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Reduction to HUD Section 184 Fees

The Office of Native American Programs, under the Department of Housing and Urban Development (“HUD”) recently announced a reduction of fees charged to borrowers for the Section 184 Indian Housing Loan Guarantee program (“Section 184 program”).

Effective July 1, 2023, the Upfront Loan Guarantee fee will be reduced from 1.50 percent to 1.00 percent and the Annual Loan Guarantee fee will be reduced from 0.25 percent down to 0.00 percent for a Section 184 guaranteed loan. The fee reductions are not retroactive and will not apply to any Section 184 guaranteed loan that closed prior to the effective date.

The Section 184 program was established in 1992 to provide access to sources of private mortgage financing for Native American families, Native American housing authorities and Native American tribes. The program gives HUD the authority to guarantee loans for property on trust lands and in other Native American and Alaska Native areas. 

The Section 184 program is funded by annual appropriations and the collection of upfront and annual fees collected from borrowers.  HUD previously increased fees in 2014 and 2016. However, since 2016 the program has experienced a very low default rate, allowing for a reduction in fees without an increase of risk to funding for the program.  HUD estimates that the reduction in fees will save the average borrower almost $5,700 over the course of a loan.

To view HUD Lender Letter 2023-05, click here.

DocMagic will be adding a new audit to return for Section 184 loans if the Upfront Loan Guarantee fee is not equal to 1.00 percent and the Annual Loan Guarantee Fee is not 0.00 percent. The new audit will available beginning on August 3, 2023.

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