Federal government suspends Native American home loan program

The environment of sequestration is hitting every corner of Washington D.C. Public services are currently operating under the partial Commitment Authority until Congress can perhaps resolve the nation’s budgetary crisis.

One program, however, is already halted, having reached the limit of its spending authority.

The department of Housing and Urban Development sent a letter to mortgage broker’s associations halting mortgage originations under the Indian Home Loan Guarantee Program (Section 184). Unless a mortgage already has HUD approval, sources say, there is no chance of the loan closing as of now.

Section 184 is an 11-year old mortgage product for American Indian and Alaska Native families, tribes Alaska Villages or tribally designated housing entities. The program is designed to provide the American Dream of homeownership to a population with typically few choices in mortgage lending.

The below graph breaks down the amount of money spent on housing programs impacted by sequestration:

HUD Secretary Shaun Donovan argued for weeks now that housing programs would be particularly and painfully impacted by sequestration.

Donovan decried the austerity as potentially creating a subclass of American citizens unnecessarily made homeless.

“Much of this damage will be done through cuts to HUD’s Continuum of Care programs, under which formerly homeless families and individuals are quickly re-housed and given other assistance to move them towards self-sufficiency,” he explained last month to a Senate Appropriations Committee.

“In addition, the sequestration cuts would eliminate some of the key funding for the nation’s shelter system for the homeless provided by the Emergency Solutions Grants program,” he added.

Donovan added that sequestration cuts could cause more than 100,000 formerly homeless Americans, including veterans, to be removed from their current residences or emergency housing programs. 

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Christina Mlynski contributed to this report.

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