by K. Renee’ Davis, Esq.
Kivell, Rayment and Francis, PC 
USFN Member (OK)

The Section 184 Loan Guarantee Program (“Section 184 LGP”) is a specific loan program offered by the Department of Housing and Urban Development (HUD) to Native Americans, federally recognized Indian Tribes, Indian Housing Authorities, and Tribally Designated Housing Entities (collectively, “Native American entities”). This program was created under the provisions of the Housing and Community Development Act of 1992, as amended by the Native American Housing Assistance and Self-Determination Act of 1996. The Section 184 LGP was set up to address the issue of lack of mortgage opportunities for Native American entities, particularly on land held in trust by the U.S. government. 

While the Section 184 LGP allows for collateral to include leaseholds and land held in trust, this article focuses primarily on Section 184 loans made to an individual Native American that holds title in fee simple. Individual Native Americans may quality for a loan under the Section 184 LGP, as long as the property owned is within an eligible area, as determined by HUD. There are 24 states in which the entire state is considered “eligible area.” The majority of other states have some portion of their respective state that is considered “eligible area.” For a specific list of eligible areas, visit the Hud.gov website. Hawaii has a specific program under Section 184A. 

Approved lenders follow specific guidelines when making a loan under the Section 184 LGP. The lender must verify that the applicant is eligible to participate in the program and that the land also qualifies, (i.e., the land is within an eligible area). The first requirement may raise questions of discrimination under the Fair Housing Act, which prohibits discrimination based upon many factors. Arguably, a lender may violate the Fair Housing Act by asking the applicant for proof of membership of a Tribe. However, because the Section 184 LPG was enacted specifically to benefit Native American entities, and one of the qualifying factors is that the borrower be a member of a federally recognized Tribe, requesting proof of tribal membership likely would not be a violation of the Fair Housing Act for a borrower seeking a loan under the Section 184 LGP. 

According to information from HUD, as of August 2019, there were 44,351 active loans under the Section 184 LGP, totaling $7,542,681,029 in outstanding principal balance. Of those loans, nearly half (over 20,000) were made within the State of Oklahoma. Historically, about 90% of all Section 184 loans have been on fee simple land.

If a borrower defaults on a Section 184 loan that is secured by fee simple land, the lender has the option of either foreclosing on the land or requesting an assignment to HUD. If the lender chooses foreclosure, the foreclosure process will generally proceed under the jurisdiction of state law; however, under the precedent of a recent United States Supreme Court case McGirt v. Oklahoma, 591 U.S. (2020), questions may arise as to whether jurisdiction is proper in state courts, or if tribal courts may have jurisdiction in foreclosure actions involving loans originated under the Section 184 LGP. At this time, there have been no civil case decisions in Oklahoma regarding this question of jurisdiction. 

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December 2020 e-Update