II.A.8.g. Section 248 Mortgages on Indian Land (09/14/15)

Owned by Kacey Olson
Nov 21, 2018
3 min read

© HUD Single Family Housing Policy Handbook 4000.1

Included in this section are:

i. Definitions
ii. Eligibility
iii. Underwriting
iv. Valuation

i. Definitions

A Section 248 Mortgage on Indian Land refers to a purchase or refinance Mortgage covering one- to four-family dwellings on Indian Lands.

Indian Land refers to those lands that are held by or for the benefit of Indian Tribes under some restriction or with some attribute peculiar to the legal status of its owners.

Indian Tribe refers to any Indian or Alaskan native tribe, band, nation, or other organized group or community of Indians or Alaskan natives recognized as eligible for the services provided to Indians or Alaskan natives by the Secretary of Interior because of its status as such an Entity, or that was an eligible recipient under Chapter 67 of title 31, United States Code, prior to the repeal of this section.

ii. Eligibility

(A) StandardThe Mortgagee must obtain documentation from the Indian/Native American that the Indian Land/reservation has adopted eviction procedures acceptable to HUD.

(B) Required DocumentationThe Mortgagee must obtain a certification from the Indian Tribe confirming the Indian Land/reservations compliance with HUD’s requirements. The Mortgagee must include the certification in the mortgage file and take the following measures:

  • certify to HUD that it has adopted eviction procedures and will enforce them;
  • permit HUD access to tribal lands for the purpose of servicing Properties;
  • agree to the lease form that HUD prescribes; and
  • enact a law that grants the tribal government’s court the jurisdiction to hear evictions and foreclosures so that FHA-insured and FHA-held Mortgages can be assured a first lien or provides that the law of the state in which the Property is located determines the priority of liens against the Property. If the reservation spans two or more states, the state in which the Property is located is the applicable state law.

(C) Borrower EligibilityOnly an Indian Tribe or a member of the Indian Tribe may be a Borrower. Where there is a co-Borrower, at least one Borrower must be an Indian Tribe or a member of the Indian Tribe. The Borrower must occupy the Property as their Principal Residence.

(D) Property EligibilityThe Property must be located on land held by the Indian Tribe or held by the United States government for the benefit of the Indian Tribe.Units in cooperatives are not eligible.The Borrower must hold a Residential Lease for the Property.

(E) First Lien StatusThe Mortgages must be secured by a first lien on the Property that has been filed with the state recording system and with the Bureau of Indian Affairs, U.S. Department of the Interior.

(F) AssumptionsThe Mortgagee cannot approve an assumption of a Mortgage secured by a Property located on an Indian Land/reservation unless the Indian Tribe has approved the assumption or sale of the rights to the Property securing the Mortgage. The Mortgagee must comply with all requirements for assumptions.

(G) Lease and MortgageThe model Lease and model Mortgage Rider must be used in connection with any Section 248 Mortgages. Modifications may be made to the Section 248 rider with the approval of the Jurisdictional HOC.The term of the lease must be 25 years with a provision for an automatic extension of an additional 25 years.The lease must prohibit termination by either or both parties while the Leasehold is mortgaged under Section 248.

iii. Underwriting

(A) Tribal Leasehold and TaxesThe Mortgagee must obtain tax information on the Leasehold from the tribe and include the payment of such taxes in the calculation of the Borrower’s Mortgage Payment as is done with local property taxes.

(B) Mortgage Insurance PremiumsThe Section 248 program does not require an Upfront Mortgage Insurance Premium (UFMIP). Annual premiums are found in Appendix 1.0 – Mortgage Insurance Premiums.

iv. Valuation

The Mortgagee must ensure that the appraisal of the Property meets the requirements specified in the Appraisal of Single Family Housing on Indian Lands section of the Appraiser requirements.