Tribal Housing Activities Loan Guarantee Program
(Title VI)

Program Highlights

The Title VI Loan Guarantee Program is authorized by the Native American Housing Assistance and Self Determination Act of 1996, as amended (25 U.S.C. 4101 et seq.), (NAHASDA), in accordance with the Code of Federal Regulations at 24 CFR Part 1000. A guarantee by HUD, made under Title VI of NAHASDA guarantees repayment of 95 percent of the unpaid principal and interest due on the notes or other obligations guaranteed.

The Title VI Loan Guarantee program allows recipients of Indian Housing Block Grant Funds to use current and future fund allocations as a means of leverage to obtain HUD guaranteed financing. As a borrower, tribes, Alaska Native Villages or TDHEs (with tribe approval) will collaborate with an approved lender to prepare and submit required documents for HUD review. Once approved, HUD will provide the lender with the loan guarantee and the borrower can start the intended project. Obtaining a Title VI guaranteed loan permits borrowers to develop their project at today's cost; avoiding the need to save funds over several years and incurring the risk of potential cost increases.

Proceeds from a Title VI guaranteed loan may be used to:

• Create new housing
• Rehabilitate housing
• Build infrastructure
• Construct community facilities
• Acquire land to be used for housing
• Prepare architectural & engineering plans
• Fund financing costs

The maximum loan amount HUD will guarantee and that a tribe/TDHE can borrow is approximately five times the need portion of the annual IHBG allocation. There is no minimum loan size. Click here. to view an example of how leveraging increases the borrower's loan amount.

A tribe/TDHE must repay its Title VI loan. However, the repayments may be stretched to 20 years. As the amortization period increases, the annual debt service payments decrease. If a tribe/TDHE fails to repay the debt and a default is declared, HUD will make the loan payments to the lender. HUD will then seek reimbursement from the borrower’s pledged funds. Click here to view an example of a repayment schedule.

Borrowers

Title VI loans provide a financing mechanism for borrowers to pledge current and future IHBG allocation for the construction of affordable housing and related activities at today’s costs. The Title VI Loan Guarantee can promote flexible financing terms and also be used to leverage additional funds from other sources. Because HUD guarantees the loan, borrowers are not required to use land as collateral.

Eligible borrowers include: Tribes, Alaska Native Villages, and their tribally designated housing entities that are Indian Housing Block Grant (IHBG) recipients. Borrowers must also demonstrate administrative and financial capacity.

• Program Benefits to Tribes and TDHEs
• Fact Sheet for Tribes

Lenders

Lenders benefit from administering Title VI loans because HUD guarantees payment of 95% of the outstanding principal and interest in the event of default, thereby limiting lender risk, reducing costs, increasing loan marketability, and improving opportunities to market financial services and credit toward meeting community reinvestment goals.

Eligible lenders include those supervised, approved, regulated, or insured by any agency of the United States or approved by the Secretary of HUD.

• Program Benefits to Lenders
• Fact Sheet for Lenders

Applying for a Title VI Guaranteed Loan

The Title VI program uses a team approach with regular conference calls to help ensure project success by providing technical assistance, answering questions, and coordinating the various parties to keep the project on schedule. The main participants include:

• Tribe or tribally designated housing entity (TDHE) – plans and implements the project.
• Lender – assists with application, performs underwriting and servicing, and distributes loan proceeds to the borrower.
• ONAP's Office of Loan Guarantee – collaborates with area office staff to review the Title VI application package, provides a preliminary letter of acceptance, and issues the firm commitment and loan guarantee.

Although every project is different, HUD has developed a general checklist for the Title VI Loan Guarantee application process.

Loan Terms

The maximum loan amount is five times the annual need portion of the tribe’s or TDHE’s annual Indian Housing Block Grant (IHBG) and the repayment period is up to 20 years.

HQ Office of Loan Guarantee

Office Loan Guarantee
451 Seventh Street, S.W.
Room 5156
Washington, DC 20410
Jeffery Glass
(202) 402-2355

Area Offices

Program Contacts by Area Office and State

Statute and Code of Federal Regulations

• NAHASDA
• 24 CFR Part 1000

Low-Income Housing Tax Credit Program (LIHTC)

• HUD Low-Income Housing Tax Credit Website
• State and local LIHTC-allocating agencies

Useful Links

• Office of Native American Programs
• National Directory of Tribes and TDHEs
• Code of Federal Regulations (CFR)

Browse Questions and Answers

Overview

What is a Title VI loan?

