| a. | Process. Once the lender has obtained the required documentation and determined that the loan meets Section 184 requirements, the loan package is sent to the Program ONAP for review of tribal eligibility and land status, underwriting and issuance of the firm commitment. |
The Director, Office of Loan Guarantee, or the designee, in the Program ONAP, acts as the Chief Underwriter for all Section 184 loans. Upon receipt of this package, the Department will:
| 1. | Ensure that all necessary information has been included in the package. |
| 2. | Review the stated loan terms and conditions for compliance with the various Section 184 Program requirements. |
| 3. | Compare the loan conditions to the borrower’s income and asset information. |
| 4. | Determine whether this loan is a good investment, given prudent underwriting criteria. |
| 5. | Issue a firm commitment to the lender if the mortgage meets the Section 184 Program underwriting criteria. |
The Department will use the following two criteria to review this package:
| 6. | Prospect of repayment–the loan must have a reasonable prospect of repayment based upon the criteria herein. |
| 7. | Property and loan value–the property and loan value has been established in accordance with appropriate regulatory and administrative requirements. |
| b. | Closing the Loan. Lenders may not close loans until they have received a letter from the Department authorizing the firm commitment and approving a loan closing (unless the lender is a Direct Guarantee lender — See Chapter 10). Lenders who close the loan or allow construction to begin before receipt of the firm commitment letter, run the risk that the Department may find errors in the underwriting criteria and therefore reject the loan. Any funds already spent on the rejected project would not be guaranteed. |
| c. | Items. The items listed below must be included in the lender’s submission of the firm commitment package. |
| 1. | Firm Commitment Submission Checklist (the checklist format is optional; lenders may develop their own format). See Appendix 3 for sample checklist and detailed explanation. |
| 2. | Mortgage Credit Analysis Worksheet (Form HUD 53036). |
| 3. | Maximum Mortgage Worksheet for Single Close (Single Close Only). |
| 5. | Uniform Residential Loan Application/Addendum A (initial signed and dated by all borrowers and the lender and the addendum to the URLA). |
| 6. | Uniform Residential Loan Application/Addendum A (final/unsigned). |
| 7. | Land Status and Jurisdiction Form. Lenders must submit evidence that a particular location has been selected and should indicate the status of this land (i.e., tribal trust, allotted, or fee simple) and the court of jurisdiction. Fee simple land should be located in a designated Indian Operating area and must be certified by the tribe. Lenders may use the form found at Appendix 4 or any other acceptable documentation of land status. |
| 8. | Sales Contract (for existing structures or acquisition of land) any amendments or other agreements and certifications. Either an original or a certified true copy of the sales contract received by the lender is required. The Real Estate Certification (for existing structures or acquisition of land) signed by the buyer, seller, and selling real estate agent or broker must also be submitted (as applicable). |
| 9. | Appraisal Report (URAR Form 92800). |
| 10. | VC Condition Sheet or detailed explanation when appraisal is subject to repairs/completion. |
| 11. | Borrower Native American ID. Lenders must submit proof that the applicant is an Indian as defined under the Section 184 statute. Tribal membership cards are a common method of proof. Also, BIA uses a form entitled "Request for Certificate of Indian Blood" which lenders can send to the local BIA agency and obtain verification. Lenders may also accept alternate forms of identification. |
| 12. | Social Security Evidence. A copy of the actual social security card is not required. The Social Security Number can be obtained from such documents as pay stubs or the driver’s license. |
| 13. | Credit Report on all borrowers that will be obligated on the mortgage note. Lenders may accept a three repository merged credit report instead of the more comprehensive residential mortgage credit report. Lenders must use credit repositories that are able to report both credit and public records information for each locality that the borrower lived in during the past two-year period. See paragraph 5-4 for more information. |
