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Navajo Council Votes Against Possible HUD Limits On Home Loan Program – Cronkite News

Restrictions on tribal land can make lenders suspicious, which is why the Indian Home Loan Guarantee Program was launched in 1992. By guaranteeing loans – more than 42,000 for a total of $ 7.2 billion – it gives mortgage lenders an incentive to lend. (Photo by Quinn Dombrowski / Creative Commons)

WASHINGTON – The Navajo Nation Council on Thursday unanimously voted against a draft Trump administration plan that critics say could impose income restrictions on applicants for India’s home loan guarantee program for the first time.

The proposal by the Ministry of Housing and Urban Development would limit participation in the program to those who earn 115% of the average income in an area, and up to 140% in certain circumstances.

A HUD official defended the plan, which he believed was misunderstood as a limitation on channeling funds to those most in need. He added that the plan is still just a draft proposal and that the HUD welcomes feedback from the tribes as it refines the guideline.

“This early draft was just intended to give them (tribes) guidance on how to target this guaranteed credit program to the benefit of lower-income families,” said Brian Sullivan, a HUD spokesman. “You have to have a definition of what lower income means.”

Maria Cohen, a Phoenix real estate agent who first brought the problem to the attention of the Navajo Nation Council, said she was initially concerned that the proposal would include income restrictions that would limit the scope of the program.

But Cohen, who has extensive experience working with Tribes and the home loan guarantee program, said Thursday that she has since received oral assurances from HUD officials that income restrictions are not part of the final rule.

Requests from members of the Navajo National Council for comments were not immediately replied to. However, a council letter to HUD in April raised concerns about the impact of potential income restrictions. It noted that the program was approved by Congress and said that any material changes should come from the legislature.

“A change in guidelines that Congress did not pass would be devastating to individuals and families who have moderately paid jobs and want to live on the reservation,” the letter said. It went on to ask HUD to clarify those definitions in the draft rules, which Sullivan said the department is currently in the process of doing.

The resolution adopted on Thursday stated that “imposing income restrictions on this program would be a step backwards for any tribal member hoping to acquire a home.”

The Indian Home Loan Guarantee Program, also known as Section 184 Loans, was established in 1992 to promote mortgage loans on tribal trust land through home loan guarantee. Tribal land restrictions imposed by the Bureau of Indian Affairs often make it difficult for borrowers to use the property as collateral.

Under the program, HUD acts as a guarantor for 100% of the loans in the event of a loan default, mitigating risk for lenders, and opening lines of credit to local borrowers looking to buy or repair a home.

Although initially limited to tribal trust land, the program has been expanded to include tribal members living outside the reservations.

The HUD announced its intention to revise the program in March, saying at the time that the growth of the program deserved new regulation to meet its “growing demands and to hold participating banks accountable to both the tribes and the federal government” .

The latest HUD statistics said that as of November, just over $ 7.2 billion in debt was guaranteed from 42,766 individual loans under the program. Arizona had the third highest number of guaranteed loans at 2,686, followed by Alaska at 4,618 and Oklahoma, whose 19,645 loans accounted for nearly half of the national total.

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