Park owned homes, how to get finance for residents

Hi everyone,

I recently took back possession of 3 single-wide built in the 90s. They were all previously financed prior to Dodd-Frank. The typical applicant has an average credit score of just above 500 with little savings. The homes are located in Indiana and all the potential chattel lenders are looking for scores of 650+. Are there any banks willing to provide chattel loans for credit scores in the 500s and both adults have steady jobs. The value of the homes I would estimate around $15,000. I’m looking to cash out of the homes and use the capital to bring additional homes. I don’t want to at this time do a lease option or credit system. I left a message with 21st but I’m also looking for alternatives. Thanks in advance

You would be farther ahead to hold out for better qualified buyers than to find financing for anyone with 500 scores. With scores that low there is about a 90% chance they will default.

Another alternative would be to find private lenders in your area interested in buying them and allow them to rent them or lease option them to tenants in your park. You might post this on Craigslist or present this investment at your local REIA club.


Chattel lenders, other than captive finance companies, normally do not finance borrowers with credit scores below 650. Banks and Credit Unions usually do not go below 680 because their regulators will raise hell with them for doing so. The only exception to this I am aware of is when a formalized joint venture relationship exists with a retailer or community owner.

21st Mortgage rarely goes below 640, but there are exceptions to that rule.

If you only have three loans to deal with, it would not be econonically sensible to try to set up a captive finance company because of the costs involved in doing so. Captive finance companies work well for people doing more than 30 loans a year, where the average amount to finance is above $25,000. (This can be a mix of more loans and lower finance amounts, or larger finance amounts and less loans.)

There are a couple of other solutions that might work for you, depending on what state the homes are in.

Regarding Bruce’s suggestion: Any private lender you sell to will need a MLO on payroll, a license to lend on manufactured homes in the state where the homes are, and a full compliance management system in place. Anything less would not be legal.

Lease with Option to purchase is legal in some states and not in others.

Getting capitol to make loans is not terribly difficult once you set up to do it correctly and know how to approach the “right” kind of investor. The work on the other hand is going to be yours.

I may be way out in left field here, but what I did with my SFR was to have somebody fix their credit so they can get loans. I don’t know what is on their credit, but it may be worth a shot. I have a company I have used for the last 5 years and am currently using them on my own personal credit. They remove foreclosures, lates, liens, judgments, etc. It may be a great expense.
Don’t know your timeline or how good or bad the tenants are. Just my .2 cents.

Unfortunately the type of tenant you would be dealing with in trailer parks that would be interested in fixing their credit scores will be few and far between. They are what they are, you can’t fix stupid.
To find home buyers with money you need to have a upscale community attracting solid blue collar working class or retirees looking to move down to liquidate equity. It needs to be a community people want to live in not one the have to live because it is the best they can do.
If it is a above average quality community you simply need to be patient and hold out for cash buyers.

@Greg Great answer.