Tenant Defaulting On Vanderbilt Mortgage. What Typically Happens Next?

One of my tenants who is elderly and terminally ill has informed me that he is moving out of the park and in with one of his children.  His mobile home is mortgaged through Vanderbilt.  He said that he has informed them that he has tried unsuccessfully to sell the home for what he still owes and that he will let them repo the home.  Apparently he still owes a little over $30,000 for the home.I’m new to this situation and trying to find out what to expect next.  Do they typically make contact with the park owner when this occurs?Do they leave the home in the park without paying rent until they resell it and then send a mover over unannounced to remove it?Is there a department within Vanderbilt that I can call that will shed some light on the situation?    

You need to call Vanderbilt immediately. This is a situation in which being proactive is extremely important. Tell them everything that’s happened and that you really don’t want to lose the home in the park. See if they can allow you to re-sell the home, as it sits, to another tenant and have them carry the paper with an appropriate amount down. The reason your tenant failed to sell the home is that he wanted $30,000 cash. That’s rarely going to happen, as most park tenants do not have great credit. However, from Vanderbilt’s position, the home is already there and in default, and they are in the business of carrying paper on mobile homes. The cheapest solution for everyone is to allow you to market the home and find a new borrower on that note. It’s a win/win.

The lender generally tries to refuse the park owner of park rents when it is being foreclosed since most lenders have park owner sign paper work to that affect when they were moved in. Most lenders have dealers and transporters that move the home to their lot for cleanup and a new owner. The market for newer used homes is very tight and the lenders are not discounting the homes from my experience. If the home is in terrible condition they sometimes will walk since they know they lose on the deal trying to rehab it.

Has anyone purchased a tenant’s home subject to the mortgage?  In other words, leave the mortgage in his name, in tact, but I would be the one making the monthly payments.  If the monthly note is low enough I could keep the home in the park and sell it on the rent credit program.  The new tenant’s rent would actually be making the note payments.

I’ve done it before, but there are some things you have to watch out for:1)  When you finish the payments, the title will be in the name of the borrower, not you. You need to find a tight legal maneuver to make sure that you end up with the title. Depending on how long you have to make payments until it’s paid off, the borrower may disappear and you’re screwed. Then the only solution will be to let it go empty and take it through an abandoned property auction.2)  Most mortgages do not allow this to be done legally, so if you get caught, they’re going to call the mortgage due in full. You could lose your money you invested so far unless you can pay it off.3)  The loan will still show on the borrower’s credit record, and that might stop them from getting another mortgage. This could cause friction at some point with the seller.4)  Make sure that the property taxes are current, as you’ll also be inheriting those.5)  Make sure you have a handle on who gets the insurance money if the home burns down.Just some thoughts.

One of our MHPs (the turnaround) is near another extremely ‘Nice’ (gated) MHP.  The Owner of the other ‘Nice’ MHP has become one of our friends.  The Owner of the ‘Nice’ MHP has a Mobile Home that has been walked away / foreclosed upon by 21st Mortgage.The Mortgage Company has contacted the Owner of the ‘Nice’ MHP and asked if he would like to purchase it.The Owner of the ‘Nice’ MHP already has a couple that is purchasing a ‘New’ Mobile Home for that Lot and his MHP is at 100% capacity.  Thus, he has no need for the walked away / foreclosed Mobile Home.The Owner of the ‘Nice’ MHP has encouraged us to try to purchase the walked away / foreclosed Mobile Home as it would be a win/win for both of us (his lot becomes physically available and we get a good deal on a fairly new Mobile Home).The Owner of the ‘Nice’ MHP designed and built his MHP and he has been running it for 30 years.  He stated that the Mortgage Company will actually pay the ‘Back’ Lot Rent (even if we purchase the Mobile Home).Last Friday we contacted the Mortgage Company and they stated that the Mobile Home is not officially for sale but that we could make an offer.The Mortgage Company said that once their Mobile Homes are foreclosed upon they ‘Detrash’ the Mobile Homes, move to repo lots and then advertise.I agree with Frank to contact the Mortgage Company immediately and see if you can purchase the home before it moves out of your MHP.We wish you the very best!

