TABLE OF CONTENTS
Tribal Legal And Administrative Framework
Eligible Activities And Properties
Loan Processing And The Firm Commitment
Loan Closing And Endorsement
Administering Construction Loans
Alaska Processing Guidelines For Construction
Chapter 1: Program Overview
|1.2 Program Overview
|1.3 Key Program Policies And Requirements
|1.4 Land Ownership In Indian Country
|1.5 Roles And Processing Steps
This guide provides instructions for implementing the Section
184 Indian Housing Loan Guarantee Program. Although it is intended
primarily as a guidance document for lenders, it provides information
that will also be valuable to tribes, Indian Housing Authorities
(IHAs)/Tribally Designed Housing Entities (TDHEs), and housing
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- Barriers to Homeownership in Indian Country. Much of
the land in Indian country is held in trust by the U.S. government
for the benefit of a particular tribe or individual Native Americans.
Land held in trust for a tribe cannot be mortgaged, and land
held in trust for an individual must receive federal approval
before a lien is placed on the property. As a result, tribes,
IHAs/TDHEs, and individual Native American families have historically
had limited access to private mortgage capital.
At the same time, demand for homeownership opportunities
has steadily grown. Many families in Indian country have worked
hard to achieve success, and now want to own a home of their
own. Other Native Americans currently live away from traditional
Indian lands and seek to return home to raise their families.
- The Section 184 Loan Guarantee Program.
- In 1992 Congress created a federal program specifically
designed to address the lack of mortgage capital in Indian
country. Under the provisions of Section 184 of the Housing
and Community Development Act of 1992 and as amended under
the provisions of the Native American Housing Assistance and
Self-Determination Act of 1996, the U.S. Department of Housing
and Urban Development (HUD) was authorized to guarantee loans
made by private lenders to Native Americans, IHAs/TDHEs and
- The Loan Guarantee Program is intended to increase the availability
of mortgage lending in Indian country and is restricted to
Native Americans, IHAs/TDHEs and Tribes selecting home sites
within an Indian area.
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KEY PROGRAM POLICIES AND REQUIREMENTS
The following key program policies and requirements are discussed
in more detail in the processing chapters that follow this introductory
- Guarantee Coverage.
- Single family residential loans made by eligible lenders
to eligible borrowers. Commercial structures are not eligible
under the Section 184 Program.
- 100 percent of the outstanding principal and interest and
payment of other necessary and allowable expenses.
Loans that are otherwise insured or guaranteed by the federal
government are not eligible for the Program.
- Eligible Borrowers.
- An Indian or Alaska Native who will occupy the property
as a principal residence and who has met the credit and underwriting
standards specified in this handbook.
- An Indian Housing Authority/Tribally Designated Housing
Entity. IHAs/TDHEs may borrow funds to develop single-family
homes that are subsequently sold to eligible borrowers or to
create IHA/TDHE-owned rental housing.
- An Indian tribe. As with IHAs/TDHEs, tribes may borrow funds
to develop single-family homes that are subsequently sold to
eligible borrowers or to create tribal owned rental housing.
- While tribally held fee simple land may be readily encumbered,
there are special considerations which need to be addressed
when the tribal borrower intends to encumber tribally held
trust land as security for the loan. Tribes are encouraged
to contact the Program ONAP when they are considering applying
for Section 184 guaranteed loans for additional guidance on
- Participating Lenders. Lenders must be:
- Approved by the Secretary of Housing and Urban Development,
the Secretary of Agriculture, or the Secretary of Veterans’ Affairs;
- Supervised, approved, regulated, or insured by any agency
of the federal government.
- Eligible Activities. Eligible borrowers may use the
guarantee program for the:
- Acquisition of existing housing.
- Rehabilitation of existing housing.
- Acquisition and rehabilitation of existing housing.
- Construction of new housing units.
Loan guarantees for commercial structures are not eligible
under the Section 184 program.
- Mortgage Terms:
- The term of the loan may not exceed 30 years.
- Interest rates established by the lender must reflect current
market rates and cannot be adjustable.
- Maximum mortgage amounts are set based on an established
loan-to-value ratio and the borrower’s debt to income
ratio, and, in no case, can these mortgage amounts exceed 150
percent of the FHA (HUD’s Federal Housing Administration)
mortgage limit established for the locality.
- Property Requirements. Properties must be:
- Located on land that is either trust/restricted or within
the operating area of an IHA/TDHE or tribe (called an "Indian
- Standard quality and must meet applicable construction and
safety codes. In addition, homes must be modest in size and
- Single family structures (one to four units). Multifamily
housing is not permitted.
- Alienation Policy. Section 184 properties may change
ownership as a result of a voluntary assumption, a voluntary
sale by the homeowner, or due to a default.