Under Title VI of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), the tribe or its Tribally Designated Housing Entity (TDHE) pledges a portion of its Indian Housing Block Grant (IHBG) funds to HUD. In turn, HUD will guarantee a lender’s loan to the tribe/TDHE.

How does HUD’s loan guarantee to a lender help the tribe/TDHE?

The guarantee protects the lender from a payment default by the tribe/TDHE. The guarantee enables a lender to offer loan terms that would not generally be available to a borrower.

What must the tribe pledge to HUD to receive a Title VI loan?

The tribe/TDHE pledges the need portion of its annual IHBG funds and the financed project’s income to HUD as collateral for a loan guarantee. The pledged funds can still be used by the tribe/TDHE for eligible IHBG activities, including debt service, unless the tribe/TDHE has defaulted on a previous loan.

Who is an eligible borrower for a Title VI loan?

A tribe/TDHE that receives and administers IHBG funds is an eligible borrower. Since a tribe has the authority to withdraw the designation of a TDHE, the tribe must be a party to the pledge of IHBG funds.

How may the loan funds be used?

The loan funds must be used for affordable housing activities eligible under NAHASDA.

Does a tribe/TDHE have to comply with IHBG regulations if the money is actually coming from a private lender?

Yes, Title VI and IHBG funds are authorized under NAHASDSA and are subject to the IHBG regulations at 24 CFR Part 1000. IHBG regulations apply to any project that uses funds from a loan guaranteed under Title VI.

Does the project have to be on Trust land or allotted land?

No, but the project must be located in the area that the tribe/TDHE currently serves, using its NAHASDA funding. The project must also be included in the tribe’s Indian Housing Plan.

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APPLICATION QUESTIONS

What steps are required to obtain a Title VI loan guarantee?

In general, there are several steps in the process.

1. The tribe/TDHE submits an application for a preliminary review of acceptance from HUD. HUD reviews the proposed project’s feasibility and the tribe’s/TDHE’s capacity to implement the project. If acceptable, HUD will issue a preliminary letter of acceptance (PLA) that is valid for 180 days.
2. The tribe/TDHE selects a lender and applies for a loan from that lender.
3. The lender requests a firm commitment from HUD, so that a loan guarantee may be
   issued. When the request is approved, HUD will issue a firm commitment to the lender
   specifying the terms that must be met for a guarantee to be issued. The lender and
   tribe/TDHE have 90 days to close the loan.
4. The lender and tribe/TDHE meet the conditions for the guarantee and close the loan.
   Once closed, HUD will issue the guarantee to the lender.

Why are the firm commitment and guarantee directed to the lender?

HUD is guaranteeing the lender’s loan to the tribe/TDHE. The lender is responsible for meeting
the terms and conditions for the guarantee.

Does HUD guarantee the full amount of the loan?

No, HUD guarantees payment of 95% of the unpaid principal and interest on the loan. The guarantee does not include late fees or other expenses. The guarantee does not cover any other costs or fees, including late fees or legal expenses.

What is the maximum loan amount that can be guaranteed under Title VI?

The maximum loan amount depends on the amount of the tribe’s annual Indian Housing Block Grant. IHBG allocations are based on a formula that considers two basic factors: the number of units of Formula Current Assisted Stock that the grantee has in its inventory; and the need of each tribal community. The need portion of the IHBG is calculated using weighted factors such as the local population’s income levels, the condition of existing housing, and housing costs. The maximum commitment amount under Title VI is limited to five times the need portion of the annual IHBG allocation.

Can a tribe/TDHE have more than one Title VI loan?

Yes, but the total amount of available funding for all of the Title VI loans cannot exceed the maximum commitment amount, which is five times the need portion of the annual IHBG allocation.

Are there restrictions on the annual debt service?

Yes, the annual debt service must not exceed the need portion of the IHBG allocation.

Does the amount of the guarantee change with each annual allocation?