Ask for the ‘Remarketing Department’ at Vanderbilt (or any of the home finance companies).-jl- 

***  UPDATE  ***:UPDATE:  This is an update on a walked away/foreclosed Mobile Home in a ‘Nice’ Mobile Home Park where the Park Owner had encouraged us to purchase the Mobile Home, because the Park Owner has a ‘New’ Mobile Home ready for the lot.Mortgage Company:  21st MortgageMortgage Department:  Remarketing Department ( Jefferson is correct :slight_smile: )Results:  As of today 21st Mortgage received our packet of documents and a cashier’s check to purchase one of their walked away/foreclosed Mobile Homes.In our particular situation we purchased the Mobile Home before it was Moved and Marketed.  The Mortgage Company gave us their price for the Mobile Home, but informed us that we would need to pay all back rent, late fees and taxes.On the Purchase Agreement there are two lines, which either state that the Buyer or Seller is responsible for Back Rent and Taxes. We researched the Back Rent and Taxes and used those numbers as room to negotiate down on the price.PMarone, I would highly encourage you to contact Vanderbilt as soon as possible (as Frank recommended). Hopefully, you can get a good deal on the Mobile Home.We wish you the very best!

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Kristin,Thank you for describing your experience.  I tried working through the situation another way, but it did not work out.  I will now contact Vanderbilt’s Remarketing Department as you did.  The tenant’s home is a 2008 16’x80’ Clayton home and has an unpaid balance of roughly $38,000.  The home appears to be in very good shape.  Two elderly people and one small dog have been the home’s only occupants.  Based upon your experience, what do you think I should offer for it?

PMarone, we wish you the very best.Wow, $38,000 Unpaid Balance sounds like a lot on a 2008 16x80.  That home must have all the bells and whistles.  Hopefully, Vanderbilt will not want that much money to resell it.  Our Business Model for our MHPs is to purchase newer (20 years and younger), Singlewide Mobile Homes with 3 Bedrooms and 2 Baths.  In the past we have purchased multiple Singlewides from individuals and then moved them into our MHP.  Approximately a year and a half ago we purchased a 2005, 16x80 Fleetwood (3 Bedroom / 2 Bath), basic Mobile Home from an individual for $15,000 (plus moving fees).  It came with all appliances, some furniture and no repairs.The Mobile Home below is the first one that we have purchased from any Mortgage Company. This Mobile Home actually does not necessarily ‘fit’ our Business Model as it is only 2 Bedrooms & 1 Bathroom (14x60 / 1999).  However, it was/is such a great deal that we could not pass it up.  We happen to have a MHP with lots and lots of empty spaces (like 35 spaces) and a great location.  Thus, we could not pass up purchasing a Mobile Home at a relatively low price.  If our MHP was almost full and this was our last spot, we might have waited for the ‘perfect’ Mobile Home to purchase.  However, that was not the situation.The Mortgage Company was asking $6,000 for:-  1999-  Singlewide-  14x60-  2 Bedroom-  1 Bath-  No Appliances-  Floor Needs To Be Replaced In Bathroom & Hall-  Back Lot Rent & FeesWe negotiated to purchase the Mobile Home for $5,000 and we are paying Back Lot Rent & Fees (around $1,000) and moving Fees.We hope that you are able to negotiate a deal that works for you.We wish you the very best!

Kristin, I agree.  Too expensive for me.  From what I can see, its not an over the top home.  Pretty basic.  They paid $43,600 for it new.  I have a copy of the sale contract and their finance agreement.  I also have a copy of their current statement which indicates their outstanding principal balance of $38,317.78…  I wonder what Vanderbilt will want for it.Your deal was a much better bargain.Thank you for the details you provided.  Very helpful! 

I usually cannot find any affordable mobile homes unless they are at least 15 years old then you can get to around the $10,000 or less mark if they need little or no work done on them.  These newer mobile homes are just too expensive and will depreciate quickly, in some cases most of what you would get for rent for it over the first 10 years.

A follow up to those who have been reading this post.I spoke with the remarketing rep for Vanderbilt.  Home hasn’t yet hit their department, but provided me with some insight as to how it works and time table for when it may be available for sale.  I will keep you updated as things develop.