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What is a Section 184 Loan?

The Section 184 was created in order to give access to mortgages to Alaskan Native and Native American tribal members. These types of loans are completely guaranteed by the Office of Loan Guarantee with the U.S department of Housing and Urban Development (HUD) located in the Office of Native American Programs. This 100% guarantee works to encourage national and local banks to give home loans for Native American. The Office of Loan Guarantee works along side a large network of Section 184 Loan lenders who have  in order to increase the access to home financing by Native Americans, as well as to improve their investments.

How Does a Section 184 Loan Work?

There are two ways that a Section 184 loan will work. If the property is located on tribal trust land then the eligible buyers will work with BIA in order to set up their house as a leasehold estate. This will turn the property into an entity that is leased for the duration of their mortgage with an additional 10 years. On the other hand if the house is located on allotted trust land and is held by a specific individual then there isn’t a need to leasehold the estate.

What Can Section 184 Loans Be Used for?

This type of loan works with home ownership of Tribal land. These types of loans can be used in order to purchase a new house or to construct a new house. It can also be used in order to renovate an already existing house, as well as the purchase and then renovation of an already existing house. It can also be used in order to refinance a home. Keep in mind that Section 184 loans can solely be used for primary single residences, and not for investment purposes or secondary homes.

The Regulations on Section 184 Loans

Before Section 184 loan application takes place there are certain regulations that are in place for Section 184 home loans that are there in order to better protect tribes. The first regulation is that lenders are only able to pursue a liquidation of assets and leases after first offering to transfer the loan to another eligible tribe member, Indian Housing Authority or the tribe. The second regulation is that in the case of a foreclosure, the private lender is not able to sell the land to anyone else besides another eligible tribe member, the Indian Housing Authority or the tribe.

Why These Regulations Are in Place

The United States government placed these regulations in order to prevent a seizure of Native American lands, which can happen if a private lender foreclosed on the homeowner of a tribal land property. Due to the fact that this makes it difficult to secure leverage on a mortgage loan, lenders are often unwilling to grant mortgages and loans to Native Americans, which makes it tricky to build homes that are on reservation land. By creating Section 184, the government can give private lenders the insurance they require in order to give loans out to Native Americans.

What Exactly Does a Tribe Require in Order to Participate in the Section 184 Loan Program?

In order to participate in the program a tribe needs to meet Section 184 loan requirements. This includes foreclosure and eviction processes. Additionally they need a system in place that will ensure that these processes are properly enforced. They also need systems that allow access to tribal land by private lenders. Lastly, tribes must acknowledge the fact that if foreclosure/eviction procedures are not enforced the guaranteed loans will be ceased.

Why It’s Difficult to Receive a Mortgage Loan for Native Americans

A large percentage of Indian Country is in a Trust by the United States Government for individuals who belong to Native American Tribes or even for whole tribes. This property is protected specifically for Native Americans. Due to the fact that this property is considered as a trust, it can be quite tricky to secure a mortgage loan for those wanting to use the land. This is due to the fact that land that is held in trust for an entire tribe is not able to be mortgaged, and land that is held for an individual must be approved by the BIA (Bureau of Indian Affairs) before the property is able to be secured for a loan.

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