| 14. | W-2’s, Most Recent Pay Stubs or a Verification of Employment. The lender must obtain from the borrower pay stubs covering the most recent 30-day period, along with original copies of the previous two years’ IRS W-2 forms. At a minimum, the pay stub must clearly show the borrower’s name, social security number, and year-to-date earnings. The "original" of the W-2 may be any of the copies of the form not submitted with the borrower’s income tax returns. (These original documents may be photocopied and returned to the borrower.) The lender must also verify by telephone current employment. The loan file must include a certification from the lender that original documents were examined and the name, title, and telephone number of the person with whom employment was verified. If the borrower files tax returns, the lender must also obtain a signed copy of form IRS 4506, Request for copy of Tax Form: or Form IRS 8821: or whatever form is appropriate for obtaining tax returns directly from the Internal Revenue Service for all loans processed in this manner. Alternately, the lender may obtain a Verification of Employment (VOE) form directly from the borrower’s employer and a copy of the borrower’s most recent pay stub. |
| 15. | Federal Income Tax Returns with all schedules (self employed borrowers). Signed copies of individual returns with all applicable schedules and signed copies of federal business income tax returns with all applicable schedules. If the business is a corporation, an "S" corporation, or a partnership the income tax return for the business must be submitted. See paragraph 5.6d(3). Year-to-date profit-and-loss and financial balance statements for all business entities along with evidence of quarterly tax payments must also be provided. Commissioned individuals must provide individual federal income tax returns for the past two years. The lender must also obtain a signed form IRS 4506,IRS 8821, or whatever form is appropriate for obtaining tax returns directly from the Internal Revenue Service for any loan where the borrower’s tax returns are required. The lender may use an electronic retrieval but cannot charge the borrower for this service. |
| 16. | Verification of Deposit and Most Recent Bank Statements. The lender must obtain from the borrower either original or certified copies of bank statement(s) covering the most recent three-month period. Provided the bank statement shows the previous month’s ending balance, this requirement is met by obtaining the two most recent consecutive statements. Alternately, lenders may obtain the most recent original bank statement and an original Verification of Deposit (VOD) form directly from the depository. |
| 17. | 12 Month Verification of Prior Payment History of previous mortgages or any other recurring housing payments including rental payments. This may be in the form of a verification of mortgage including payment history, verification of rent obtained directly from the landlord or 12 months of cancelled checks. Such verification is not required for any mortgage reported on the credit report. |
| 19. | Home Inspection Form signed by the borrower |
| 20. | Lead Based Paint Addendum (if appropriate) |
| 23. | Gift Letter or other documentation on source of funds if other than on deposit |
| 24. | Letters of explanation on Derogatory Credit must be provided by the borrower or additional documentation necessary to make a sound underwriting decision must be provided by the lender. |
In addition to the above items, the following are required based on construction and/or land status:
New Construction (single close or when lender requests HUD approval prior to doing the interim construction loan):
| 25. | Detailed Plans and Specifications including Description of Materials, |
| 26. | Signed Contractor Cost Estimate(s) including name, address and phone number of builder, |
| 27. | Well/Septic. If well/septic to be installed by Indian Health Service, provide letter showing amount and/or no cost |
| 28. | Site Map and Legal Description |
| 29. | Breakdown of Construction Costs |
| 30. | Builders Certification. HUD 92541 |
Properties on Fee Simple Land:
| 31. | Preliminary Title Report |
Properties Located on Tribal Trust Land:
| 32. | Title Status Report from the Bureau of Indian Affairs with recorded lease |
| 33. | Leasehold Instrument (with all signatures as required) |
Properties Located on Individual Allotted Trust Land (no lease):
| 34. | Title Status Report from the Bureau of Indian Affairs (including consent to mortgage from all owners if fractionated) |
Properties Located on Individual Allotted Trust Land (with lease)
| 35. | Title Status Report from the Bureau of Indian Affairs with recorded lease |
| 36. | Leasehold instrument(with all signatures as required). Lender should consult with Program ONAP when a lease is being used on individual allotted trust land. |
