KISSIMMEE, Fla. - The Department of Housing and Urban Development's section
184 guaranteed American Indian mortgage is a good niche product for
lenders, attendees of the Florida Association of Mortgage Brokers' annual
convention here heard.
Not only can local brokers earn good fees for originating the mortgages for
national lenders, HUD "has never taken more than a day to underwrite a
file," said Sherri L. Eckles, sales and training manager, M&T Mortgage
Corp., Ballston Lake, N.Y.
Eckles, who taught an educational seminar on the 184 at FAMB's annual
meeting, said the HUD 184 "is turning into a growing market. This is one
that is actually going up the hill."
HUD, which has guaranteed more than $200 million in HUD 184s, most in
recent years, has set goals of $100 million for this year and $200 million
for next, Eckles said. To help reach these aggressive goals, it has
expanded the definition of "Indian areas" to include 11 whole states,
including Florida, which was the first to be opened up, at the request of
the Seminole Tribe of Florida.
Previously, only existing reservations or the Indian areas of Alaska and
Oklahoma, which have no reservations, had been eligible for HUD 184
According to Eckles, these expansions will make it easier for brokers and
lenders to do 184s, since they open up more private, or "fee simple,"
property. Reservations contain both tribal trust land and individual trust
allotments, which complicate mortgages.
M&T Mortgage, a unit of M&T Bank, is a HUD 184 lender through third
parties, such as local mortgage brokers in California and Washington state.
Eckles said the mortgage bank has originated around 60 loans, most in the
past two years, through the HUD 184, which guarantees 100 percent of lender
A lot of its volume has been with the Morongo Tribe of California. There,
local brokers can earn up to 5 percent of the mortgage amount for
originating HUD 184s. So, on a $350,000 mortgage, a broker can earn nearly
$16,000, Eckles said. The mortgage bank will pay no more than five points,
though, to deter concerns about "predatory" lending.
She said GreenPoint Mortgage is another national lender that uses brokers
to originate HUD 184s, while Wells Fargo Mortgage and Bank One (now a part
of JP Morgan Chase) are examples of nationwide lenders that do HUD 184s
through their own retail branches.
In addition, local banks in Indian areas, such as the Chickasaw-owned Bank2
of Oklahoma City, also specialize in the HUD 184.
Eckles acknowledged to the Florida brokers that HUD 184s can be hands-on
and take longer to do than other mortgages. The BIA can be a roadblock,
since it must do a title status report on the property involved and has
been known to take extended periods of time to get them done.
"Cultivate a relationship with them," she advised the brokers, noting that
some lenders have gotten title documents out of BIA in two weeks. Other
turnarounds have been four and six months. Different agencies around the
country are also quicker than other local agencies.
Eckles also pointed to flexible underwriting standards for the HUD 184,
reflecting the fact that many Indians have little or no credit history and
unorthodox income sources, such as seasonal employment or tribal per capita
HUD looks at an overall credit history, not isolated incidents, and will
look at "alternative underwriting" such as history of rental, phone, cable
or utilities payments. Lack of credit is not a basis for denial.
An allowance for the tribe to contribute money towards down-payment and
closing costs, either through grants or second mortgages, also helps Native
people qualify for HUD 184s, she said.
The program can finance sales of new or existing homes, construction of new
homes, rehabs, or refinancing of prior loans. In addition to individual
Indians, tribes and their housing entities are also eligible to get HUD
184s to help finance housing projects.
Loan limits are the lowest of three factors: 150 percent of the Federal
Housing Administration loan limit in the specific county, 97.75 percent to
98.75 percent of appraised value, or 97.75 percent to 98.75 percent of
acquisition costs. Eligible properties include those with up to four