SECTION 184 INDIAN HOUSING LOAN GUARANTEE PROGRAM

SECTION 184 INDIAN HOUSING LOAN GUARANTEE PROGRAM
Fargo, North Dakota September 2010 U.S. Department of Housing and Urban Development L-

Section 184 Training, Sponsored by HUD
PROGRAM OVERVIEW Section 184 Training, Sponsored by HUD

PROGRAM OVERVIEW 1992 Housing and Community Development Act Annual funding by Congress Nationwide Program What is the Section 184 Program? Why do we need it? Section 184 Training, Sponsored by HUD L-

LENDING IN INDIAN COUNTRY IS UNIQUE
Unique land status Tribal Trust Land Allotted Trust Land Unrestricted Land Underserved markets Non-traditional credit Limited access/exposure to financing Manual underwriting Section 184 Training, Sponsored by HUD

184 PARTNERS HUD 184 Program Staff Lenders Tribes TDHEs (Tribally Designated Housing Entities) BIA (Bureau of Indian Affairs) Section 184 Training, Sponsored by HUD L-

LENDER INCENTIVES/ OPPORTUNITIES
100% guaranteed loan Assign or foreclose Up to 2.5% loan origination fee on construction/rehab loans Community Reinvestment Act (CRA) Section 184 Training, Sponsored by HUD L-

PARTNER ROLES AND RESPONSIBILITES
Section 184 Training, Sponsored by HUD

WHAT DOES HUD DO? Develops and implements policies Conducts training and marketing Underwrites the loan Issues the Loan Guarantee Certificate Section 184 Training, Sponsored by HUD L-

WHAT DOES THE LENDER DO? Lends the money! Explains the 184 mortgage loan process Processes and prepares the loan package Serves as liaison between borrower and HUD Underwrites the loan (Direct Guarantee approved) Section 184 Training, Sponsored by HUD L-

ELIGIBLE LENDERS Bank, Savings & Loan, Credit Union Mortgage Companies approved through FHA, VA or RD FHA approved Brokers with 184 Program Sponsorship Lenders/Tribe obtain approval through NAHASDA (Chapter 3 of Guidebook) Section 184 Training, Sponsored by HUD L-

3 STEP LENDER APPROVAL PROCESS
Submission of a Lender Package HUD OLG in Washington Dc Electronically or mailed Completion of mandatory training for staff. (Lender approval letter issued after completion of steps 1. and 2.) Submission of executed Code of Conduct form. Section 184 Training, Sponsored by HUD

Lender Package HUD Form 11701, Application for Lender Approval Sponsor Agreement Funding Evidence of federal approval Financial Statements Fidelity Bond Errors and Omissions Insurance Licenses Credit Reports Resumes Quality Control Plan State Approval of dba Evidence of Acceptable Facilities Sanctions Letters Section 184 Training, Sponsored by HUD

RETAINING AN ACTIVE STATUS
Submit annual, updated certification package to designated OLG staff. (In the planning stages) Request training for all new/inactive staff. Process at least 2 applications within a 6 months period . Section 184 Training, Sponsored by HUD

CONTENTS OF LENDER PACKAGE
Statement requesting approval to include: Name and address of applicant, geographic service area EIN number for applicant and date on Incorporation, Companies that are already approved lenders need not resubmit a new Lender package, but training is mandatory for all new staff. Section 184 Training, Sponsored by HUD

CONTENTS OF LENDER PACKAGE (CONT.)
List of Officers/Directors who supervise staff and persons holding more than 10 percent of stock in the entity including phone numbers , home addresses and social security numbers. List of employees who will participate in the program to include social security numbers , positions and residential credit reports. Section 184 Training, Sponsored by HUD

WHAT DOES THE TRIBE DO? Implements foreclosure, eviction, lien & leasing procedures Model One-Stop Docs Conducts environmental reviews Completes land status form Section 184 Training, Sponsored by HUD L-

WHAT DOES THE TRIBE PROVIDE?
Land Homeownership counseling Financial Assistance Infrastructure Section 184 Training, Sponsored by HUD L-

WHAT DOES BIA DO? Serves as a trustee for tribal trust land Approves lease/mortgage Provides/updates title status reports Records mortgage/lease Underwrites/reviews loan package (if allotted/restricted) Section 184 Training, Sponsored by HUD L-

