By Blair Gisi, Esq.

SouthLaw, PC *

USFN Member (IA, KS, MO, NE)

Recently, there has been an effort to address concerns with the lack of mortgage lending in and around Native American tribal lands along with a rise in referrals for loans subject to the regulations of the Section 184 Indian Housing Loan Guarantee (“Section 184”) program. As a brief history, Section 184 is designed to increase opportunity and access for certain Native American families to achieve home ownership.  Per HUD’s website:

The Section 184 Indian Home Loan Guarantee Program is a home mortgage product specifically designed for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. Congress established this program in 1992 to facilitate homeownership and increase access to capital in Native American Communities.

With Section 184 financing borrowers can get into a home with a low down payment and flexible underwriting. Section 184 loans can be used, both on and off native lands, for new construction, rehabilitation, purchase of an existing home, or refinance.

Section 184 is synonymous with home ownership in Indian Country.

See https://www.hud.gov/section184.

            While expanding,  there are currently 38 states in which a Section 184 loan can be used, and since 2012, there have been over 15,000 loans totaling over $2.4 billion (https://www.1tribal.com/section-184-home-loan-explanation/). A full list of participating tribes and the associated state(s) is also available on HUD’s website.

An important pre-foreclosure consideration when reviewing Section 184 loans is whether the property sits on tribal or allotted land or whether it is fee simple property. Generally speaking, foreclosure and sale of fee simple properties can follow the standard procedure per the terms of the loan documents and pursuant to state guidelines.

            For trust or allotted land, the leasehold interest will need to be incorporated to collateralize the loan, which brings along additional regulations. The two primary considerations involve the potential sale of the property via the foreclosure action and may include a right of first refusal to an eligible tribal member, the tribe itself, or the Indian Housing Authority serving the tribe. There are also limitations on who may purchase the property in the event of foreclosure.

            Section 184 has a rich history of supporting Native American and Alaskan Native housing initiatives. Its regulations on rights upon default aim to provide a framework for addressing defaults in a manner that balances the interests of borrowers and lenders while promoting access to affordable housing in Native American communities. The distinction with how the property is held and where the property sits is paramount to proceedings involving Section 184 loans, and there are many resources online to help guide lenders, servicers, and attorneys in these situations.

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USFNews - June 12, 2024

* Denotes firm is a 2023 USFN Award of Excellence recipient