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Get creative in a challenging market

National Mortgage Professional
Apr 26, 2006

Section 184 extending homeownership in Indian CountryElisa Blackminority homeownership, Native Americans, Section 184 In the Origin Myth, as told in the Navajo Blessing Way chant, the first man's dwelling was a hogan constructed around four poles: one of white shell, the second of abalone, the third of turquoise and the fourth of black jet. Resting atop the four poles and completing the structure was the rainbow. The builder sang the planning hogan songs to the building materials. When the hogan became too cramped to contain all of the first mans guests, he blew on each of the poles, and the hogan grew. Indian Country currently suffers from overcrowded dwellings and a low level of overall homeownership - 33 percent, compared with 70 percent of the U.S. Caucasian population. In 1992, Congress, in an effort to promote safe and sufficient housing on Indian tribal land, created the Section 184 Indian Housing Loan Guarantee Program. Section 184 creates home purchase and housing rehabilitation opportunities for Native Americans and Alaska natives. This program increases these groups' access to capital, enhances credit and gives tribal housing agencies private funding opportunities. Overall, Section 184 increases the opportunities for homeownership and helps tribes create self-sustaining economies. The Section 184 loans are fixed-rate loans of 30 years or less. They are available on tribal trust lands and can be used to buy a home, build a new one, rehabilitate an existing structure or even refinance a home. Section 184 has considerable advantages for both homebuyer and lender. To the buyer's advantage, Section 184 has a low down payment requirement - 1.25 percent to 2.25 percent - and gift funds are allowed. There are no maximum income limits, 100 percent financing is available and no mortgage insurance is required. To ensure successful homeownership, two things are essential for the buyer: an excellent loan program, like Section 184, and homebuyer counseling and education. For many Native Americans and Alaska natives, Section 184 is enabling them to become the first homeowners in many generations. The U.S. Department of Housing and Urban Development (HUD) offers excellent homeownership education modules. Many non-profit housing organizations also offer free homebuyer education counseling and courses. To ensure the lender against loss, Section 184 loans are guaranteed by HUD. The underwriting requirements are flexible and the loan is assumable and marketable. Freddie Mac, Fannie Mae and Ginnie Mae all purchase Section 184 loans. Additionally, federal home loan banks can also purchase Section 184 loans, and because refinancing is available, Section 184 loans can generate repeat business. Lenders wishing to make Section 184 loans need to complete specialized training. HUD sponsors training seminars throughout the country. Training brochures can also be downloaded and viewed from the HUD Web site, Lenders need to be approved by the Federal Housing Administration's/HUD's single-family mortgage insurance program or authorized by the U.S. Department of Veterans Affairs or the U.S. Department of Agriculture. Joanne Shenandoah wrote a song for the National American Indian Housing Council. It embodies the spirit behind programs such as Section 184. "Take them by the hand and show them all you understand; they'll have a home someday, where family is the sacred way." Elisa Black is director of marketing and communications for the Esther Foundation, a Utah-based non-profit organization that works to strengthen communities by helping people to become homeowners. She can be reached at (866) 743-7795 or e-mail [email protected]
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