No, once the guarantee is issued, the maximum amount of that guarantee is fixed and does not
change, regardless of any changes in the annual IHBG allocation.

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GUARANTEE QUESTIONS

What is the collateral for a loan guaranteed under Title VI?

The loan has no real estate collateral. The guarantee is the primary collateral for the lender. The
tribe/TDHE pledge of the need portion of the IHBG allocation is the collateral for HUD’s guarantee.

Can a lender also use a pledge of IHBG funds for loan collateral?

No, the pledge of IHBG funds is made to HUD, and cannot be pledged a second time.

Can a lender require more than the guarantee as collateral for the loan?

Yes, additional collateral may be negotiated between the tribe/TDHE and the lender. For example, it is common for a lender to request cash collateral for the 5% that is not covered by the guarantee. Depending on the type of account or collateral, the additional collateral may be an eligible financing expense under NAHASDA.

If a payment is not made, can a lender immediately call the loan due and payable in full?

No, HUD must approve the demand for full repayment of interest and principal.

Has HUD made payments due to a borrower defaulting on a Title VI loan?

No, as of September 2014, there had been no claims paid on a guarantee through the 15-year life of the program.

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LOAN DOCUMENT QUESTIONS

Are there application forms for a Title VI loan?

There are no application forms. However, HUD does provide a checklist of documents needed to qualify. The checklist generally follows the documentation requirements that lenders have for commercial development financing.

May the lender use its standard loan documents?

Yes, HUD does not have documents for the lender to use for its loan. However, HUD will review the lender’s documents and may require some changes.

What are the required HUD guarantee documents for the tribe/TDHE?

The required documents include a contract for the pledge of the tribe’s/TDHE’s IHBG funds and a certification of compliance with NAHASDA.

What are the required HUD guarantee documents for the lender?

The required documents include a guarantee agreement and the guarantee certificate.

Does HUD require special terms in the lender’s loan documents?

The Title VI Loan Guarantee Program is designed to be flexible; however, the loan terms must meet the needs of the project. The maturity date should not exceed 20 years, and the tribe/TDHE may not be a party to any hedge structure for fixed-rate financing.

Does the tribe/TDHE need to include the Title VI project and financing in its annual Indian Housing Plan (IHP)?

Yes, HUD requires the IHP to include the project, loan proceeds, and estimated debt service. The useful life of the project must equal or exceed the loan term.

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SERVICING QUESTIONS

Does the lender need to monitor construction?

Yes, loan advances that pay for construction costs need to be based on completed work.

What loan reports must the lender provide to HUD?

The lender must provide quarterly payment reports that include the current principal balance and current interest rate, as well as the amount of principal and interest payments. In addition, the lender must report any payment delinquencies that are more than 30 days late.

Does the tribe/TDHE have Title VI reporting requirements?

Yes, the project must be included in the tribe’s/TDHE’s Annual Performance Report, annual audit, and the self-monitoring plan. In addition, the debt service should be included in the annual Indian Housing Plan.

Will HUD conduct a monitoring review of a Title VI project?

Yes, HUD will include a Title VI project in its on-site monitoring reviews. In addition, it may undertake a desk review of all or a portion of a project.

May a Title VI guaranteed loan be modified to change one or more terms?

Yes, the loan terms may be modified with HUD’s written approval of the changes.

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To learn more about using the Title VI Loan Guarantee Program for your housing project, contact

Jake Coury
Jake.R.Coury@hud.gov or call (202) 402-3507
Native American Program Specialist (Title VI)
U.S. Department of Housing
and Urban Development
Office of Loan Guarantee
Room 5156
451 Seventh Street, S.W.
Washington, DC 20410

• Application Checklist
• Title VI Program Benefits to Tribes
• Title VI Program Benefits to Lenders
• The Power of Leveraging
• Structure of Loan Payment
• Title VI Fact Sheet for Tribes/TDHEs
• Title VI Fact Sheet for Lenders
• Grantee Reference Index of Program Guidance and Notices
• NAHASDA Indian Housing Block Grant
• Regional Offices:
  • Alaska Regional Office of Native American Program
  • Northwest Regional Office of Native American Program
  • Southwest Regional Office of Native American Program
  • Northern Plains Regional Office of Native American Program
  • Southern Plains Regional Office of Native American Program
  • Eastern Woodlands Regional Office of Native American Program
• Section 184 Loan Guarantee Program
• Title VI Brochure

Alaska Region

Taguiugmiullu Nunamiullu Housing Authority (TNHA)
https://tnha.info/
Alaska

The TNHA initiated a project to develop 24 “next generation,” Sustainable Northern Shelter (SNS) affordable single family homes in 6 villages throughout the North Slope region of Alaska. The goal of the project was to address the need for sustainable rural housing for northern climates utilizing a simply constructed home that uses very little water or energy.

