Tribal Housing Activities Loan Guarantee Program (Title VI)

Tribal Housing Activities Loan Guarantee Program (Title VI) is sponsored by U.S. Department of Housing and Urban Development (HUD). This opportunity supports mission-aligned projects and measurable outcomes.

Title VI Loan Guarantee Program | HUD.

gov / U.S. Department of Housing and Urban Development (HUD) Title VI Loan Guarantee Program Tribal Housing Activities Loan Guarantee Program Dear Lender Letter 2023-08 - OLG FY23 Year End Closure This Dear Lender Letter (DLL) informs Lenders and other stakeholders of the start of HUD’s FY 2023 financial closeout for the Section 184 Indian Home Loan (Section 184), the Section 184A Native Hawaiian Home Loan (Section 184A) and the Title VI Loan Guarantee (Title VI) programs.

The Title VI Loan Guarantee Program is authorized by the Native American Housing Assistance and Self Determination Act of 1996, as amended (25 U.S.C. 4101 et seq.) , ( NAHASDA ), in accordance with the Code of Federal Regulations at 24 CFR Part 1000 .

A guarantee by HUD, made under Title VI of NAHASDA guarantees repayment of 95 percent of the unpaid principal and interest due on the notes or other obligations guaranteed. The Title VI Loan Guarantee program allows recipients of Indian Housing Block Grant Funds to use current and future fund allocations as a means of leverage to obtain HUD guaranteed financing.

As a borrower, tribes, Alaska Native Villages or TDHEs (with tribe approval) will collaborate with an approved lender to prepare and submit required documents for HUD review. Once approved, HUD will provide the lender with the loan guarantee and the borrower can start the intended project.

Obtaining a Title VI guaranteed loan permits borrowers to develop their project at today's cost; avoiding the need to save funds over several years and incurring the risk of potential cost increases.

Proceeds from a Title VI guaranteed loan may be used to: Construct community facilities Acquire land to be used for housing Prepare architectural & engineering plans The maximum loan amount HUD will guarantee and that a tribe/TDHE can borrow is approximately five times the need portion of the annual IHBG allocation. There is no minimum loan size. Click here .

to view an example of how leveraging increases the borrower's loan amount. A tribe/TDHE must repay its Title VI loan. However, the repayments may be stretched to 20 years.

As the amortization period increases, the annual debt service payments decrease. If a tribe/TDHE fails to repay the debt and a default is declared, HUD will make the loan payments to the lender. HUD will then seek reimbursement from the borrower’s pledged funds.

Click here to view an example of a repayment schedule. Title VI loans provide a financing mechanism for borrowers to pledge current and future IHBG allocation for the construction of affordable housing and related activities at today’s costs. The Title VI Loan Guarantee can promote flexible financing terms and also be used to leverage additional funds from other sources.

Because HUD guarantees the loan, borrowers are not required to use land as collateral. Eligible borrowers include: Tribes, Alaska Native Villages, and their tribally designated housing entities that are Indian Housing Block Grant (IHBG) recipients. Borrowers must also demonstrate administrative and financial capacity.

Program Benefits to Tribes and TDHEs Lenders benefit from administering Title VI loans because HUD guarantees payment of 95% of the outstanding principal and interest in the event of default, thereby limiting lender risk, reducing costs, increasing loan marketability, and improving opportunities to market financial services and credit toward meeting community reinvestment goals.

Eligible lenders include those supervised, approved, regulated, or insured by any agency of the United States or approved by the Secretary of HUD.

Program Benefits to Lenders Applying for a Title VI Guaranteed Loan The Title VI program uses a team approach with regular conference calls to help ensure project success by providing technical assistance, answering questions, and coordinating the various parties to keep the project on schedule. The main participants include: Tribe or tribally designated housing entity (TDHE) – plans and implements the project.

Lender – assists with application, performs underwriting and servicing, and distributes loan proceeds to the borrower. ONAP's Office of Loan Guarantee – collaborates with area office staff to review the Title VI application package, provides a preliminary letter of acceptance, and issues the firm commitment and loan guarantee.