- Voluntary Transactions:
- Eligible borrowers (Native Americans, IHAs/TDHEs and
Indian tribes) may assume a Section 184 guaranteed loan.
Any prospective borrower must qualify for the loan based
upon both income and credit.
- Owners of Section 184 properties on tribal trust land
may voluntarily sell their home. However, the tribe has
the right to review and approve the leasehold securing
the property and thus may reject certain buyers based on
- Owners of Section 184 guaranteed properties on fee simple
or allotted land may voluntarily sell their property.
Secondary Mortgage Market. Mortgages guaranteed under
Section 184 may be sold in the secondary market.
- On tribal trust land and allotted trust land, neither
HUD nor a lender may sell a defaulted property to a non-Native
American (24 CFR 1005.107(b).
- Defaulted fee simple properties may be sold to any purchaser
or may be assumed by an eligible Native American borrower.
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LAND OWNERSHIP IN INDIAN COUNTRY
Understanding the various forms of Indian land ownership is important
for lenders and program participants because program requirements
and processing procedures vary depending upon the way land is held.
This paragraph summarizes the basic types of land ownership in
Indian country. The definitions provided in 1.6 below further clarify
the legal aspects of homeownership and identify unique arrangements
that exist in Alaska, California and Oklahoma. Differences in requirements
and processing instructions, based upon the types of land ownership,
are specified throughout this guide.
- Defining an Indian Area. An Indian area is the geographic
area within which an Indian housing authority or tribe is authorized
to provide housing through its power as a governmental entity.
This may include land held in trust by the federal government
for tribes or individual Native Americans as well as fee simple
land within the operating area of the IHA/TDHE or tribe.
- Land Held in Trust for Tribes. Tribal trust lands are
held in trust for the tribe by the federal government. The Department
of the Interior, through the Bureau of Indian Affairs (BIA),
administers the federal government’s trust responsibilities.
- Tribal trust land cannot be alienated (taken out of trust)
or encumbered without BIA approval.
- Tribes may lease or otherwise assign portions of the tribal
trust land for the use of specific individuals or purposes,
but ownership, through the federal trust, remains with the
- Generally, tribal courts, together with BIA, have jurisdiction
over key real estate transactions (lien recording, eviction
and foreclosure procedures) on tribal trust lands.
- Land Held in Trust for Individual(s). Allotted trust
land is held in trust by the federal government for individual
- Tribes generally have no property interest in allotted trust
lands. However, like tribal trust land, allotted trust lands
cannot be alienated or encumbered without BIA approval.
- Real estate transactions (lien recording, eviction, and
foreclosure) are sometimes governed by tribal law but in other
areas may be under the jurisdiction of state/local government
- Unrestricted (Fee) Land Within Indian Areas. The term "fee
title" or "fee simple title" generally denotes
land in which the owner has an interest that entitles the owner
to dispose of the entire property or various interests in the
property without hindrance.
- Loans on fee land located in an Indian area are eligible
for a Section 184 loan guarantee.
- Real estate transactions (lien recording, eviction, and
foreclosure) are generally under the jurisdiction of state/local
government laws. However, in some areas, fee land within the
Indian area may be under the jurisdiction of tribal courts.
- Determining the Status of Proposed Home Sites. As a
part of the initial application, the land status (tribal trust
land, allotted or fee simple) of the proposed home site must
be identified by the tribe. Lenders should send the Land Status
and Jurisdiction Form found at Appendix
4 to the tribe for signature
to document land status and court of jurisdiction.
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ROLES AND PROCESSING STEPS
The roles of principal participants are summarized below.
- Borrower Responsibilities. Individual, IHA/TDHE and
Indian tribe borrowers are responsible for making an application
for financing to an approved Section 184 lender; providing the
information needed to enable the lender to determine the borrower’s
qualification for mortgage financing; and abiding by the terms
of the loan agreement, once the loan is approved.
- Responsibilities of the Tribe:
- Each tribe must enact policies and procedures for processing
foreclosure and eviction actions or identify a State/County
court that will enforce these procedures.
- Tribes may also participate as a coordinator of the program
by: assisting borrowers with loan applications; making available,
through lease, trust lands for home sites; providing financial
assistance to borrowers; and homebuyer education.
- Lender Responsibilities:
- Lenders accept and process borrower applications for financing,
and, if the borrower qualifies, submit the loan application
packages to HUD to request a firm commitment under the Section
184 Program. Lenders may contact the Program ONAP to determine
eligibility, land status and other essential information.
- Once HUD has approved the firm commitment, and a closing
has taken place, the lender makes the loan to the borrower.
The loan may be held in their portfolio or sold.
- If a lender elects to participate as a Direct Guarantee
lender, procedures in Chapter 10 must be followed.
- In the event of default, the lender has the option of either
foreclosing or requesting assignment to HUD.
