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Section 184 Draft Regulations Tribal Consultation

Join the teleconference call to discuss the draft regulations for the Section 184 program, outlining lender eligibility, tribal participation, underwriting requirements, loan guarantee fees, servicing, claims, and lender monitoring.

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Section 184 Draft Regulations Tribal Consultation

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  1. Section 184 Draft Regulations Tribal Consultation Teleconference call in information: US Toll Free: 1-877-369-5243 Access Code: 0608542# May2019

  2. Welcome Heidi Frechette Deputy Assistant Secretary for Native American Programs

  3. Poll: Who is joining the session? • Please identify yourself from the following choices: • A) Tribal Leader • B) Housing/TDHE Staff • C) Tribal Member • D) Other

  4. Welcome Krisa Johnson Director, Office of Loan Guarantee

  5. Table of Contents • Subpart A: General Program Requirements • Subpart B: Financial Institution Eligibility & Requirements • Subpart C: Tribal Participation • Subpart D: Underwriting • Subpart E: Closing and Endorsement • Subpart F: Section 184 Loan Guarantee Fees • Subpart G: Servicing • Subpart H: Claims • Subpart I: Lender Monitoring, Reporting, Sanctions and Appeals

  6. Subpart A – General Program Requirements • Outlines general requirements and provides definitions for terms used in the regulation. • Definitions §1005.3 • Date of default – The date the loan payment was due. • Trust land or Tribal trust land – covers all trust and allotted lands.

  7. Subpart B – Lender Eligibility and Requirements • Outlines lender eligibility and application process to become a Section 184 lender. • Makes the distinction between Direct Guarantee lenders and Non-Direct Guarantee lenders. §1005.207 • Outlines the sponsorship relationship between the DG lender and the Non-DG lender. §1005.213

  8. Subpart B – Lender Eligibility and Requirements • HUD delegating Non-DG lender approval to the DG lender sponsor. The DG lender must ensure that its sponsored entity is an eligible lender. • Creates Non-lending Servicer application process. §1005.217 • Creates a minimum threshold of tribal trust activity to participate in the program. §1005.223

  9. Subpart C – Tribal Eligibility • Outlines requirements for tribal participation in the Section 184 program. • Updates mandatory lease provisions. §1005.303 • Provides more flexibility for the tribe to reassign the lease in the event of default or vacancy during foreclosure. • Requires assignment to HUD at foreclosure.

  10. Subpart C – Tribal Eligibility • Creates annual tribal recertification. §1005.309 • Requires tribes to report to HUD any changes or updates in staffing or legal framework within 15 days. §1005.207

  11. Subpart D – Underwriting • Outlines requirements for eligible borrowers, eligible properties and loan types for the Section 184 program. • Allows borrowers with a previous Section 184 default to participate in the program. §1005.401 • Five year waiting period for deed or lease in lieu. • Seven year waiting period for foreclosure.

  12. Subpart D – Underwriting • Updates lending requirements for manufactured homes. §1005.427 • Updates requirements for water purification systems. §1005.429 • Removes the requirement for a 10-year warranty for new construction. §1005.431

  13. Subpart E – Closing and Endorsement • Outlines requirements for closing a Section 184 loan and receiving endorsement approval from HUD. • Provides borrowers the option for third-party tribal notification in the case of default. §1005.501(j)

  14. Subpart F – Section 184 Loan Guarantee Fees • Outlines requirements for calculation, collection and submission the Section 184 loan guarantee fee. • Clarifies servicing of the annual loan grantee fee. §1005.607 • Fee gradually decreases based on original amortization schedule.

  15. Subpart F – Section 184 Loan Guarantee Fees • Establishes late fees and fines when lenders do not submit loan guarantee fee to HUD in a timely manner and/or do not properly adjust borrower annual loan guarantee fee payments. §1005.611 • Lenders must continue to submit annual loan guarantee fees during default and will be reimbursed after foreclosure. §1005.609

  16. Subpart G – Servicing • Outlines requirements for lenders and servicers to manage the Section 184 loan and steps to take when the loan is in default. • Section 184 servicing will generally follow Consumer Financial Protection Bureau (CFPB) regulations.

  17. Subpart G – Servicing • Initiation of foreclosure (fee simple) or assignment (tribal trust) to HUD must occur 120 days after default, if loss mitigation is unsuccessful. • Establishes new tribal right of first refusal options: • At lease in lieu or deed in lieu • Applicable to fee simple or tribal trust foreclosure • Tribes may assume loan or purchase at current market values • Tribes have 60 days to accept or decline

  18. Subpart H – Claims • Outlines requirements to submit claims to HUD. • Establishes timeframe in which HUD will reimburse eligible costs and interest payments incurred during default and foreclosure.

  19. Subpart I:Lender Monitoring, Reporting, Sanctions and Appeals • Outlines reporting requirements and sanctions to lenders for noncompliance with regulations. • Allows for appeals of a determination by HUD to deny a lender’s participation in the Section 184 program.

  20. Tribal Consultation Section 184 Draft Regulations Accepting comments at: 184Consultation@HUD.gov

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