More secrets to immediate home ownership

By Michelle M. Greendeer-Rave

In the last edition of the Worak, I wrote about how to use Down Payment Assistance (DPA) grants to get your foot in the door to home ownership.  This next article focuses on one way for tribal members to access a program designed specifically to help enrolled tribal members get into their dream house.  Welcome, Section 184 Home Loans:  
Section 184 financing is guaranteed Indian home loan financing that is available now. USDA and WHEDA Home Loans can also be specifically designed for trust lands as well and if these loans are more advantageous for you, then always go with the bottom line. For 184 lending, you must be an enrolled member of a Federally Recognized Indian Tribe and verification of tribal enrollment will be necessary upon loan application. It is competitive (there are many banks that offer it) and it is readily available for your needs.
First Nations Community Financial (FNCF) does have information on how to prepare yourself for such an encounter with a Section 184 lender. This includes technical assistance to provide you an easy way to clean up your credit in a timely fashion. FNCF may also be able to provide Home Buyer Education Courses scheduled through Ho-Chunk Housing and Community Development Agency (HHCDA) if anyone is looking to crunch the numbers and decide on their dream home.
There can be credit problems in everyone’s past and it is always great to be prepared with a working budget plan. It is never too late to clean up your credit.  Yes, it can take up to three (3) months to see it work through, with success but it will happen. Overall, most financial institutions are looking for responsible people who demonstrate proper bill paying habits. Some are very strict and others will work with you on some smaller issues to get your score higher. Some people with 500 credit scores have even demonstrated themselves, in a short amount of time, to become credit worthy enough to be a homeowner.
A Section 184 loan can be used only for a single-family home (1–4 units) and for a primary residence, but not for a second or investment property. Section 184 loans offer advantages such as:
• Low down payment: 2.25 percent on loans of more than $50,000 and only 1.25% on loans of less than $50,000 versus 20% down for a conventional loan (which would be like $20,000down on $100,000 loan).
• Fixed interest rate: Lenders charge market rate. No adjustable rate mortgages (ARMS) are permitted. Fees are monitored to prevent predatory loans.
• No monthly private mortgage insurance (PMI): A one-time 1.5% fee is paid by the borrower at closing and can be financed into the loan which can cost up to an extra $150 per month on your loan.
• Manual underwriting: The program uses a hands-on approach to underwriting and approval, as opposed to automated decision-making tools.
So, here are the unofficial and informal steps to home ownership that has worked for the rest of us who used it, who are now are happy homeowners:
1. Find a bank of your preference that offers 184 lending. I personally preferred Native-owned banks with proven records (for example, Bay Bank from Oneida/Green Bay or Woodlands National Bank in Minnesota).
2. If you try to get a conventional loan, you would need about 20% down payment to purchase your home so that is why 184 is easier to get because you only need 2.5% down payment. Most people ready for home ownership usually have a good idea about their finances.  That 2.5% fits with the DPA grants (usually need about $10K to put down)
3. Contact the approved 184 bank, fill out a loan application completely. 
4. If you have an appointment with the bank lending officer, be sure to dress clean and business casual, get there early with all of your documents completely filled out, DON’T FORGET YOUR State ID or DLs, SS Card, Tribal ID and check stubs for past 4 checks.
5. The bank will let you know if you will be approved, or if you cannot be approved and specifically what credit issues you need to clean up and how much you will be approved for.
6. Complete a homebuyer education course offered by a program like HHCDA or Ho-Chunk Nation Home Ownership Program (HOP) by a certified trainer.
7. Start searching for your dream home or designing your home with a local builder, even if your credit is not ready yet. It is never too late to start your homework.  Pay attention to the real estate market because the more you study it, the more you will get a feel for what you want and don’t want. Look at property taxes, age, and deterioration of the home, look at access to schools and hospitals if you would be frequenting them often, as well as snow removal and lawn mowing concerns.
8. If you want to build on trust lands, then contact the Ho-Chunk Nation Realty Department and see what land lots are available for lease and development if you want to live on HCN tribal trust or fee simple land. It usually costs as little as $1 per year, so a 50 year lease would cost $50. Water and Sewer fees on tribal land run about $50 per month. Most of the sites do not have natural gas lines and you would be expected to buy propane through metal tanks that can by leased or purchased.  The tribe tends to negotiate rates for the price of propane.
8. Contact the BIA and see what heirship lots are available if you want an heirship trust lease. (Note that these leases can cost the fair market value annually to keep so they could cost several hundred per month, year, or more…I think the average lease was about $600 per year).
9. Once you find your home to buy, complete an application for Down Payment Assistance (DPA) from the Housing Department or the HHCDA, or even both if you are income-eligible or low income for HHCDA.  Once you get a lease approved by the Legislature, or get the heirship lease approved by BIA, try to get the DPA grant applications in.
10. Save up as much money as you can, teach yourself to budget and stick with it.  Remind yourself daily that you can do this! Small and large costs will most likely show up here and there, like maybe you want some landscaping, or maybe you want new appliances with your new home.
11. If you are building new construction, consider applying for other tribal grants for needs like the Ho-Chunk Nation’s Heavy Equipment grant or the Nation’s Environmental Health Water grant, etc.  These programs can provide up to $8,000 in excavation costs (like digging your basement or making your gravel driveway) and $3,000 for putting in your water and sewer, if they have funding available.
In closing, you should be able to readily find banks that can help you apply for 184 financing, especially if you google “Section 184 Approved Lenders”. 
*The comments and opinions expressed on this site are of the individual authors and may not reflect the opinions of the Ho-Chunk Nation or its tribal Departments, special counsel law firms or any individual attorney.  This content of this article not intended to be legal advice and is intended to be educational and is being offered only as a public service to the Ho-Chunk community exclusively and does not constitute solicitation or provision of legal advice.  This article should not be used as legal advice from an attorney licensed or authorized to practice in your jurisdiction. One should always consult a suitably qualified attorney regarding any specific legal problem or matter.  Nothing on written in this article is intended to create an attorney-client relationship and nothing provided in the article constitutes legal advice.