In the Spring 1998 Community Dividend, we published an article discussing the U.S. Department of Housing and Urban Development (HUD) 184 loan program for residential mortgages on homes located in Indian Country. To give you the most complete and up-to-date information, we offer the following additional information.
As we stated in the article, no mortgage insurance is required for loans made under this program. However, HUD does require a 1 percent loan guarantee fee on all loans. The fee may be paid in cash or financed in the mortgage and may be paid by the borrower or the seller. Also, HUD does require that the borrower make a down payment, generally based on 2.25 percent of the lesser of the property's appraised value or the acquisition cost, which is the sales price plus the closing costs. (If the appraised value or acquisition cost is $50,000 or less, the down payment is generally based on 1.25 percent.) The down payment may be a loan from a third party, such as a tribe or not-for-profit organization, or a gift from a relative, tribe, or not-for-profit organization.
Furthermore, while HUD will not allow refinancings using the 184 program, it will allow the borrower who owns a home to refinance using another program. In other words, the borrower may pay off a HUD 184 loan early if he or she can obtain financing through another HUD or Federal Housing Administration program or from another source.
Finally, we note that the procedures for processing HUD 184 applications have been updated. In particular, no longer should the lender submit the application package to the HUD Office of Native American Programs (ONAP) field office to request a prequalification commitment. This step has been eliminated.
For complete information about the HUD 184 loan program and its technical requirements, please contact ONAP at (303) 675-1600 or visit www.hud.gov/offices/pih/ih/homeownership/184/.
