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Can the loan on a mobile home be crammed down in Michigan?

Yes it can. A cram down is the process where the principal balance on a loan is reduced to the value of the collateral that has been pledged as collateral for that loan.

In the case captioned In re Reinhardt, 563 F.3d 558 (6th Cir., 2009) the court held that a manufactured home that is not attached to the real estate is considered personal property and any loan associated with that personal property can be crammed down.

The Reinhardt court maintained that 11 U.S.C. 1322(b)(2) prevents modification of “a claim secured only by a security interest in real property that is the debtor’s principal residence ….” The key point in Reinhardt was that the manufactured home was considered personal property, and not real property.

A couple of points should be noted:

1. The manufactured home should not be attached to the land or put on a foundation; and

2. No steps should be taken to convert the manufactured home to real property.

For the Michigan statute governing the attachment of a manufactured home and converting it to real property see M.C.L. 125.2330i