The Section 184 Indian Housing Loan Guarantee Program Processing Guidelines (found on HUD’s website at https://www.hud.gov/program_offices/public_indian_housing/ih/homeownership/184/guidelines) inform Lenders that:
Section 184 does not have a standard mortgage instrument. However, lenders are allowed to use the FHA or the Fannie Mae/Freddie Mac (multi state) conventional loan instrument. When using the multi state document you must change the late fee to 4 percent rather than the customary 5 percent.
Late charges may not exceed 4 percent of the full monthly payment (principal, interest, taxes and insurance) due from the borrower in the month of computation. [Ch. 6, Sec. 6.4.B]
Based on this guideline, late charges for Section 184 loans should be based on the full monthly payment, rather than just on principal and interest like many other loan types. Accordingly, we are changing the late charge language on several documents for Section 184 loans to reflect that the late charge percentage will be based on the total monthly payment, instead of on solely the principal and interest portion.
The documents being modified are:
- FHA Note Fixed (Cx36)
- FL Housing – FHA Note (Cx15130)
- NY CEMA GAP – FHA Note Fixed (Cx16243)
- AK Housing – FHA Note Fixed (Cx19047)
- Loan Estimate (Cx18565)
- Closing Disclosure (Cx18566)
- Spanish Loan Estimate (Cx18990)
- Spanish Closing Disclosure (Cx18991)
These changes will be in effect on October 2, 2021. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.