Mortgage firm to refund N.C. homeowners $2.8M

Posted March 9, 2010 6:45 p.m. EST

— A lender that specializes in financing for manufactured homes has agreed to refund $2.8 million to North Carolina homeowners to settle alleged violations of state laws, authorities said Tuesday.

Vanderbilt Mortgage and Finance Inc. also agreed to pay a civil penalty of $750,000 to the state, contribute $250,000 toward the State Home Foreclosure Prevention Project and improve its business practices and internal controls to ensure compliance with state and federal laws.

“As more and more manufactured home loans are now secured by real estate, manufactured home lenders have struggled to meet the standards required of mortgage lenders. This settlement should serve as a message to manufactured housing lenders to make sure they operate in compliance with North Carolina law,” Mark Pearce, North Carolina's chief deputy commissioner of banks, said in a statement.

Traditionally, manufactured home lenders offered loans secured by the manufactured housing unit itself. In these transactions, the unit was considered a vehicle under North Carolina lending and title laws.

In recent years, the industry has increasingly relied on “land/home” deals, where the manufactured home unit is attached to real property, titled as real estate and secured by a mortgage. Due to recent changes in mortgage licensing laws, individuals who solicit or accept applications to finance manufactured homes must be licensed and supervised by the Office of the Commissioner of Banks, regardless of whether the home loans are secured by land.

The majority of refunds to homeowners will be done by crediting the borrower’s account, officials said, so borrowers with existing Vanderbilt loans do not need to take any action. Former Vanderbilt borrowers covered by the settlement should receive a refund check.

Anyone with questions about their refund should call Vanderbilt at 866-702-3777.