NEW!  Dear Lender Letter 2020-12 - Extension of Re-verification of Employment and Tax Transcript Flexibilities and Updated Appraisal Flexibilities in Connection with the COVID-19 National Emergency The purpose of this Dear Lender Letter (DLL) is to inform lenders and servicers of an extension of the re-verification of employment and IRS tax transcript flexibilities originally issued in DLL 2020-05, extended in DLL 2020-06 and DLL 2020-08 and further extended in DLL 2020-10, for an additional period through December 31, 2020.  This DLL will also provide an updated scope of work inspection option providing for Exterior-Only Appraisals, which limits face to face contact for certain Section 184 and 184A transactions affected by the COVID-19 National Emergency. NEW! Dear Lender Letter 2020-11 - Section 184A Loan Limits This Dear Lender Letter (DLL) announces a technical correction by the Office of Native American Programs (ONAP) to the Section 184A loan limit for properties located in Hawaii County.  This DLL is effective immediately for all Section 184A loans that do not have a 184A cohort number assigned as of September 9, 2020. NEW! Dear Lender Letter 2020-10- Extension of Foreclosure Moratorium and Administrative Flexibilities Due to the ongoing COVID-19 National Emergency, HUD is extending the foreclosure and eviction moratorium applicable to the Section 184 Indian Home Loan Guarantee program and Section 184A Native Hawaiian Housing Loan Guarantee program through December 31, 2020. HUD is also extending the loan processing flexibilities originally issued in DLL 2020-05, and further extended in DLL 2020-08, through October 31, 2020. For more information, please see Dear Lender Letter 2020-10.

NEW!  Dear Lender Letter 2020-09- Office of Loan Guarantee Fiscal Year 2020 Year-End Closure (Now Open as of October 6, 2020) This Dear Lender Letter (DLL) informs stakeholders when HUD will begin its Fiscal Year (FY) 2020 financial closeout for loan guarantee programs, including the Section 184 Indian Home Loan program, the Section 184A Native Hawaiian Housing Home Loan program, and the Title VI Loan Guarantee program.  The financial closeout process will begin on Monday, September 21, 2020, at 4:30 p.m. EDT.

​What is the Section 184 Loan Guarantee Program?

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.

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 able to make home loans to individual Native Americans.

How does the Section 184 program address the lack of mortgage capital?

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.

How Does Section 184 Work?

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.

• 184 Loan Flowchart
• HUD Form 50143 - Section 184 Direct Guarantee Reservation of Funds Request

Where can Section 184 loans be used?

Section 184 can be used in 38 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.

Who Can Use a Section 184 Loan?

Section 184 Loans can be made to the following:

How Can Lenders Become Approved to Participate?

Loans are originated and serviced by lenders that have completed Section 184 training and have met program requirements.  To become a Section 184 lender, submit the Lender Application form to HUD for approval. If you have questions on the requirements or procedures of the approval process send an email to 184lenderapproval@hud.gov.

How are Homes on Native American Lands Appraised?

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.

Are Guaranteed Loans Marketable?

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.

Lender Training

• DLL 2020-06 Training-Cares Act Implementation (June 3, 2020)
  • Lender Overview PowerPoint or PDF Version
  • Recording of Lender Overview
• Section 184 Training Agenda- April 21, 2020
  • Endorsement Delivery Training
  • Servicing Part 1
  • Recording- Day One
• Section 184 Training Agenda- April 22, 2020
  • Servicing Part 2
  • Claims Training
  • Recording- Day Two