PROGRAM FEATURES AND REQUIREMENTS

Who can get a 184 Loan? ELIGIBLE BORROWERS
Indian or Alaska Native individual enrolled in a Federally recognized tribe. Copy of enrollment card/enrollment letter required. TDHE/IHA (Indian Housing Authority) Tribe. Tribal federal designation available on Federal Register accessed on Dept. of Agriculture/BIA website Section 184 Training, Sponsored by HUD L-

Who can get a 184 Loan? ELIGIBLE BORROWERS (Cont.)
Citizenship/Immigration Not required for eligibility Lawful permanent resident aliens – document evidence of permanent residency Non permanent resident aliens Principal residence SSN Eligible to work in the US Section 184 Training, Sponsored by HUD L-

LOAN FEATURES Term: 30 years or less Fixed interest rate determined by lender 1% guarantee fee Minimal down payment requirement No Adjustable Rate Mortgages No commercial structures Section 184 Training, Sponsored by HUD L-

HOMEOWNERSHIP OPPORTUNITIES
Purchase existing house Rehabilitation of existing house Purchase and rehabilitation New construction Manufactured Modular/stick built Refinancing Section 184 Training, Sponsored by HUD L-

PROPERTY REQUIREMENTS
Trust land or land within an Indian area Meet construction and safety codes Single family (1-4 units) Examples include: house, duplex, tri-plex, four-plex, town home, manufactured/modular home Manufactured Housing Affixed to a permanent foundation Manufactured after 6/15/76 Section 184 Training, Sponsored by HUD L-

LAND OWNERSHIP Tribal trust land Allotted individual trust land Fee simple land in a defined Indian operating area Section 184 Training, Sponsored by HUD L-

LAND OWNERSHIP Program requirements and processing procedures vary depending upon how land is held Land in an Indian Area = area in which a Tribe/TDHE is authorized to provide housing Section 184 Training, Sponsored by HUD L-

LAND CHARACTERISTICS Tribal Trust Land Land or interest in land held in trust by BIA for a Tribe Land may not be encumbered or alienated (leasehold) Section 184 Training, Sponsored by HUD L-

Allotted Individual Trust Land Section 184 Training, Sponsored by HUD
LAND CHARACTERISTICS Allotted Individual Trust Land Land or interest in land held in trust by the BIA for an individual Indian Tribe has no interest in land Subject to restrictions against alienation or encumbrance Section 184 Training, Sponsored by HUD L-

LAND CHARACTERISTICS Fee Simple Land Estate in land that is absolute or unrestricted Owner can dispose of land Subsequent sale of home and/or foreclosure; land and home sold together Located on reservation or within Tribe’s operating area for housing Section 184 Training, Sponsored by HUD L-

184 LENDING ON TRIBAL TRUST LAND
Leasehold interest must be established between borrower and tribe Title Status Report from BIA preliminary with lease final with lease/mortgage Parties to lease: BIA, Tribe, and Borrower HUD approval/review Section 184 Training, Sponsored by HUD L-

184 LENDING ON TRIBAL TRUST LAND (cont.)
Note: Leasing instrument normally approved when tribe submits documentation to participate in 184 program Section 184 Training, Sponsored by HUD L-

184 LENDING ON INDIVIDUAL ALLOTTED TRUST LAND
Generally no lease BIA approval required BIA issues Title Status Report with recorded mortgage & approval Section 184 Training, Sponsored by HUD L-

184 LENDING ON INDIVIDUAL ALLOTTED TRUST LAND
Fractionated ownership Lease (due to fractionated ownership) Foreclosure can result in loss of land Excess land Section 184 Training, Sponsored by HUD L-

184 LENDING ON FEE SIMPLE LAND
Lease not required Title policy required Property must be in a designated Indian Operating Area (Tribal certification on Land Status and Jurisdiction Form) Section 184 Training, Sponsored by HUD L-

184 LEASE REQUIREMENTS Not to exceed 50 year term Provision preventing termination without HUD approval Language indicating lessee can mortgage the leasehold, and foreclosure is allowed Language preventing transfer or assignment of leasehold interest without HUD/Tribe approval Section 184 Training, Sponsored by HUD L-

LOAN PROCESS FOR TRUST TRANSACTIONS

LOAN PROCESS For TRUST TRANSACTIONS
Land status verified with tribe and/or BIA: Title Status Report needed to verify individual allotment ownership Land Status and Jurisdiction Form Section 184 Training, Sponsored by HUD L-

