The U.S. Department of Housing and Urban Developmentās (HUD) Office of Native American Programs will reduce fees for homebuyers utilizing the Section 184 Indian Home loan, making homeownership more affordable for Native American families.
āFor this country to truly succeed, all Americans must have access to opportunity,ā HUD Secretary Marcia Fudge said. āThat means expanding access to wealth-building and homeownership. Today, we are building on the steps weāve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future.
āAs we reduce housing costs for Native American families with Section 184 loans, we continue our work to address longstanding disparities in homeownership.ā
Reductions will be made to the upfront loan guarantee fee and the annual loan guarantee fee. Specifically, the first will go from 1.5 percent to 1 percent, and the second will go from 0.25 percent to 0 percent.
As a result of these reductions, Section 184 homebuyers will save an average of $500 (when purchasing a $194,000 home), and up to $6,800 over the term of the loan. HUD stated the fee reductions could result in a savings of $1.5 million for an estimated 3,000 Native American families in the first year.
These fee reductions will go into effect for guaranteed loans dated July 1 and after. The reductions will not apply to Section 184 guaranteed loans closed prior to that date.
In cases where a firm commitment was issued before July 1, and the loan scheduled to close on or after July 1, lenders must request an updated firm commitment to reflect the reduced loan guarantee fees before the closing date.
Those who do not request an updated firm commitment and proceed to closing without the reduction in guarantee fees are required to refund the borrower the difference between the old and new upfront guarantee fee rate through a cash reimbursement, if the borrower paid the fee in cash at closing; applying the difference between the old and the new rate to the unpaid principal balance, if the fee was financed at closing; and reimbursing through cash any of the annual loan guarantee fee installments collected from the borrower.
Freddie Mac also announced it was launching a new mortgage product for members of Native American communities. The financing option, called HeritageOne, will provide funding for single-family properties on tribal lands in rural areas, as well as financial counseling and other resources.
āWith HeritageOne, we are again breaking new ground in our efforts to safely and responsibly expand opportunities in traditionally underserved communities,ā Sonu Mittal, Freddie Mac single-family senior vice president of acquisitions, said. āOur commitment to make home possible for Native American families not only requires long-term planning and prudent execution, but strong partnerships with industry members and tribal leaders. Through this collaboration, we can help create more affordable mortgage options in tribal lands and rural areas.ā
To qualify, at least one borrower must be an enrolled member of a federally recognized Native American tribe who will occupy the property as a primary residence.