The HUD Section 184 Loan may be used on Tribal Trust Land on reservations. The first important thing to know about getting a loan on your trust land parcel is the tribe must become a HUD 184 approved tribe. Information regarding Tribal approval can also be found at the HUD website (see chapter 2). The tribe must work directly with HUD through this approval process. HUD has streamlined the approval process for tribes. So if your tribe is not currently approved, do not lose hope! Have your tribe contact HUD Office of Native American Programs directly. If they do not know who to contact, please call our offices. We are glad to help!
If your tribe is already approved, or soon to be approved, there are certain things to know about your land. There are two ways to hold title on trust lands. The first type of holding is an allotment. When a tribal member holds title to an allotted parcel, the tribe has no interest in the property. The tribal member may encumber, sell or gift the property as they see fit subject to Bureau of Indian Affairs prior approval.
The second method of holding title on trust land is an assignment. This means the tribe itself has control over all, or a certain portion of trust land on the reservation. The tribe then may assign a particular tribal member the right to use a particular parcel of land for a variety of purposes. If the tribal member wishes to use the HUD Section 184 loan to purchase, build or refinance a home on their assignment, the tribe will grant them a home-site lease. A home-site lease is typically fifty years in term, but must be at least the mortgage term plus 10 years. The home-site lease will be recorded at the BIA Office. This lease serves as constructive notice that the tribe has granted the tribal member assignee a right to encumber that particular parcel.
In many case, the property in question may require a survey. The purpose of the survey is to define the boundaries of the parcel. When this work is complete, the surveyor will provide a legal description. That legal description must be written on the home site lease. Before ordering a survey, please contact your tribe or the housing authority for your tribe. They may already have a legal description of the parcel.
One unusual aspect of financing on trust land is the BIA is the title provider. Prior to HUD Section 184 loan approval, the BIA must provide a certified Title Status Report (TSR). This is the equivalent of a title report that would be provided by a title company for an ‘off reservation’ property. The time frame required by the BIA to process the TSR may vary greatly. The history of each parcel is different, and land records vary greatly from one BIA office to another. That is the main reason for variation of time frames.
Your local or regional BIA Realty Office will play an integral role in gathering the information to provide the TSR. They will collect the initial information and request for TSR from you and your tribe. The BIA Realty Office will then process that information, and produce a certified TSR.
After the TSR has been issued, the file is reviewed and approved by our Direct Guarantee Underwriter or the HUD Office of Native American Programs. When the loan has been approved, the final documents are signed, and back to the BIA for one final check. After we receive BIA approval, your loan will fund and you can move in or start construction on your new home!
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