Underwriting the Title Status Report Documentation required from the Bureau of Indian Affairs Tribal Trust Certified TSR (1 years or less) with/without recorded lease Executed lease Section 184 Training, Sponsored by HUD L-

Underwriting the Title Status Report (Cont.) Individual Allotted Trust land Certified TSR (6 months or less) BIA approval to mortgage Individual Allotted Trust Land with lease Title Status Report with recorded lease NO BIA approval to mortgage Section 184 Training, Sponsored by HUD L-

LOAN PROCESS For TRUST TRANSACTIONS (Cont.)
Borrower works with Tribe/BIA to obtain 184 lease if tribal trust land Lease is recorded with BIA and TSR issued Borrower works with Tribe/BIA to get environmental review completed. REQUIRED ON ALL LOANS Section 184 Training, Sponsored by HUD L-

Lender submits simultaneously: Complete underwriting package to HUD (fee simple, tribal trust and individual allotment) Copy of proposed mortgage/DOT to BIA for approval (trust land) Complete underwriting package to BIA (individual allotted land) Section 184 Training, Sponsored by HUD L-

Lender receives commitment for BIA (individual allotment) Lender receives commitment from HUD BIA Issues Certificate of Mortgage Approval (trust land) BIA Title Plant completes certified Title Status Report for lender (trust land) Guarantee Package to HUD for Loan Guarantee Certificate Section 184 Training, Sponsored by HUD L-

SECTION 184 LOAN PROCESSING Section 184 Training, Sponsored by HUD

LOAN ORIGINATION Borrower contacts approved lender Lender determines if borrower meets program eligibility Native American (ID/Enrollment Card) Tribe on 184 approved list Indian operating area Lender requests case number from HUD using forms and process as described. Section 184 Training, Sponsored by HUD

LOAN ORIGINATION (Cont.)
Lender obtains loan documents and construction/purchase documents Lender orders an appraisal HUD Manual Cost approach can be utilized if comps not available FHA approved Appraiser Appraisal good for 120 days Lender prepares loan package and submits for underwriting Section 184 Training, Sponsored by HUD L-

REQUESTING A CASE NUMBER
Files will NOT be accepted for HUD underwriting until a case number has been assigned by OLG staff. Case number assignments represent internal funds management for HUD and reservation of funds for lenders. Section 184 Training, Sponsored by HUD

REQUESTING A CASE NUMBER (Cont.)
Must be requested prior to submission of underwriting package Electronic (MS Word compatible) form is available and preferred Submit electronically as a Word document (.doc or .docx formats) via to HUD for fastest turnaround Section 184 Training, Sponsored by HUD

Underwriting Components
Credit Capacity Collateral The underwriting review determines the borrower’s ability and willingness to repay the mortgage debt. Section 184 Training, Sponsored by HUD

The borrower’s ability to repay the debt is assessed by considering: Income history and stability; Employment history and stability Debts The borrower’s willingness to repay the mortgage debt is assessed by considering Credit Pay history Section 184 Training, Sponsored by HUD

The maximum allowable mortgage amount is determined as the lower of these 3 factors: 150% of FHA Loan limits (03/2008) for the County where the property is located Loan to Appraised Value Ratio: 97.75% when $50,000 or greater 98.75% when $49,999 or less Acquisition cost (sales price + closing costs): Section 184 Training, Sponsored by HUD

CLOSING COSTS Costs not included when calculating mortgage basis (paid in cash): Prepaids (hazard/taxes/interest) Discount points Note: 1% guarantee fee is not included in closing costs when calculating mortgage basis. It is added on at 100% after calculating the mortgage basis. Section 184 Training, Sponsored by HUD L-

PREQUALIFYING BORROWERS
Lender responsibility prior to submission to HUD 184 Determine threshold eligibility: Enrollment in Federally recognized tribe. Credit worthiness. (see Chapter 5 of “Draft” Guide of 12/30/09 for detailed Underwriting standards). Acceptability /Cost of property. Evidence of stable employment, sufficient cash availability for transaction, etc. Section 184 Training, Sponsored by HUD

URLA Uniform Residential Loan Application (URLA, Fannie Mae 1003, Freddie Mac 65) This document must be completed in its entirety for all Section 184 loan requests Provide a blank URLA ….Review with participants Section 184 Training, Sponsored by HUD L-

