The Section 184 Loan Guarantee Program was created by the Housing and Community Development Act of 1992 to address the lack of mortgage lending in Indian Country. The 184 program offers a 100% loan guarantee.
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 able to make home loans to individual Native Americans.
For a home loan on tribal trust land, the eligible individual borrower leases the land from the tribe for 50 years. It is the home and the leasehold interest that are mortgaged. The land remains in trust for the tribe. The Section 184 mortgage is designed to be secured with this Leasehold interest.
The Office of Loan Guarantee within HUD’s Office of Native American Programs guarantees the mortgage loan made to eligible borrowers. The loan guarantee assures the lender that its investment will be repaid in the event of a foreclosure. The borrower pays a 1.5% loan guarantee fee at closing which may be financed in the mortgage.
Effective December 1, 2016 the new annual premium of 0.25 percent of the remaining loan balance will apply to all new loan guarantees, including refinances.
The borrower applies for the loan with an approved lender. If leasing tribal land they work with the tribe and the Bureau of Indian Affairs to obtain an approved 50 year lease.
Section 184 can be used in 37 states. In fact, as the eligible area continues to expand across the nation, a majority of participating states are eligible in their entirety.
The land located in an eligible Indian area or Alaska Native area (as determined by the participating Tribes) may entail Tribal Trust, Allotted Trust or Fee Simple.
Section 184 Loans can be made to the following:
Loans are originated and serviced by lenders that have completed Section 184 training and have met program requirements.
For detailed information on the requirements and procedures of the approval process contact Robert Floyd, in the Office of Loan Guarantee, 202-402-2817.
Home values can be based on Cost or Market basis. On reservation properties, land values are not added into total appraisal values. The HUD FHA 4150.2 handbook (issued May 20, 1999), provides guidance for appraisers on how to appraise existing, proposed and new construction of one to four family homes on tribal trust, allotted and fee simple lands under HUD's Office of Native American Program (HUD/ONAP) Section 184 Loan Guarantee Program.
Yes! A Section 184 guaranteed loan, including the security given for the loan, may be sold or assigned by the lender to any financial institution. A strong secondary market exists for Section 184 loans. A growing network of national Lenders as well as Fannie Mae, Freddie Mac, Ginnie Mae, some state housing financing agencies, and some federal home loan banks purchase Section 184 loans.
- ONAP Loan Origination System Notice
- FHA Mortgagee Letter 2016-08 – calculating student loan payments
- November 15, 2016 memo – Loan processing updates (Effective December 1, 2016)
- Section 184 Processing Guidelines (October 2014)
- Annual Fee Federal Register Notice (dated 11/1/2016)
- Fee Increase FAQs (dated 11/2/2016)
- Annual Fee Mortgagee Letter (dated 10/15/2014)
- Annual Fee Submission Tutorial Annual Fee Submission Tutorial (PAY.GOV)
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