These units have a total budget of $9,821,818. The bulk of those funds come from a Title VI Guaranteed Commercial Bank Loan for $6,672,170, combined with $1,478,468 from State Supplemental Housing Grant Funds. The remaining funds for this project are from an Indian Housing Block Grant. For a complete project summary click here.

Eastern/Woodlands Region

Catawba Indian nation, Iswa Development Corporation
https://www.catawba.com/housing-services
South Carolina

Green Earth, a master-planned community located in York County, South Carolina, was developed with respect for wildlife habitat and wetlands preservation for the Catawba Indian Nation by the ISWA Development Corporation. The 120 units in Phase I include 90 single family rentals (lease with an option to purchase) and 30 multifamily units. Project funding included Indian Health Service water and sewer grants, Rural Housing Grant funds, the IHBG, and a Title VI guaranteed loan. The First Union Title VI loan includes a 2-1/2 year construction period based on the LIBOR floating rate plus margin. Monthly payments with a 20 year amortization begin with the conversion to the permanent fixed rate loan.

Mowa Choctaw Housing Authority
https://mowachoctawhousingauthority.com/
Alabama

The Tribally Designated Housing Entity (TDHE) built twelve single family four-bedroom homes in Mobile and Washington counties in Alabama on fee simple land owned by tribal members or the TDHE, including five homes built in a subdivision previously developed by the housing authority. Whitney National Bank originated the Title VI loan. With a 78 month maturity, repayment with IHBG funds was structured as quarterly interest payments for 18 months, and then interest quarterly and principal annually based on a 5-year amortization.

Northern Plains Region

Northern Arapaho Tribal Housing
https://www.northernarapaho.com/
Wyoming

The TDHE secured a Title VI loan for water and sewer infrastructure for ten duplexes (ten 2-bedroom units and ten 3-bedroom units), funded with Low Income Housing Tax Credits and IHBG funds, located on the Wind River Reservation just north of Riverton, Wyoming. Wells Fargo Bank in Wyoming was the lender for the 5 year Title VI loan. The annual debt service payment will be made with IHBG funds.

Northwest Region

Yakama Nation Housing Authority
https://ynha.org/
Washington

In total a $15.8 million Title VI loan provided $4.4 million for infrastructure expansion at the Adams View Development, and $11.4 million to build 68 single family homes.

Siletz Tribe
https://ctsi.nsn.us/
Oregon

With an investment of $69,917 of their Indian Housing Block Grant funds the Siletz Tribe of Oregon utilized a $1.4 million dollar Title VI loan to construct seven new, energy efficient 3, 4, and 5 bedrooms single family homes to be sold to tribal members. Under a three year lease purchase program families will address credit issues, manage their budget, and prepare to qualify for a home loan to purchase the unit. For complete project summary, click here.

Southern Plains Region

Sac & Fox of Oklahoma Housing Authority
https://sacandfoxha.com/
Oklahoma

The $2.5 million dollar apartment complex will address 46 percent of SFHA’s immediate need for new housing. The $1.5 million dollar Title VI loan was guaranteed on September 8, 2015 and supplemented by $1 million from SFHA’s annual Indian Housing Block Grant. For complete project summary, click here.

Southwest Region

Tohono O’odham Ki:Ki Association
https://tokahousing.org/
Arizona

Tohono O’odham Ki:Ki Association TOKA was awarded $2.5 million Title VI Loan Guarantee to renovate 20-units vacant rental units.

Over half of the units will be modernized to provide accessibility for the disabled and elderly. All units were upgraded for energy efficiency. For complete project summary, click here.

Current as of February 2016