INCOME Income - Types: Salary or Wages Overtime and Bonus Commissions Seasonal and Part Time Retirement, Alimony, Child Support Rental Trust and Non-Taxable Self Employment Tribal Distribution Section 184 Training, Sponsored by HUD

INCOME (Cont.) Income and Employment- Determination and Documentation Verification of 2 full years of employment Salaried or hourly: Written or verbal VOE All W-2’s for 2 years Recent paystubs covering a full one month period What are we looking for on the paystub? What are we looking for on the VOE? Section 184 Training, Sponsored by HUD L-

INCOME (Cont.) Income and Employment- Determination and Documentation Verification of 2 full years of employment Self Employed: Signed/Dated personal tax returns (2yrs) Signed/Dated business tax returns (2yrs) Signed/Dated year to date Profit & Loss Section 184 Training, Sponsored by HUD L-

INCOME (Cont.) Rental Income- Determination and Documentation Rental Income documented on Tax Return Schedule E and current lease w/6 months remaining Rental Income NOT documented on Tax Return Comp factor with current lease w/6 months remaining Full payment (PITI) counted as debt for qualifying Section 184 Training, Sponsored by HUD L-

INCOME (Cont.) Tribal Distribution- Determination and Documentation Two year history (1099’s) Current year distribution Documented 3 year continuation OR Letter from tribe verifying a prior two year distribution to tribal members Documented 3 years continuation Section 184 Training, Sponsored by HUD L-

LIABILITIES Recurring Obligations Include with 6 months or more remaining (all debts) Subject to underwriter discretion Projected Obligations Scheduled to commence within 12 months Section 184 Training, Sponsored by HUD L-

LIABILITIES Contingent liabilities Co-signed obligations Originator made 12 consecutive payments Divorce Decree/legal separation with designated responsibility to ex-spouse Current at time of separation/divorce Copy of separation agreement Mortgage Obligations (within the last 5 years without a release of liability); unless: Divorce decree/legal separation with designated responsibility to ex-spouse Transfer by employer and covered by home sale guarantee plan Section 184 Training, Sponsored by HUD L-

What are we looking for? CREDIT HISTORY
Show borrower(s) payment pattern Show previous/existing debt Show court order judgments, collections and liens which may affect borrower’s ability to obtain a loan Note: Lack of Credit is not basis for denial Section 184 Training, Sponsored by HUD L-

CREDIT HISTORY Special Notes
Non Purchasing Spouse Not to appear on the security instrument or otherwise take title to the property at loan settlement; unless Required by state law to perfect a valid and enforceable first lien Community Property States Debts of non purchasing spouse must be included in the borrower's qualifying ratios Credit history not to be considered a reason for credit denial States: AZ, CA, ID, LA, NV, NM, TX, WA, WI Section 184 Training, Sponsored by HUD L-

CREDIT REPORT The credit report must: Be a RMCR or Tri-Merge Credit Report Credit Scoring Be the original provided by the credit reporting agency Contain all credit available in the repositories, be accurate and complete, provide an account of the credit, residence history, and public record information of each applicant. This includes bankruptcies, judgments, lawsuits, foreclosures, and tax liens that have occurred within the last 7 years. Contain a 24 months employment and 24 months residency history if not verified otherwise. Section 184 Training, Sponsored by HUD L-

CREDIT REPORT (Cont.) The credit report must: Identify each applicant’s name, social security number, date accounts were opened, credit limit, required payments, unpaid balance and payment history of each account. Payment history must appear in the "number of times past due" format and be otherwise easy to read and understandable. Must have no whiteouts, erasures, or alterations. Section 184 Training, Sponsored by HUD L-

CREDIT REVIEW Bankruptcy- general requirements Chapter 7: Discharge with credit reestablished Two years since discharge 12-23 months with documented unusual circumstances Chapter 13: One year payout with good performance Court approval Section 184 Training, Sponsored by HUD L-

CREDIT REVIEW (Cont.) Foreclosure Extenuating circumstances Re-established good credit Short Sales Must have been approved by the lender prior to the becoming delinquent or in default Section 184 Training, Sponsored by HUD L-

CREDIT REVIEW (Cont.) Collections Paid in full (at or before closing) Resulted in collection 12 months prior or more Written letter of explanation Medical (can remain if documented 3rd party responsibility) Liens/Judgments Paid in full 12 months prior to date of application Re-established good credit Exceptions: Executed repayment agreement with two year history; caution Section 184 Training, Sponsored by HUD L-

