Section 184 Loan Frequently Asked Questions

Hello and welcome to the frequently asked questions page. Made because you’ve got questions and we’ve got answers. Learn all about the Section 184 Indian Home Loan.

This guide was assembled to better help you understand HUD Section 184 Loans and answer common questions pertaining to these loans. Section 184 is synonymous with home ownership for Native Americans; so let’s get started!

What is the purpose of Section 184?

A large portion of Indian Country is held in Trust by the United States Government for specific Tribes or individuals belonging to Native American Tribes. This land is specifically protected for Native Americans. And, because of the lands legal status as a trust, it is difficult to secure mortgage loans for those on the land. For example:

Land held in trust for a Tribe cannot be mortgaged
Land held in trust for an individual must receive approval of the Bureau of Indian Affairs (BIA) before a lien is placed on the property to secure a loan.

The government made these regulations to prevent private seizure of Native American lands, which would occur if a private lender was to foreclose on a home owner of tribal land. Because of the difficulty in securing leverage against a loan (also known as a lien), private lenders were unwilling to grant home loans and mortgages to Native Americans. This made it difficult to build and maintain homes on reservation land. Creating Section 184 gives private lenders the insurance they need to proceed with mortgage loans.

How does Section 184 Work?

Section 184 works in two distinct ways. If the land is on tribal trust land, the eligible buyer works with BIA and HUD to set up the home as a leasehold estate. This effectively turns the property into a leased entity for the duration of the mortgage plus 10 years. Before this can happen it must be first be approved by the BIA and the Housing and Urban Development (HUD). It is this lease, and not the land itself, which the lender can seize if the loan is defaulted on.

If however, the home is on allotted trust land, held by an individual, there’s no need for a leasehold estate. However, once again both BIA and HUD must approve the loan applicant, and the home itself can be seized in foreclosure. Before that happens however, to better protect the tribes, certain regulations have been put in place around a Section 184 Home Loan:

The lender can only pursue liquidation of the lease and asset only after offering to transfer the loan to an eligible tribe member, the tribe, or Indian Housing Authority.
In event of foreclosure, the lender cannot sell the land to anyone other than an eligible tribe member, the tribe, or the Indian Housing Authority.

These regulations make sure the tribe’s land stays intact, and the tribe has the ability to repurchase foreclosed property. So, lenders and tribes rights are both protected.

Are Trust lands the only available for Section 184 Loan Guarantee?

No, tribes may also designate areas where their tribal members live off reservation to be included in the Section 184 loan program.

What can a Section 184 Loan be Used for?

The Section 184 Home Loan Guarantee is synonymous with home ownership on Tribal land. As of January 2012, the Section 184 program has guaranteed over 15,000 loans, worth a total sum of almost $2.5 billion, to various individuals, Tribes, and TDHEs.

Section 184 Loans can be used for:

The purchase of a new home
The construction of a new home
Renovating an existing home
The purchase and subsequent renovation of an existing home
Refinancing a home

Furthermore, Section 184 loans can only be used for single (1-4 units) primary residences. They cannot be used for secondary homes or investment purposes.

This is because Section 184 was specifically designed to help increase home ownership within Native communities. These regulations were created to help target that specific goal, and have thus far helped thousands across 37 states.

What Does a Tribe Need to Participate?

A Tribe, in order to participate, needs to have the following systems in place:

Eviction Processes
Foreclosure Processes
A system in place to ensure the enforcement of these processes
Systems allowing access to tribal lands by HUD and/or private lenders
Acknowledge that if eviction/foreclosure procedures aren’t enforced, the HUD will cease to guarantee loans.

How Much Can I Borrow?

Section 184 loan limits are based upon where you live. Check with us to find out the loan limit for where you live. Your personal loan amount will also be determined by your current income and current debts.

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