Although every project is different, HUD has developed a general checklist for the Title VI Loan Guarantee application process. The maximum loan amount is five times the annual need portion of the tribe’s or TDHE’s annual Indian Housing Block Grant (IHBG) and the repayment period is up to 20 years.

HQ Office of Loan Guarantee (202) 402-2355 Northwest Office (202) 402-2355 Northern Plains Office (202) 402-2355 Southwest Office (202) 402-2355 Southern Plains Office (202) 402-2355 Eastern Woodlands Office Ralph H.

Metcalfe Federal Building 77 West Jackson Boulevard Program Contacts by Area Office and State Statute and Code of Federal Regulations Low-Income Housing Tax Credit Program (LIHTC) HUD Low-Income Housing Tax Credit Website State and local LIHTC-allocating agencies Office of Native American Programs National Directory of Tribes and TDHEs Code of Federal Regulations (CFR) Frequently Asked Questions (FAQs) Browse Questions and Answers Under Title VI of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), the tribe or its Tribally Designated Housing Entity (TDHE) pledges a portion of its Indian Housing Block Grant (IHBG) funds to HUD.

In turn, HUD will guarantee a lender’s loan to the tribe/TDHE. How does HUD’s loan guarantee to a lender help the tribe/TDHE? The guarantee protects the lender from a payment default by the tribe/TDHE.

The guarantee enables a lender to offer loan terms that would not generally be available to a borrower. What must the tribe pledge to HUD to receive a Title VI loan? The tribe/TDHE pledges the need portion of its annual IHBG funds and the financed project’s income to HUD as collateral for a loan guarantee.

The pledged funds can still be used by the tribe/TDHE for eligible IHBG activities, including debt service, unless the tribe/TDHE has defaulted on a previous loan. Who is an eligible borrower for a Title VI loan? A tribe/TDHE that receives and administers IHBG funds is an eligible borrower.

Since a tribe has the authority to withdraw the designation of a TDHE, the tribe must be a party to the pledge of IHBG funds. How may the loan funds be used? The loan funds must be used for affordable housing activities eligible under NAHASDA.

Does a tribe/TDHE have to comply with IHBG regulations if the money is actually coming from a private lender? Yes, Title VI and IHBG funds are authorized under NAHASDSA and are subject to the IHBG regulations at 24 CFR Part 1000. IHBG regulations apply to any project that uses funds from a loan guaranteed under Title VI.

Does the project have to be on Trust land or allotted land? No, but the project must be located in the area that the tribe/TDHE currently serves, using its NAHASDA funding. The project must also be included in the tribe’s Indian Housing Plan.

What steps are required to obtain a Title VI loan guarantee? In general, there are several steps in the process. The tribe/TDHE submits an application for a preliminary review of acceptance from HUD.

HUD reviews the proposed project’s feasibility and the tribe’s/TDHE’s capacity to implement the project. If acceptable, HUD will issue a preliminary letter of acceptance (PLA) that is valid for 180 days. The tribe/TDHE selects a lender and applies for a loan from that lender.

The lender requests a firm commitment from HUD, so that a loan guarantee may be issued. When the request is approved, HUD will issue a firm commitment to the lender specifying the terms that must be met for a guarantee to be issued. The lender and tribe/TDHE have 90 days to close the loan.

The lender and tribe/TDHE meet the conditions for the guarantee and close the loan. Once closed, HUD will issue the guarantee to the lender. Why are the firm commitment and guarantee directed to the lender?

HUD is guaranteeing the lender’s loan to the tribe/TDHE. The lender is responsible for meeting the terms and conditions for the guarantee. Does HUD guarantee the full amount of the loan?

No, HUD guarantees payment of 95% of the unpaid principal and interest on the loan. The guarantee does not include late fees or other expenses. The guarantee does not cover any other costs or fees, including late fees or legal expenses.

