Section 184 loan developed for Native Americans
section 184 loan is available for home loans, home rehabilitations and home
refinancing. (Graphic by Travis Snell)
|The section 184
loan is available for home loans, home rehabilitations and home refinancing.
(Graphic by Travis Snell)
By Jami Custer
TAHLEQUAH, Okla. – The Section 184 loan is a mortgage product developed for Native Americans, their tribes and tribally designated housing entities to assist them with homeownership in Native communities.
The program, which Congress created in 1992, allows borrowers to purchase a home with a low down payment or no down payment, no monthly mortgage insurance and flexible underwriting.
Underwriting refers to the process a financial service provider, such as a bank, uses to assess the eligibility of a customer to receive its products, such as a mortgage.
The Section 184 loan is not only used to purchase existing homes, but people can also use it for constructing a home (stick-built or a manufactured home on a permanent foundation), rehabilitating one or refinancing a home.
The program requires a 2.25 percent down payment for loans more than $50,000 or a 1.25 percent down payment for loans less than $50,000. There is no monthly mortgage insurance, but there is a one-time 1 percent loan fee that can be added to the financed loan.
In Oklahoma, there are numerous mortgage companies capable of handling the Section 184 loan.
“We want to increase awareness of the product, as well as get everyone approved no matter if it takes 10 minutes or 10 months,” said Jory Conly, loan officer with GateWay Mortgage Group in Tulsa. “This program, alongside the $8,000 tax credit, and current interest rates make it the best time ever to achieve this dream of homeownership not to mention that it the best buyers market in many years.”
The $8,000 tax credit is better known as the Worker, Homeownership and Business Assistance Act of 2009. It extends a tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence and up to $6,500 for qualified repeat home buyers. The credit applies to sales occurring on or after Jan. 1, 2009, and on or before April 30, 2010.
As for the Section 184 loan, people and entities eligible for it include:
• American Indians or Alaska Natives who are enrolled citizens of a federally recognized tribe,
• A member of an Alaska village and regional corporation established pursuant to the Alaska Native Claims Settlement Act,
• A federally recognized Indian tribe,
• A tribally designated housing entity, and
• An Indian housing authority.
“If there is a catch to the program, it would be the 1 percent loan guarantee fee paid to the government to back the loan. However, this is no catch at all when comparing it to the 1.75 percent for FHA (Federal Housing Administration) loans, which is scheduled to go up this summer, or 2.15 percent for VA (Veterans Affairs) loans,” he said. “This program also promotes improvement of current mortgages as no cash-out refinances go to 97.75 percent loan to value at very low interest rates.”
He said even cashing out home equity is also allowed through the 184 program, but the underwriting is stricter. Rehabilitation to a current home or to a home being purchased is also allowed under for up to $30,000.
Reach Staff Writer Jami Custer at (918) 453-5560 or email@example.com