- HUD Responsibilities:
The responsibility for review of tribal eligibility and land
status issues lies with HUD’s Program Office of Native
American Programs (ONAP). The address and phone number for the
Program ONAP is included in Appendix
1. Responsibility for case
number assignment, loan processing, underwriting, issuance of
the firm commitment, and guarantee certificate also lies with
HUD’s Program ONAP. HUD will:
- Issue a Section 184 case number to reserve Loan Guarantee
Funds (if available) and issues the loan guarantee certificate
- Review all underwriting recommendations submitted by lenders.
- Approve or disapprove firm commitments based on lenders’ submissions.
- For assigned loans, HUD determines the claim payment amount
to be paid to the lender and may foreclose on the loan.
- In the case of a foreclosure, HUD will sell the property
to another eligible buyer.
- For lender conveyed properties after completion of the foreclosure,
HUD determines the claim amount paid to the lender and resells
- Role of the Bureau of Indian Affairs: For trust lands,
BIA issues Title Status Reports (TSR) and reviews, approves,
and records lease contracts, deeds of trust, leasehold mortgages
and/or real estate mortgages.
- Indian Health Service Responsibilities: The Indian
Health Service is available to evaluate the adequacy of water
and sewer systems for Native Americans and may also provide for
the cost and/or installation of water and sewer systems on an
individual or community-wide basis.
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- Alaskan Native Lands.
- Alaskan Natives (Indian, Eskimo, and Aleut) hold land under
a unique system imposed by the Alaska Natives Claims Settlement
Act of 1971 (Act). This statute was a congressional response
to conflict between non-Indians seeking to develop Alaska and
Natives who claimed extensive tracts of aboriginal territory.
The Act extinguished all aboriginal rights to lands in Alaska
and established, under State law, village and regional corporations
in which enrolled Natives would receive corporate stock. The
corporations then select lands set aside under the Act for the
Alaska Natives and, through corporate bylaws, protect against
alienation of the land.
- Allotted Trust Land.
- Land or any interest in land held in trust by the United States
for the benefit of individual Indians or held by individual Indians
subject to federal restrictions against alienation or encumbrance.
- Assignment Program.
- The transfer of the mortgage and security interest to HUD
by a lender that holds the rights to the mortgage or deed of
trust. This action occurs when a mortgagor is in default and
the Program ONAP makes a determination that it is in HUD’s
best interest to become the holder of the mortgage and security
interest. As of the date of this guidebook, it is our policy
to accept the assignment of a loan in default if the holder of
the guarantee certificate elects not to foreclose.
- A demand for something due. A request or demand for payment
in accordance with an insurance policy or guarantee. To assert
and demand the recognition of right, title and\or possession
of or to personal property.
- The failure by a borrower to make any payment or to perform
any other obligation under the terms of a loan for a period of
more than 30 days.
- The U.S. Department of Housing and Urban Development (HUD
or the Department).
- The legal process by which households in violation of their
lease and/or mortgage terms are removed from occupancy of a given
- Fee Land.
- The terms "fee title" or "fee simple title" generally
denotes an estate in land that is absolute and unrestricted.
The owner is entitled to dispose of the entire property or various
interests in the property without hindrance. Upon death, the
land, or any remaining interests, passes to heirs or those to
whom the owner has given it by will. Within Indian reservations,
lands may be owned in fee simple by both Indians and non-Indians.
The former may have received a fee patent or some other document
removing the restrictions against alienation on land formerly
held in a trust or restricted status. The latter may have entered
the reservation by purchasing allotted land at an advertised
sale, from an Indian having the fee or unrestricted title to
the land, or from the federal government at a sale of the ceded
and surplus tribal land that remained after allotments were granted
to individual tribal members. In some cases, fee ownership within
an Indian reservation may predate the establishment of the reservation.
Furthermore, a tribe/tribal member may convert fee land to trust
- The legal process by which title to a given residence is transferred
from a homeowner in default of a mortgage and/or lease terms
to the note holder. On fee simple and mortgaged allotted trust
properties, this includes the conveyance of the land as well
as the structure. On tribal trust or leased allotted trust properties,
the structure is conveyed to the note holder, as well as the
leasehold interest in the land. Title to the land itself remains
- Fractionated Ownership.
- The term used to note ownership of a property in the name
of more than one individual. The term is typically used in conjunction
with allotted or individual trust lands to describe situations
where, over time and through division of inheritance, multiple
parties have claim to a single property.
- Guarantee Fund.
- The Indian Housing Loan Guarantee Fund established under Section
184(i) of the Housing and Community Development Act of 1992.
- Any person recognized as being Indian or Alaska Native by
an Indian tribe, the federal government or any state and includes
the term "Native American."
- Indian Area.
- The area within which an Indian housing authority or a tribal
housing entity is authorized to provide housing.
