On Nov. 30, HUD proposed updates to home loan guarantee program.
HUD proposed to modernize Indian home loan guarantee program (aka Section 184) to provide more homeownership opportunities for Native American families.
Proposed rule expanded and revised the existing program regulations under Section 184 of the Housing and Community Development Act of 1992 (12 USC 1715z-13a).
Will codify program requirements and introduce clarity for participating lenders.
Indian Home Loan Guarantee Program
Indian home loan guarantee program is a home loan product that was specifically created for American Indian and Alaska Native individuals, families; Alaska villages.
Also created for Tribes; tribally designated housing entities (TDHEs); underwriting requirements, low down payment, reduced fees make program more accessible.
Guarantee program encourages lender participation, expands mortgage capital access.
Federal guarantee to be provided by HUD on qualifying loans in the event of default.
Will additionally authorize HUD to establish a minimum level of lending on trust land.
Proposed Amendments
Provisions of proposed rule include outlining of requirements in Section 184 program.
Outlined requirement for Tribal participation; requirements for eligible borrowers, eligible properties, loan types; requirements for servicers to service Section 184 loans.
Proposed rule additionally provided for servicers' loss mitigation requirements when a loan is in default; outlined claim types and requirements to submit claims to HUD.
Additionally, outlined HUD’s ability to conduct periodic performance reviews, reporting requirements for lenders and servicers, penalties for noncompliance with regulations.
Consultation
The proposed rule to modernize Section 184 is open for comments until Mar. 6, 2023.
Dec. 2022 Fed Reg Proposal
On Dec. 21, 2022, HUD published proposal in federal register, comment Mar. 17, 2023.
Mar. 20, 2024 Fed Reg Final Rule
On Mar. 20, 2024, HUD issued final rule on section 184 program in the federal register.
Adds participation and eligibility requirements for lender applicants, direct and non-direct guarantee lenders, holders and servicers, and other financial institutions.
Clarifies Tribal participation, underwriting requirements, closing and endorsement process, servicing requirements, claims, standards for reporting, sanctions, appeals.
This new rule adds new definitions and makes statutory conforming amendments.
HUD final Indian home loan guarantee program rule is effective on Jun. 18, 2024.
Mar. 29, 2024 HUD Final Rule Correction
On Mar. 29, 2024, HUD published correction to final rule on the Section 184 program.
Specifically, in 24 CFR 1005.749 HUD failed to designate a paragraph (c)(6).
In 24 CFR 1005.759, HUD incorrectly designated two paragraphs as paragraph (b).
Additionally, in 24 CFR 1005.805, HUD failed to designate a paragraph (b)(4)(v).
Jun. 2024 HUD Delayed Effective Date
On Jun. 14, 2024, HUD delayed final rule effective date from Jun. 18 to Dec. 31, 2024.
Must comply with final rule provisions no later than Mar. 1, 2025.
In Aug. 2024, HUD issued letter to extend COVID-19 recovery options, see #223659.
