Reverse Mortgages on Tribal Lands

Recently, a NRMLA member asked whether FHA will insure reverse mortgages made on homes located on tribal lands. The following answer was provided by Daniel Mooney, a senior underwriter at HUD’s Santa Ana Homeownership Center, in Santa Ana, CA.

Mooney: The question of HECMs on Native American and Tribal lands is one that bears considerable review, on the part of any lender desiring to participate in such originations/fundings.

The first place to start is to review the transfer restrictions to be found in 24 CFR 203 as these are referenced in the HECM’s 24 CFR 206. The lender will discover that, depending upon the nature of the lands in question, their efforts to determine eligibility of the property may encompass inquiries and approval from the Bureau of Indian Affairs (Dept. of the Interior), the Office of Native American Programs (ONAP) and/or HUD. After discerning with whom the lender must confer/verify eligibility of both land and mortgage, the lender must then determine if the terms of the lease, if applicable, will be acceptable under the terms specified in the HECM regulations.

Bottom line…this is not a simple evolution.

I’d recommend that the tribal member begin by conferring with the tribal council, so as to determine the potential applicability of the program within the tribe (With Indian gaming income, some tribes will have little or even no use for such programs.). Then, if it were me, I’d be speaking with the appropriate oversight agency (will vary with the classification of the lands in question) and determine what, if any, additional info or steps may be necessary to garner approval for such mortgages to be utilized on the lands of said tribe. Following those efforts, either ONAP or HUD (again, depending on the classification of the lands in question) would be the next office with which to confer.