Downpayment going to dealer and not lender?

We are in the process of purchasing a new manufactured home & property. We are currently going through the conditions for an FHA loan through CIS Home Loans. One of the conditions was for us to provide a copy of a cashiers check for the 3.5% down payment, which i provided with payment going to CIS.

I received an email from the dealer which contained CIS requesting that we change the cashiers check to the dealer.

Is this standard practice with MH dealers? Why wouldn’t the down payment go directly to the lender?

I’m no expert in your situation, but why would the lender get the down payment? The seller gets the down payment, lender lends the rest, right? Seller is the dealer?

If you are using and escrow company, money is held by the escrow company and disbursed as per escrow instructions. Since you are getting an FHA loan, I’m guessing that’s the procedure. The lender won’t release funds until all THEIR conditions are met.

Rule #684.3 - don’t pay anyone outside escrow unless required to by the lender. i.e. appraisal, termite reports, etc. Especially NOT the dealer/seller.

Some of them have come up missing!


Down payments do not go to lenders. It is either held in escrow or with a RE broker. In your case, it is perfectly fine. You really didn’t need to give the dealer 3.5%. Dealers ask for deposits on the home to execute a sales agreement, FHA loans allows for as little as 3.5% down. I think that you would not only need a copy of the cashier’s check but also provide seasoning of the money. In that case, you would need to provide bank statements for at least several months prior. I am surprised they have not asked for that as well.

Thanks for the replies guys. They definitely asked for a ton of other documentation and papers to sign. The downpayment going to the dealer was the only thing that concerned me.

I’m a dealer. Yes the down payment goes to the dealer. Typically you will need to pay with a personal check or cashiers check and also obtain a letter from the bank stating the money came from your account with specifics.

As far as 3.5% down, every bit of down payment helps if you want the project to appraise… unless you already have a lot of equity in the land or own it free and clear.

All the talk of escrow companies is for traditional real estate. This mobile home package is not yet real estate, but in the process of being developed.

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