CREDIT REVIEW (Cont.) Recent Debt and Undisclosed Debt Delinquent Federal debts – LDP/GSA: Borrower not eligible unless account is current, paid or otherwise satisfied Credit Alert Interactive Voice Response System (CAIVRS): FHA system to verify if borrower is/has been delinquent on Federal debt Section 184 Training, Sponsored by HUD L-

CREDIT REVIEW (Cont.) Credit Requirements: No late payments within 12 months No late mortgage payments within 12 months No bankruptcy, judgments in 24months (special circumstances reviewed on case by case basis) No accounts reverting to collection in 12 months Lack of credit not grounds for rejection; alternative credit accepted; 1 to 3 sources. Section 184 Training, Sponsored by HUD

DEBT-TO-INCOME RATIO 41% debt-to-income ratio (guide): Determines if borrower(s) has/have the ability to repay the mortgage Compensating factors when ratio exceeds guide Documented in underwriting file Section 184 Training, Sponsored by HUD L-

BORROWER’S INVESTMENT
Cash investment — difference between the mortgage loan and the cost to acquire the property Range of investment — 1.25% to 2.25% based on maximum mortgage limit Section 184 Training, Sponsored by HUD L-

FUNDS TO CLOSE Borrower can obtain the down payment and closing cost funds from any of the following sources: Saving/Checking Secured funds Gifts Cash Land equity Sale of personal items Sale of home proceeds 401K loan Sale of Investments Section 184 Training, Sponsored by HUD L-

FUNDS TO CLOSE VERIFICATION
Savings/Checking/Deposit Accounts Verification of Deposit Two months bank statements (all pages) Secured funds Copy of signed loan docs showing collateral Gifts Gift letter Verification of donors ability Documented receipt of funds Sale of current home Certified copy of signed HUD-1 Section 184 Training, Sponsored by HUD L-

TRIBE/TDHE ASSISTANCE
Provide a gift or loan to borrower: Gift letter 2nd mortgage letter Recorded documents with the endorsement package Tribal funds: No restriction on use/amounts Section 184 Training, Sponsored by HUD L-

APPRAISAL Market Approach Using FHA appraiser/guidelines Cost Approach Trust land, rural areas Types of Appraisals Manufactured Condominium Standard 1 – 4 Units Section 184 Training, Sponsored by HUD

APPRAISAL Appraisal Issues Land value > 50% Declining market loans > $400,000 Other FHA Approved Certified Appraisers Appraisal valid for 120 days Section 184 Training, Sponsored by HUD

SUBMITTING UNDERWRITING PACKAGE TO HUD

FIRM COMMITMENT CHECKLIST
See Handout Section 184 Training, Sponsored by HUD L-

SECTION 184 MCAW See Handout Section 184 Training, Sponsored by HUD

HUD FILE PROCESSING OLG staff receives file, conducts preliminary completeness review, logs file and accepts in pipeline. Incomplete, improperly packaged files subject to rejection/return by Program. Files generally processed in date order as received. Section 184 Training, Sponsored by HUD

HUD FILE PROCESSING (Cont.)
Consideration given when possible for occasional emergencies (expiring contracts, expiring rate locks, delays beyond the control of Lender/Borrowers). Turn time for issuance of Firm Commitment/Conditional Commitment 5-7 days.( Longer response times may occur during peak work load periods) Commitment or declination letter issued by Underwriter, signed and faxed to Lender. Section 184 Training, Sponsored by HUD

CLEARING COMMITMENT CONDITIONS
Additional submission required for all items referenced in pre-closing section of commitment. Preference is for submission of a complete package of all documentation needed to clear. May be faxed or ed. Section 184 Training, Sponsored by HUD

CLEARING COMMITMENT CONDITIONS (Cont.)
Underwriter will review (within 24 hours), approve, initial date and return by fax to Lender. Closing not authorized until fully cleared commitment is received from HUD. Loan closing to be scheduled before the commitment expiration date. (Extensions are not automatic). Section 184 Training, Sponsored by HUD

THE TRIBE OR TDHE AS BORROWER Section 184 Training, Sponsored by HUD
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UNDEVELOPED MARKETS Limited Housing Supply Low turnover, vacancy rate Limited availability of developed lots Limited sales Modest homes Tribal developers Financing generally grant based Limited exposure/access to financial markets Subsidies Construction (grants, guarantees, interest rate) Down payment & closing costs Section 184 Training, Sponsored by HUD

