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| HUD Section 184 Mortgage Program |
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| The Chicago Federal Home Loan Bank (Chicago FHLB) purchases mortgages
originated by its member institutions under the HUD Section 184 Loan
Guarantee Program. Members must be approved by HUD to originate and
service Section 184 mortgages. Information on becoming a HUD approved
lender can be found on HUD's Office of Native American Programs' website
(Log onto http://www.hud.gov/offices/pih/ih/homeownership/184)
and select "Becoming a Qualified Lender.") A list of tribes participating
in the Section 184 Loan Guarantee Program can also be accessed on
HUD's website. |
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| Key Features of HUD's Section 184 Loan Guarantee Program |
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(excerpted from HUD's website)
- Available on tribal trust, individual allotted trust, or
fee simple land in an Indian operating area.
- Low downpayment requirements of 1.25% to 2.25%, based on
the lower of the appraised value or cost to acquire the home.
- 1% financeable guarantee fee at closing.
- Maximum loan amount is 150% of the FHA mortgage limit, subject to
appraised value and down payment requirements.
- Total debt to income ratio of 41%, which can be exceeded with
compensating factors.
- 100% guarantee to the lender in the event of a foreclosure and claim.
- A secondary market exists for these mortgages, including the Chicago FHLB.
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| Application Process |
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- Participating Chicago FHLB members will be required to execute a
Mortgage Loan Purchase & Servicing Agreement, and submit a
Lender Application with associated documentation to the Chicago FHLB for
review and approval.
- After approval, members contact the Chicago FHLB to request
pricing for a Section 184 mortgage.
- The Chicago FHLB will quote the member a price specific to the
characteristics of the loan, based on an interest rate, loan term,
and commitment period (3, 10, 20, 30, or 45 business days) specified
by the member.
- The member will forward HUD's Section 184 Loan Guarantee
commitment form, the original note, and the original unrecorded
assignment of mortgage in blank from the lender to the Chicago FHLB's
Community Investment Group for review and acceptance within an agreed
upon time frame.
- Community Investment staff will review the documents and
information received to ensure the loan's eligibility for purchase.
Upon acceptance, the Chicago FHLB will purchase the loan and deposit
the proceeds into the member's Daily Investment Deposit (DID) Account.
- After closing, the member will continue to service the loans and handle all
subsequent contact with the homebuyer. The member's compensation for servicing a HUD
Section 184 mortgage is 46 basis points annually.
- The member will provide to Chicago FHLB a monthly loan-level report, reflecting activity for all mortgages.
- Based on information contained in the Lender's Monthly Remittance Report, the net amount due to the
Chicago FHLB will be deducted from the members DID account.
The Chicago FHLB's Downpayment Plus® Program (DPP®) may be used in
conjunction with the HUD Section 184 Mortgage Program. DPP
provides grants to income eligible homebuyers to assist with downpayment
and closing costs.
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Dolores Bowstring, a member of the Lac Courte Oreilles Band of Lake Superior
Chippewas, has lived and worked on the Lac Courte Oreilles reservation in northern
Wisconsin much of her life.
In early 2003, Dolores had no home to call her own and was temporily
living with her sister to make ends meet.
Relying on the HUD Program to address the common barriers associated with lending on tribal land,
the Chicago FHLB to purchase the HUD-guaranteed loan, and Jackson County Bank to service the loan,
Chippewa Valley was able to provide construction and permanent financing for Dolores's new house.
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Click here for complete story.
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