It can be so frustrating to try applying for a home loan or mortgage, and even more difficult if you are a Native American or Alaskan Native living on tribal land. When the Section 184 Loan Guarantee Program was created by the Housing and Community Development Act of 1992, attaining a loan or mortgage became easier for Native Americans. Here are a few basics to help you understand Section 184 and how it works.
How does it work?
If the land that you are wanting to build a house on, purchase and existing house, or renovate is on tribal trust land, the eligible buyer works with the Bureau of Indian Affairs (BIA) and HUD to set up the home as a lease hold estate. This turns the property into a leased unit for the duration of the mortgage and for 10 years after that. Both the BIA and HUD must approve the mortgage. It’s the lease, not the land itself that the lender seizes if the loan is defaulted. The land still belongs to the tribe and is a part of the trust that is held by the government. The lender cannot sell the land to anyone other than an eligible tribe member, the tribe, or the Indian Housing Authority.
Who is Eligible?
Section 184 is reserved for members of Native American and Alaskan tribes, so to receive a Section 184 loan you must be an enrolled member of a federally recognized tribe. Enrollment into a tribe is solely made by the tribal government and the tribe will typically provide a card or letter proving your enrollment into the tribe. Proof or tribal enrollment will be necessary when applying for a Section 184 loan. There is a PDF file on the HUD website listing all of the Tribes that participate in Section 184. The participating Tribes are allowed to determine where Section 184 is eligible, whether it is limited to specific counties or state wide.
What is Section 184?
As a part of the US Department of Housing and Urban Development (HUD), Section 184 is specifically designed for American Indian and Alaska Native families, Tribes, and Alaska Villages. These loans can be used both on and off native lands for new construction, renovation, refinance, or purchase of an existing home. Section 184 is a program that is specifically geared towards these groups because of the unique status of Indian lands and is a better overall choice when choosing between which loan to take.
These reservations and Native American lands are being held in trust by the US government for specific tribes or individuals belonging to Native American tribes. Because of the legal status of a trust, these lands are difficult to secure mortgage loans to prevent the private seizure of Native American lands. Private lenders were unwilling to grant home loans and mortgages because of the difficulty in obtaining leverage for a loan. Then Section 184 was created and gave private lenders the reassurance they needed to go ahead with mortgage loans both on and off reservations. As of January 2012, the Section 184 program has guaranteed over 15,000 loans (approximately $2 billion) to individuals and tribes.