TRIBE/TDHE LOANS When the Tribe or TDHE borrowers for the construction/purchase of rental property, they must demonstrate: Property management skills Rental and maintenance plan Renters able to pay Section 184 Training, Sponsored by HUD L-

TRIBE/TDHE LOANS (Cont.)
These properties are eligible for assumption by qualified borrowers: Tribe/TDHE pays cash investment and loan payments during construction Qualified Borrowers able to assume After qualifying assumption, Tribe or TDHE is released from liability Section 184 Training, Sponsored by HUD L-

TRIBE/TDHE LOANS(Cont.) Financial Capacity
Demonstrated ability to pay mortgage loan: Credit History (Dunn & Bradstreet) Sources of funds to close Income Liabilities Section 184 Training, Sponsored by HUD L-

Coverage of debt service Skills, experience to undertake project Demonstration of need Marketing plan Audited financial statements Section 184 Training, Sponsored by HUD L-

Evidence of authority to borrow Evidence of ability to obtain deficiency judgment Plans for projects exceeding 20 homes must be built in phases Section 184 Training, Sponsored by HUD L-

184 SINGLE CLOSE CONSTRUCTION LOANS

CONSTRUCTION LOAN OPTIONS
2 options available to borrowers: Lender or Bank carries interim construction loan 184 loan used to payoff construction loan; not closed or guaranteed until after house is complete 184 single close construction loan Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE CONSTRUCTION LOAN
One time Single Close Construction starts within 60 days after closing Mortgage payments begin after closing 6 month construction period Guarantee issued after closing Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE CONSTRUCTION EXPENSES
The following expenses can be included in the loan amount , if supported by the appraisal: Inspections Up to 2.5% loan origination fee Contingency Reserve 0-6 mortgage payments Title update fees Permits Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE CONTINGENCY REQUIREMENT
$0 - No contingency for manufactured and modular homes 10% requirement for site built, site work, rehabilitation Included in loan: unused portion used to pay down unpaid principal balance Excluded from loan: separate escrow; unused portion may be returned to borrower Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE REHAB LOANS
Acquisition or existing debt + improvements can’t exceed program LTV requirements $10,000 + of improvements required for eligibility Appraisal requirements or borrower’s wish list allowable. Luxury items and items not a permanent part of the property are not eligible Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE LOAN PROCESSING
Borrower/contractor determine cost to construct /rehabilitate Appraisal based on completed or after improved value Lender completes construction/rehab worksheet; to determine mortgage amount Section 184 Training, Sponsored by HUD L-

SINGLE CLOSE LOAN PROCESSING (Cont.)
Lender submission package to include all construction documents: Single Close Max Mortgage Worksheet Plans & Specs/Description of Materials Site Map and Plot Plan Proposed Contractor/Homeowner Agreement and Breakdown of Costs Proposed Construction Schedule Builders Certification, HUD 92541 Section 184 Training, Sponsored by HUD L-

Closing Requirements: Section 184 applicant acknowledgment Construction loan rider Construction loan agreement Evidence of construction escrow Notice to Proceed issued to Borrower and included in closing package Final release of contingency reserve funds approved by the lender; final accounting sent to HUD Section 184 Training, Sponsored by HUD L-

Post Endorsement Documents Sent to HUD after completion of construction Post Endorsement Checklist Section 184 Training, Sponsored by HUD L-

REFINANCES Section 184 Training, Sponsored by HUD L-

REFINANCES Statute and regulations amended to allow refinance under Section 184 No statutory or regulatory authority to refund Loan Guarantee fee Loan Guarantee fee required Loan amounts must be within mortgage limits for area (150% of FHA limit published March 2008) Section 184 Training, Sponsored by HUD

TYPES OF REFINANCES Streamline refinances (existing 184 loans) With or without an appraisal With or without credit qualifying Cash out with an appraisal and credit qualifying No cash out with an appraisal and credit qualifying Section 184 Training, Sponsored by HUD

TRUST LAND REFINANCES Acceptable existing lease: Sufficient term remaining Current TSR with recorded lease New lease when existing lease is unacceptable: Old lease must be canceled Current TSR with new lease recorded and old lease removed Section 184 Training, Sponsored by HUD

TRUST LAND REFINANCES (Cont.)
Responsibility of Lender after closing: Satisfaction of existing mortgage is recorded on TSR New mortgage and rider approved and recorded on TSR Section 184 Training, Sponsored by HUD

