any structures on the owned property in perpetuity. Applicants that are replacing their MHU with a single-family stick-built home can relocate to a new location outside of the SFHA. See below for the Mobile Home Relocation reference tables.
For applicants of manufactured homes who will be locating the new unit on a lot different from the location of the damaged unit or building a new single-family stick-built home on a different location on the same lot, an Environmental Review must be completed on both the original site and the new site on which the new unit will be installed or built. The Program will fund one environmental review in accordance with Program requirements of the applicant’s desired relocation, but any necessary subsequent environmental studies will be the sole responsibility of the applicant. For example, applicants on owned or non-owned land that wish to move to a location in which the ERR identifies as a “wetland,” will be responsible for any additional studies/clearances required by the ERR. Such expenses will not be funded or reimbursed by the Program and will be the sole responsibility of the applicant. Furthermore, any additional environmental reviews needed will be the sole responsibility of the applicant.
ii. Solution 3 Reimbursement for MHU Replacement
If a habitable MHU has already been installed on the property to replace a damaged single-family home or MHU prior to Program damage assessment, the eligible Program activity will be Solution 3 - Reimbursement. Costs associated with removal of the damaged MHU and customization of access are not subject to reimbursement.
The Program established maximum allowances for replacement manufactured homes based on the type of unit damaged, either single-wide or double-wide. Program allowances are found in Section VI (A) (iii). Under Solution 3, the maximum allowances limit the amount of funding that will be available through reimbursement.
These Program allowances for MHU reimbursement apply to the following situations:
v. Solution 3 Elevation Requirements
All repaired, reconstructed, or replaced homes subject to reimbursement must meet an elevation requirement of ABFE +2’ or the local jurisdiction requirement, whichever is greater, if required to elevate.
Solution 3 requests for elevation will be evaluated on a case-by-case basis. Elevations will be considered in the following circumstances: Properties located within the floodplain that are required to be elevated by local ordinance and the local code enforcement officials’ determination that a property is substantially damaged or will be substantially improved; or Properties outside of the floodplain which are required to be elevated by local ordinance as part of a reconstruction.
Note: Dirt fill as an elevation method is not eligible under the RLHP and will not be funded under any Program solution.
End State OCD-DRU new Policy as of 10-5-2022
Is your builder using at least HUD Housing standards to build your new home?
By Murray Wennerlund