Section 184 Draft Regulations Tribal Consultation Teleconference call

Section 184 Draft Regulations Tribal Consultation Teleconference call in information: US Toll Free: 1 -877 -369 -5243 Access Code: 0608542# May 2019 S

Welcome Heidi Frechette Deputy Assistant Secretary for Native American Programs 2

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

Welcome Krisa Johnson Director, Office of Loan Guarantee 4

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

Subpart A – General Program Requirements S Outlines general requirements and provides definitions for terms used in the regulation. S Definitions § 1005. 3 S Date of default – The date the loan payment was due. S Trust land or Tribal trust land – covers all trust and allotted lands. 6

Subpart B – Lender Eligibility and Requirements S Outlines lender eligibility and application process to become a Section 184 lender. S Makes the distinction between Direct Guarantee lenders and Non-Direct Guarantee lenders. § 1005. 207 S Outlines the sponsorship relationship between the DG lender and the Non-DG lender. § 1005. 213 7

Subpart B – Lender Eligibility and Requirements S HUD delegating Non-DG lender approval to the DG lender sponsor. The DG lender must ensure that its sponsored entity is an eligible lender. S Creates Non-lending Servicer application process. § 1005. 217 S Creates a minimum threshold of tribal trust activity to participate in the program. 8

Subpart C – Tribal Eligibility S Outlines requirements for tribal participation in the Section 184 program. S Updates mandatory lease provisions. § 1005. 303 S Provides more flexibility for the tribe to reassign the lease in the event of default or vacancy during foreclosure. S Requires assignment to 9 HUD at foreclosure.

Subpart C – Tribal Eligibility S Creates annual tribal recertification. § 1005. 309 S Requires tribes to report to HUD any changes or updates in staffing or legal framework within 15 days. § 1005. 207 10

Subpart D – Underwriting S Outlines requirements for eligible borrowers, eligible properties and loan types for the Section 184 program. S Allows borrowers with a previous Section 184 default to participate in the program. § 1005. 401 S Five year waiting period for deed or lease in lieu. S Seven year waiting period foreclosure. 11

Subpart D – Underwriting S Updates lending requirements for manufactured homes. § 1005. 427 S Updates requirements for water purification systems. § 1005. 429 S Removes the requirement for a 10 -year warranty for new construction. § 1005. 431 12

Subpart E – Closing and Endorsement S Outlines requirements for closing a Section 184 loan and receiving endorsement approval from HUD. S Provides borrowers the option for third-party tribal notification in the case of default. § 1005. 501(j) 13

Subpart F – Section 184 Loan Guarantee Fees S Outlines requirements for calculation, collection and submission the Section 184 loan guarantee fee. S Clarifies servicing of the annual loan grantee fee. § 1005. 607 S Fee gradually decreases based on original amortization schedule. 14

Subpart F – Section 184 Loan Guarantee Fees S 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 S Lenders must continue to submit annual loan guarantee fees during default and will be reimbursed after foreclosure. § 1005. 609 15

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

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

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

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

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