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What is the Section 184 Loan Guarantee Program?
Under the provisions of section 184 of the Housing and Community Development Act of 1992, as amended by the Native American Housing Assistance and Self-Determination Act of 1996 (12 U.S.C. 1715z-13a), the Department of Housing and Urban Development (the Department or HUD) has the authority to guarantee loans for the construction, acquisition, or rehabilitation of 1- to 4-family homes that are standard housing located on trust or restricted land or land located in an Indian or Alaska Native area.
What is the Section 184A Native Hawaiian Housing Loan Guarantee Program?
The Hawaiian Homelands Homeownership Act of 2000 adds a new Section 184A to the Housing and Community Development Act of 1992 which authorized the Native Hawaiian Housing Loan Guarantee Program. The regulations for Section 184A was published as an Interim Rule on June 13, 2002, and are found at 24 CFR part 1007. The program is designed to offer home ownership, property rehabilitation, and new construction opportunities for eligible Native Hawaiian individuals and families wanting to own a home on Hawaiian home lands.
Does ONAP require Borrowers to pay the current month’s mortgage payment due prior to disbursement on a Refinance transaction?
For all Refinance types, the Borrower must have made the payments for all mortgages secured by the subject property for the month due prior to closing. The current month payment may be made at closing. Please refer to Dear Lender Letter 2021-04 for all other requirements.
Example: If the Borrower is closing on April 5, they must have made the March payment within the month of March. The April payment must be paid at closing.
Why is there a lack of mortgage lending in Indian country?
Much of the land in Indian Country is held in trust by the United States government for the benefit of a particular tribe or individual Native American. Land held in trust for a tribe cannot be mortgaged, and land held in trust for an individual must receive approval from the Bureau of Indian Affairs (BIA), before a lien is placed on the property. Without the ability to mortgage and foreclose on a home or place a lien on individual trust property, lenders were not willing to make home loans to individual Native Americans.
How does the Section 184 program correct the problem?
For a home loan on tribal trust land, the eligible individual borrower leases the land property from the tribe on a lease approved by the Bureau of Indian Affairs (BIA) and by HUD to create a leasehold estate. It is the home and the leasehold interest in the homesite that are mortgaged so that in the event of a foreclosure the home and leasehold interest are what are foreclosed. The ownership of the land itself remains in trust for the tribe.
For a home loan on individual or "allotted" trust land, both HUD and the BIA must approve the loan applicant. In the event of a default by a borrower on a 184 guaranteed loan on either tribal or individual trust land, the lender or HUD can only pursue liquidation of the loan after offering to transfer the loan to an eligible tribal member, the tribe or the Indian Housing Authority serving the tribe. In the event of a foreclosure, the lender or HUD can not sell the property to anyone but an eligible tribal member, the tribe or the housing authority serving the tribe. Thus the unique status of the trust land is protected.
COVID-19 Recovery Loss Mitigation Options
Should the Native ALM be included in the COVID-19 relief waterfall options?
The Native ALM is a pre-waterfall step for COVID-19 relief. It is available to Borrowers exiting their COVID-19 Forbearance, who are 90 days or more delinquent; and to Borrowers not on a COVID-19 Forbearance, but who are 90 days or more delinquent, and is an available option up to the end of the COVID-19 National Emergency
Are Lenders/Servicers required to evaluate Borrowers for the COVID-19 Recovery Loss Mitigation Advance and the COVID-19 Recovery Native Loan Modification if the Borrower rejects or does not qualify for the COVID-19 Native ALM?
Yes, as part of the COVID-19 loss mitigation waterfall, Borrowers must be evaluated for the COVID-19 Recovery Loss Mitigation Advance and the COVID-19 Recovery Native Loan Modification in addition to the traditional loss mitigation options.
What evidence should be submitted with the Servicing File to evidence Lenders/Servicers’ use of the Freddie Primary Mortgage Market Survey (PMMS) rate?
Lenders/Servicers should include a snap shot of the dated weekly average PMMS rate used, which can be found at http://www.freddiemac.com/pmms/.
Can missed payment and interest payments be included in the COVID-19 Recovery Loss Mitigation Advance and the COVID-19 Recovery Native Loan Modification?
Yes, both of these options can include arrearages, which is defined in DLL 2022-01 as “any amounts needed to bring the Borrower current.” This includes missed principal and interest payments.
Are Borrowers, who are 90 days or more delinquent, but not in a COVID-19 Forbearance, who request a COVID-19 Recovery loss mitigation on or before the end of COVID-19 National Emergency permitted to finalize a COVID-19 Recovery loss mitigation after the end of the National Emergency?
Borrowers who started a COVID-19 Recovery option before the end of the National Emergency can complete the loss mitigation option within the allowable timeframe after the end of the emergency. However, HUD strongly encourages that these transactions be finalized as close to the deadline as possible
According to DLL 2022-01, loss mitigation must occur within 120 days. Are COVID-19 Recovery loss mitigation options available to Borrowers who have exceeded this timeframe?
If Loss mitigation does not occur within 120 days, the Borrower is still eligible for all the COVID-19 loss mitigation options. Borrowers are eligible for the COVID-19 Loss mitigation options until the end of the National Emergency, with the exception of those Borrowers whose COVID-19 Forbearance ends after the National Emergency. These Borrowers are eligible for the COVID-19 loss mitigation options for 120 days after they have exited their COVID-19 Forbearance.
Will ONAP allow for extension requests beyond the 120-day timeframe for loss mitigation
If a Lender needs additional time for loss mitigation and the loss mitigation will not be complete before reaching the 180 days to file for first legal, then ONAP recommends the Lender request an extension to the filing of first legal date due to active loss mitigation.
What must a tribe do to participate in the HUD 184 Loan Guarantee Program?
A tribe with tribal court jurisdiction over the property needs to have the following in place:
- Foreclosure Procedures
- Eviction Procedures
- Procedures giving the HUD Guaranteed Loan first lien priority or otherwise ensuring that the guaranteed loan will be satisfied before all other property debts (except tribal taxes)
- Ensure that HUD and/or private lenders have access to tribal lands for the purpose of servicing and evaluating guaranteed properties.
- If there is tribal trust land, ensure acceptable lease is in place.
- Understand that if eviction and foreclosure procedures are not enforced, the Department will cease making new loan guarantees within the tribe's area of jurisdiction
A copy of the ordinances/procedures, proposed lease and the tribal resolution enacting these ordinances/procedures should be mailed to:
Office of Loan Guarantee
HUD Office of Native American Programs
451 7th Street, Room 4108
Washington, D.C. 20410
or call 1-800-561-5913
Is trust land the only land eligible for a Section 184 loan
No. Land located in an Indian area or Alaska Native area are eligible locations for a 184 guaranteed home loan. Fee simple lands within an approved Indian area are allowed under Section 184. Check here to see a listing of State and Counties eligible for the Section 184 guaranteed home loan program. If you don't see your county listed call, (800) 561-5913.
The Office of Loan Guarantee