by       Rob Chrisman
Sequester Puts Native American Loan Program on Hold; Uniform State Test Info; Interesting Prepayment Info and How it Impacts Pricing

Andrew Jackson’s portrait is on the $20 bill of the United States – we know that. But what many people don’t know is that for years, and perhaps to this day, many Native Americans will not touch a $20 bill due to the horrendous record Jackson had in dealing with Native Americans. Jackson not only owned slaves but was responsible for, according to one petition, “the cruel and brutal forced” removal of Native Americans from their homelands to Oklahoma known as the Trail of Tears (the goal being moving all tribes from east of the Mississippi to west of the Mississippi).

I mention this because Native Americans now have been impacted by the sequester. Mind you, compensation for Congress and the White House does not change due to the sequester cuts. The Oklahoma Mortgage Bankers sent out, “Hello Fellow Oklahoma Mortgage Bankers: This has been a very challenging week for all us of that originate the HUD Section 184 Native American home loans. As of last Friday when HUD Senior Management decided to put the program on hold as a result of “sequestration”, homeownership dreams also were put on hold. If a lender did not already have a firm commitment in their hands with a cohort number issued by HUD then they were unable to transact their customer’s home loan. To put that in perspective….a firm commitment and cohort number cannot be issued till all underwriting conditions of the loan are met which typically takes place at a minimum 3-5 days outside of a closing date. So think about the number of closings that came to a halt this week across the State of Oklahoma and our Nation and how many consumers lives were affected and not only Native Americans. While we view the situation as temporary, we know this hurts innocent Native American families and all those tied to the closing transaction. It also creates untold pain for Native Americans families that often have the fewest home finance alternatives. There are Native American borrowers that are not able to convert their loan request to an alternative program such as conventional or FHA. As a result contracts were lost and the home they had already started making plans on furnishing and establishing homestead was taken away from them. All of this relates to the so called “sequestration” and is politically motivated; in fact, the FHA and VA programs remain unaffected. The situation won’t change until a new federal budget is passed or there is a new annual continuing budget resolution. As we are all aware, the next deadline for a federal budget is March 27th and we do not expect the program to restart loan closings before that date. While there are efforts underway to get HUD senior management to reconsider their position, it’s most reasonable to assume HUD’s position won’t change in the short-term.”


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