TRUST LAND REFINANCES (Cont.)
Appraisals: Follow HUD Handbook Cost approach usually utilized Section 184 Training, Sponsored by HUD

STREAMLINE REFINANCES
Limited to existing Section 184 loans Purpose: Lower borrower’s monthly payment; or Reduce mortgage term Subordinate financing can remain in place if subordinated to new loan No repairs financed Cash back to borrower cannot exceed $250 Section 184 Training, Sponsored by HUD

STREAMLINE REFINANCES (Cont.)
Social Security numbers/Tribal enrollment verified Loan must be current prior to refinance Premium pricing allowed for no cost loans Evidence of cash to close not required but at OLG discretion Section 184 Training, Sponsored by HUD

CASHOUT REFINANCE Not limited to 184 Credit qualifying No DG approval, HUD underwritten Appraisal All subordinate liens paid off Mortgage payments on time Section 184 Training, Sponsored by HUD

CASHOUT REFINANCE (Cont.)
Tribal approval when down payment assistance provided on original loan Maximum cash back limited by OLG ($25,000 cash in hand) Section 184 Training, Sponsored by HUD

CASHOUT REFINANCE Credit Requirements: No late payments within 24 months No late mortgage payments within 36 months No bankruptcy, judgments in 48 months ( special circumstances reviewed on case by case basis) No accounts reverting to collection in 24 months Section 184 Training, Sponsored by HUD

NO CASHOUT REFINANCE Used to refinance mortgage loans other than existing Section 184 No cash back Max mortgage amount may include payoff, closing costs, and prepaids Not to exceed the appropriate program LTV and FHA loan limits on 03/2008 Section 184 Training, Sponsored by HUD

NO CASHOUT REFINANCE Credit Requirements: No late payments within 12 months No late mortgage payments within 12 months No bankruptcy, judgments in 24months (special circumstances reviewed on case by case basis) No accounts reverting to collection in 12 months Section 184 Training, Sponsored by HUD

PROCESSING RESOURCES Chapter 5 of the Guidebook Chapter 7 of the Guidebook Chapter 11 of the Guidebook All Forms with HUD number can be obtained on Section 184 Training, Sponsored by HUD

LOAN CLOSING Section 184 Training, Sponsored by HUD

LOAN CLOSING Lender closes loan All commitment conditions met All closing documents including specific to 184 1% guarantee fee sent to HUD Lockbox Lender sends Mortgage/DOT for recording to BIA and/or county/tribe and requests final TSR/Title Policy Section 184 Training, Sponsored by HUD L-

ENDORSEMENT PACKAGE Received within 60 days after closing Reviewed 184 required documents Commitment conditions Closed as underwritten Late endorsement (more than 60 days after closing) Special processing requirements , fees may apply Section 184 Training, Sponsored by HUD L-

GUARANTEE FEE HUD 53038, Guarantee Fee Transmittal Form Check to lock box in Atlanta, GA Must be received 15 calendar days after closing Late charge/interest Section 184 Training, Sponsored by HUD L-

LOAN SERVICING Protecting HUD’s interest File retention (life of mortgage + 3 years) Escrow accounts Notification of servicing change Section 184 Training, Sponsored by HUD L-

DELINQUENT SERVICING Face-to-face interview before 3 payments owed Borrower information packet Delinquency letter (30-45 days) Notice of intent to foreclose Leased land (review for reporting requirements to tribe) Section 184 Training, Sponsored by HUD L-

FORECLOSURE OR ASSIGNMENT
Option to foreclose or assign 100% payment Claim submission Section 184 Training, Sponsored by HUD L-

REPORTING REQUIREMENTS
Notify HUD when delinquent days Quarterly reports to HUD Principal balance Delinquency status (if applicable) 184 Servicing Contact: Thelma Pillay (202) Section 184 Training, Sponsored by HUD L-

SECONDARY MARKETS Ginnie Mae Fannie Mae Freddie Mac Local Markets Section 184 Training, Sponsored by HUD L-

THANK YOU! More information on the 184 program: HUD/Office of Native American Programs Toll Free: Section 184 Training, Sponsored by HUD L-

SECTION 184 INDIAN HOUSING LOAN GUARANTEE PROGRAM

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SECTION 184 INDIAN HOUSING LOAN GUARANTEE PROGRAM

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