New HUD rule aims to increase lender participation in tribal housing program

The U.S. Department of Housing and Urban Development (HUD) this week announced a new rule aimed at bolstering the department’s Section 184 Indian Housing Loan Guarantee program, with the goal to increasing lender participation and ensure access to potential Native American beneficiaries.

The final rule, published in the Federal Register on March 20 but formally announced this week, aims to strengthen the program by “clarifying rules for stakeholders” and cites increased demand as one reason for pursuing the rule.

There are a total of 30 program changes listed in the rule’s Federal Register entry, but it is summarized by explaining how the new rule “adds participation and eligibility requirements for lender applicants, direct [and non-direct] guarantee lenders, […] holders and servicers and other financial institutions,” according to the entry.

The new rule also clarifies governing rules for tribal participation in the Section 184 program and “establishes underwriting requirements, specifies rules on the closing and endorsement process, establishes stronger and clearer servicing requirements, establishes program rules governing claims submitted by servicers and paid by HUD, and adds standards governing monitoring, reporting, sanctions, and appeals.”

HUD acting secretary Adrianne Todman said that this new rule has been issued in an effort to provide more access to homeownership for tribal communities.

“Homeownership is key to building generational wealth. By enhancing the Section 184 program, we are ensuring homeownership and wealth-building opportunities are available to Native American borrowers,” Todman said. “[This] announcement emphasizes the Biden-Harris administration’s dedication to strengthening the Nation-to-Nation relationship with Tribes and making key investments in Indian Country.”

Miki Adams, president of CBC Mortgage Agency — a correspondent investor wholly owned by the Cedar Band of Paiutes of the Paiute Indian Tribe of Utah — expressed support for the final rule in a statement shared with HousingWire.

“The Section 184 program is a vital tool for so many Native American homebuyers,” Adams said. “The new regulations will bring more clarity and predictability to this important program, and we applaud the administration for the improvements and their efforts to work closely with Tribal leaders and other stakeholders. There is still more that must be done to modernize the program and we look forward to working collaboratively with HUD on future improvements.”

During the public comment period, several opposition comments were submitted to the department. HUD provided rebuttals to many of the expressed concerns in the final rule’s entry, including on issues such as the onerousness of the rule’s requirements, sanctions and penalties that critics said could reduce the intended participation from tribal communities.

“HUD appreciates all the concerns raised by the commenters. HUD does not believe that the proposed rule will deter Tribes and Direct Guarantee and Non-Direct Guarantee Lenders from participating in the program,” the department responded in part. “Most of HUD’s proposed rule codified current program practices.”

The effective date for the new rule is June 18, 2024.