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Park Models and Other Tiny Homes and HMDA
I have been asked many times if tiny homes are HMDA reportable under both current HMDA rules and the revised rules going into effect 1/1/2018. I have also been asked how to treat a park model tiny home if the wheels are removed and it is placed on a foundation.
The answer depends upon the specific situation. More information is needed than simply referring to the collateral as a “tiny home”.
This article will answer these questions and discuss other aspects of tiny homes and recreational vehicles.
Park Model Homes
Some “tiny homes” are park model homes. A park model is a type of recreational vehicle built on wheels; these are specifically excluded from the definition of dwelling under the revised HMDA rules. They are excluded because park model homes are not manufactured homes built in compliance with the HUD construction code. They are legally a recreational vehicle even when the intention is to leave it in one place.
You can read about park model homes here.
Under current HMDA rules, in effect until 12/31/2017, recreational vehicles are not dwellings according to the Commentary for the definition of dwelling at 1003.2. I believe you should include park models in that category because they are classed as recreational vehicles, not subject to either site built building codes or manufactured home building codes. Many local zoning laws restrict use of park models and other recreational vehicles as full time residences.
From the current Commentary: “1003.2 Dwelling – 2. Exclusions. Recreational vehicles such as boats or campers are not dwellings for purposes of HMDA. Also excluded are transitory residences such as hotels, hospitals, and college dormitories, whose occupants have principal residences elsewhere.”
Under revised HMDA rules effective 1/1/2018, park model recreational vehicles are specifically excluded. The revised Commentary states: “EXCLUSIONS. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices.”
Site Built Tiny Homes
Tiny homes can also be site built, some on permanent foundations, others built on skids to allow future moves to another “permanent site”. These are not park model recreational vehicles. An applicant could construct a tiny home on land that they own. Review this article on site built tiny homes.
A site built tiny home on a permanent foundation is simply a small home and will be subject to HMDA when used as a dwelling. That is the same under current (pre-2018) and revised (effective 1/1/2018) rules; HMDA has no size standards. Of course, the house must meet local zoning laws to be a legal dwelling; that is an important factor for a financial institution to consider for a structure to be acceptable as collateral.
There are many complexities involved in building site built tiny homes. How they are taxed and treated under local zoning and tax laws can hinge on whether they are eligible for permanent electrical, water and sewer hookups.
Many city and town ordinances have very specific requirements, such as Albuquerque, NM.
Tiny Homes as Cooperatives
There are some tiny home communities that are set up as cooperatives. This particular community in Oregon is intended for low and moderate income, but the concept could work for any income level.
Can a Park Model RV Be Changed to a Site Built Home?
I have been asked a number of times if a tiny home on wheels can be changed to a site built home.
If the wheels are removed and the home is attached to a permanent foundation, you must consider the same factors as a manufactured home that has been revamped. You will have to consider how the home is appraised, zoned, insured, etc. Those factors can be influenced by whether the home meets local building codes. It could end up as an illegal structure that has been made more difficult to move. If it is located in a rural area without building codes this will be less of a problem.
Review my recent article on whether a manufactured home can be treated as a site built home. The same concepts apply.
HUD states in its FAQs that a home built as a park model cannot later be changed to a manufactured home category, with a HUD label.
“I have a park model home and have made upgrades to my home. I was told I need a HUD label. How do I get one?
Regardless of the upgrades made to your park model, it is not possible to obtain a HUD label on any structure that was not produced and inspected as a manufactured home in accordance with HUD’s Manufactured Home Construction and Safety Standards and Regulations during its original construction. You may contact the Recreational Park Trailer Industry Association http://www.rptia.org for additional information and resources regarding park model homes.”
Overall, decisions collateral must be made on a case by case basis, words every compliance officer and lender hates to hear, but there is no one size fits all.
Of course, HMDA rules do not necessarily carry over to Regulation Z when determining if a loan is secured by a dwelling. Careful training of staff to accurately report for HMDA while also complying with other regulations is critical.