TULSA, Okla. - The Department of Housing and Urban Development has set
quotas on section 184 American Indian mortgages for its six regions in an
effort to use up federal guarantee money before it reverts back to the U.S.
Michael Liu, assistant HUD secretary for Public and Indian housing, told a
regional Native housing summit "we're at that stage now to make a great
leap forward" in use of the HUD 184, but that hundreds of millions of
dollars in 184 guarantee money will revert to the Treasury at the end of
fiscal year 2005 if not pledged by then.
"If you don't use it, you might lose it," Liu told tribal officials and
housing leaders from the Southern Plains region of the Office of Native
American Programs, which is based in Oklahoma City. "Let's work together to
use it before we lose it."
Liu, who has experience in the mortgage industry as a former top official
of the Federal Home Loan Bank of Chicago, has set bank-like quotas for each
of HUD's six ONAP districts. (Although he did not reveal the totals, he did
say the Southern Plains region needed to make 97 more HUD 184s to meet its
"We need to be in a position to prove to Congress and others that this
program is working," Liu declared. "We are well on the way to making that
He revealed that since program inception, HUD has guaranteed 1,750 section
184 mortgages for $172 million of mortgage finance in Indian areas.
Forty percent of that volume has been done in the past two years, he said.
In fiscal year 2003, 271 HUD 184s were guaranteed for $27 million in
finance. This year, 423 loans have been done, for $44 million in mortgages.
Liu attributed the large amounts of unused money in the 184 program to
tribes' lack of familiarity with the program and the length of time it
takes to develop new homes in Indian country. He said that "lenders are
much more interested than ever before" in the program, especially since
2004 mortgage volumes nationwide have dropped sharply as the great
refinancing boom of the past several years has tapered off.
He said the 184 can be used in conjunction with the new American Dream
Downpayment Assistance Fund, which can pay for up to 6 percent of the value
of the home. He noted Oklahoma has been allocated $1.97 million in DPA
money. Oklahoma has easier access to HUD 184 funds than most other places
in Indian country, Liu said, because it does not have the trust land issues
that most reservations have. The entire state of Oklahoma is an eligible
area for the HUD 184.
Overall, Indian country is at "the cusp of a new era," Liu said, one in
which tribes will be using "government financing to link up with other
Two hundred lenders have made HUD 184 loans, he said, and 130 tribes have
enacted the ordinances that will allow mortgages on tribal or individual
Lender transaction costs are low, he said, and the 184 is a "direct
endorsement" program, meaning less red tape. Borrowers must qualify under
the lender's own guidelines, and if the borrower gets behind on payments,
the lender can assign the foreclosure to HUD, saving it substantial costs.
Eligible borrowers include tribes or their designated housing entities, or
individual Indian families. Loans can be used for one-to-four family homes,
rehabs or re-financings.
Lenders and secondary mortgage agencies "should be looking at this
program," Liu said. He noted that mortgage agency Fannie Mae, his former
employer the Federal Home Loan Bank of Chicago and the Federal Home Loan
Bank of Seattle have purchased HUD 184s, meaning that they buy the loans
from the original lender, giving that lender cash that can be immediately
used to make more 184 loans.
Liu also mentioned a second HUD loan program in danger of losing hundreds
of millions of dollars in federal guarantee money, the Title VI program
(named after the section of the Native American Housing Assistance and Self
Determination Act that authorized it.)
The Title VI program is more underused than the HUD 184, since only about
$77 million in loans have been made under it. But Liu complimented the
Southern Plains region for its use of the Title VI program, since the
biggest loan by far to date in it has been a $50 million financing for the
Cherokee Nation of Oklahoma.
Congress this summer acted to raise the Title VI guarantee percentage back
to its original 95 percent, but as yet has not addressed the problem of the
impending guarantee money "rescission" to the Treasury. The $54 million in
lost credit subsidy would translate to more than half-a-billion dollars in