Section 184 home loan program helps Cherokees
By Christina Good Voice
TAHLEQUAH, Okla. – Though in existence for nearly two decades, many American Indians know little about a home loan through the U.S. Department of Housing and Urban Development with flexible underwriting and isn’t based on credit scores.
HUD’s Section 184 Indian Home Loan Guarantee Program is specifically for Indians. Congress established it in 1992 to facilitate homeownership in Indian Country, and some of its benefits include low down payments and no private mortgage insurance.
“It’s specifically for Native American buyers or Native Americans who want to refinance,” said Stephanie Powell, mortgage loan officer at First Mortgage Company in Tulsa.
In Oklahoma, the maximum loan amount is $300,240, and there is no income limit.
“When I get all the information, I take your income, your debts and analyze everything and make sure that it fits within the guidelines of the 184 program,” Powell, a Muscogee (Creek) citizen, said. “It’s very important to find an experienced lender, one who knows all the ins and outs of the program.”
Powell added that now is a good time to apply for the 184 loan due to the financial state of lenders and their willingness to participate in the program.
“This year, with all the mortgage mess, a lot of lenders have got on board with the 184 program because buyers can’t qualify for your typical conventional loans anymore,” she said.
The 184 guidelines themselves do not have a minimum credit score, and the 184 loan might be the only route in obtaining a home loan for those who have credit issues, she said.
“So many of the other programs have really tightened guidelines up,” Powell said. “One of the things on the 184 program is if someone has outstanding collection accounts, they do require those collection accounts be paid. But it’s definitely more flexible on the credit guidelines.”
The program’s attractiveness also stems from HUD underwriting the loan.
The 184 loan also has a low down payment requirement of 2.25 percent for loans more than $50,000 and 1.25 percent for loans less than $50,000, as well as no private mortgage insurance. Instead the buyer pays a one-time, 1 percent loan guarantee fee that can be added to the final loan amount.
The loan can also be used to refinance an existing home mortgage, Shay Smith, a Self-Sufficiency manager with the tribe’s Small Business Assistance Center, said.
“The other thing about this is a lot of people don’t realize that the 184 loan can be used to refinance an existing loan, so it doesn’t have to be new home purchases…and there is no income cap.”
Another attractive 184 aspect is that it can be combined into the tribe’s Mortgage Assistance Program for home purchases, Powell said.
The MAP helps citizens capable of attaining a mortgage on their own, and in attaining a mortgage, the CN gives qualifying citizens $15,000 towards a down payment and closing costs. However, MAP applicants must meet income guidelines, be a first-time homebuyer, complete the necessary paperwork and applications, as well as complete a homebuyer’s training class.
People who have seen their credit recently and know they have issues should contact a HUD-approved counseling agency. Those agencies can typically provide free homebuyer education.
“Counseling is key, especially for first-time homebuyers,” Powell said. “Through a HUD-approved counseling agency, they can get free counseling to see maybe what they need to do to get their credit to a point where they can potentially go qualify for a lender.”