What is the maximum loan amount that can be guaranteed under Title VI? The maximum loan amount depends on the amount of the tribe’s annual Indian Housing Block Grant. IHBG allocations are based on a formula that considers two basic factors: the number of units of Formula Current Assisted Stock that the grantee has in its inventory; and the need of each tribal community.

The need portion of the IHBG is calculated using weighted factors such as the local population’s income levels, the condition of existing housing, and housing costs. The maximum commitment amount under Title VI is limited to five times the need portion of the annual IHBG allocation. Can a tribe/TDHE have more than one Title VI loan?

Yes, but the total amount of available funding for all of the Title VI loans cannot exceed the maximum commitment amount, which is five times the need portion of the annual IHBG allocation. Are there restrictions on the annual debt service? Yes, the annual debt service must not exceed the need portion of the IHBG allocation.

Does the amount of the guarantee change with each annual allocation? No, once the guarantee is issued, the maximum amount of that guarantee is fixed and does not change, regardless of any changes in the annual IHBG allocation. What is the collateral for a loan guaranteed under Title VI?

The loan has no real estate collateral. The guarantee is the primary collateral for the lender. The tribe/TDHE pledge of the need portion of the IHBG allocation is the collateral for HUD’s guarantee.

Can a lender also use a pledge of IHBG funds for loan collateral? No, the pledge of IHBG funds is made to HUD, and cannot be pledged a second time. Can a lender require more than the guarantee as collateral for the loan?

Yes, additional collateral may be negotiated between the tribe/TDHE and the lender. For example, it is common for a lender to request cash collateral for the 5% that is not covered by the guarantee. Depending on the type of account or collateral, the additional collateral may be an eligible financing expense under NAHASDA.

If a payment is not made, can a lender immediately call the loan due and payable in full? No, HUD must approve the demand for full repayment of interest and principal. Has HUD made payments due to a borrower defaulting on a Title VI loan?

No, as of September 2014, there had been no claims paid on a guarantee through the 15-year life of the program. Are there application forms for a Title VI loan? There are no application forms.

However, HUD does provide a checklist of documents needed to qualify. The checklist generally follows the documentation requirements that lenders have for commercial development financing. May the lender use its standard loan documents?

Yes, HUD does not have documents for the lender to use for its loan. However, HUD will review the lender’s documents and may require some changes. What are the required HUD guarantee documents for the tribe/TDHE?

The required documents include a contract for the pledge of the tribe’s/TDHE’s IHBG funds and a certification of compliance with NAHASDA. What are the required HUD guarantee documents for the lender? The required documents include a guarantee agreement and the guarantee certificate.

Does HUD require special terms in the lender’s loan documents? The Title VI Loan Guarantee Program is designed to be flexible; however, the loan terms must meet the needs of the project. The maturity date should not exceed 20 years, and the tribe/TDHE may not be a party to any hedge structure for fixed-rate financing.

Does the tribe/TDHE need to include the Title VI project and financing in its annual Indian Housing Plan (IHP)? Yes, HUD requires the IHP to include the project, loan proceeds, and estimated debt service. The useful life of the project must equal or exceed the loan term.

Does the lender need to monitor construction? Yes, loan advances that pay for construction costs need to be based on completed work. What loan reports must the lender provide to HUD?

The lender must provide quarterly payment reports that include the current principal balance and current interest rate, as well as the amount of principal and interest payments. In addition, the lender must report any payment delinquencies that are more than 30 days late. Does the tribe/TDHE have Title VI reporting requirements?

Yes, the project must be included in the tribe’s/TDHE’s Annual Performance Report, annual audit, and the self-monitoring plan. In addition, the debt service should be included in the annual Indian Housing Plan. Will HUD conduct a monitoring review of a Title VI project?

Yes, HUD will include a Title VI project in its on-site monitoring reviews. In addition, it may undertake a desk review of all or a portion of a project. May a Title VI guaranteed loan be modified to change one or more terms?

Yes, the loan terms may be modified with HUD’s written approval of the changes. To learn more about using the Title VI Loan Guarantee Program for your housing project, contact Office of Native American Programs U.S. Department of Housing and Urban Development