- Indian Housing Authority.
- Any entity that is authorized to engage in or assist in the
development or operation of low-income housing for Indians and
that is established either (1) by exercise of the power of self-government
by an Indian tribe independent of State law; or (2) by operation
of State law providing specifically for housing authorities for
Indians, including regional housing authorities in the State
- Land Assignments.
- Assignments are an internal tribal assignment of tribal trust/restricted
lands to tribal members. Assignments are not normally recorded
against title to the land and are not normally recognized as
valid unless they are recorded. Therefore, assignments cannot
be recognized as site control. Unless the terms of the assignment
provide for the leasing of the land by the holder of the assignment,
the tribe must join with the assignee in the grant of a lease.
- A written agreement between the owner of real property and
another party detailing the specific terms by which the use and
possession of real property is granted by the owner to the other
- Lease Assignments.
- A lease assignment is the transfer or conveyance of a valid
existing lease to a third party, who becomes the new lessee.
Generally, an assignment must cover the entire leasehold interest.
- Leasehold Encumbrance.
- This term refers to a mortgage, deed of trust, or other lien
on the leasehold interest given to secure the repayment of a
loan obtained by the lessee.
- Leasehold Interest.
- This is the name given to the interest conveyed by the tribe
to the borrower under the lease; in other words, the borrower’s
interest in the land. It consists of the right to the quiet enjoyment
of the leased premises for the term of the lease, subject to
the requirements of the lease.
- The party to a lease who receives the right to use and possess
- The owner of real property who leases the property to another
- The mortgage is a pledge of property as security for repaying
the indebtedness evidenced by the note.
- Mutual Help Program.
- A HUD housing program offering homeownership opportunities
for Native American families. Under this Program, funds are allocated
from HUD to Indian Housing Authorities who construct Mutual Help
homes and determine the price of these homes. The housing authority
then establishes a schedule that amortizes the prices of these
homes over a set term. Mutual Help participants may use the Section
184 Program to acquire the property or acquire and rehabilitate
their home, or may use Section 184 to rehabilitate Mutual Help
homes that have been paid off.
- Principal Residence.
- The dwelling where the borrower maintains (or will maintain)
a permanent place of abode, and typically spends (or will spend)
the majority of the calendar year. A borrower may have only one
principal residence at any one time.
- Public Domain Allotments.
- Trust/restricted property located outside the exterior boundaries
of a federally recognized reservation. Public Domain property
is generally considered to be the original allotted tract, but
may also include purchased tracts which have been accepted in
- Rancheria is a term used synonymously with "reservations" in
the State of California. Lands within a "Rancheria/reservation" may
be owned by a tribe or individuals and held in trust by the federal
- Restricted Land.
- Land or any interest in land which is held by an individual
Indian or tribe and is subject to federal restrictions against
alienation or encumbrance. This land can be alienated or encumbered
only with the approval of the Secretary of the Interior as mandated
by federal law.
- The Secretary of the U.S. Department of Housing and Urban
- Standard housing.
- A dwelling unit or housing that complies with the physical
condition requirements established in the Section 184 statute.
These requirements are stated in Paragraph 4.7 of this guidebook.
- Certain leases may permit the lessee to create several leases
in place of the original lease (so-called spin-off leases). Each
of these subleases may then be assigned to another lessee.
- Title Status Report.
- A report issued by the Land Titles and Records Office of the
Bureau of Indian Affairs having administrative jurisdiction over
the specific Indian land indicating the type of ownership of
the land, listing any restrictions or encumbrances on the land;
the current owners; and any specific conditions or exceptions.
- Tribal Land.
- Land or any interest therein held by the United States in
trust for a tribe, band, community, group, or pueblo of Indians
subject to federal restrictions against alienation or encumbrance,
including such land reserved for BIA administrative purposes
when it is not immediately needed for such purposes. The term
also includes lands held by the United States in trust for an
Indian corporation chartered under Section 17 of the Act of June
18, 1934 (48 Stat. 984: 25 U.S.C. 476). This term also includes
assignments of tribal land.
- Any tribe, band, rancheria, colony, pueblo, group, community,
or nation of Indians or Alaska Natives.
- Tribally Designated Housing Entity.
- An entity other than the tribal government authorized by an
Indian tribe by exercise of the power of self-government independent
of state law or by operation of state law providing specifically
for housing authorities or housing entities for Indians, including
regional housing authorities in the State of Alaska, to receive
grant amounts and provide assistance under the Native American
Housing Assistance Act and Self-Determination Act of 1996 for
affordable housing for Indians. A TDHE may be authorized or established
by one or more Indian tribes to act on behalf of each such tribe
authorizing or establishing the housing entity.
- Trust land.
- Land or any interest in land held in trust by the U.S. Government
for an individual Indian or tribe.