The Section 184 Indian Home Loan Guarantee Program is a home mortgage specifically designed for American Indian and Alaskan Native families, Alaska Villages, Tribes, or Tribally Designated Housing Entities. Section 184 loans can be used, both on and off native lands, for new construction, rehabilitation, purchase of an existing home, or refinance.

History

Native American lands are 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 willing to make home loans to individual Native Americans. ^[1]

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. The HUD Section 184 Loan Guarantee gives private lenders the insurance they need to proceed with mortgage loans.

Section 184 on leasehold or allotted tribal trust land works in two distinct ways:

1. If the land is on tribal trust land, the eligible buyer works with Bureau of Indian Affairs (BIA) and the Housing and Urban Development (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 HUD. It is this lease, and not the land itself, which the lender can seize if the loan is defaulted on.
2. 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.

Section 184 on Fee Simple land works in a similar way to other government and conventional loan programs. The loan is very similar to an FHA loan in that it provides for a low down-payment and flexible underwriting standards. However the benefit to a Native American borrower is a lower Guarantee Fee and a lower monthly insurance premium than what is offered to a borrower through a standard FHA loan.

Qualification and Usage

At least one borrower must be an enrolled member of a Federally Recognized Tribe to qualify for a HUD 184 Loan. Enrollment decisions are made solely by the tribal government. Tribes must apply to HUD ONAP to participate in the program on their tribal lands. ^[2] Tribes may also request that non-tribal areas be designated as approved for the Section 184 program. Some states are fully approved and others are limited to specific counties. ^[3]

HUD 184 Loans are limited to:

• Purchasing an Existing Home
• Constructing a New Home (Site-Built or Manufactured Homes on permanent foundations)
• Rehabilitating a Home, including weatherization
• Purchasing and Rehabilitating a Home
• Refinancing a Home (Rate and Term, Streamline, Cash Out)

Section 184 loans can only be used for single family homes (1-4 units) and for a primary residence.