CBC Mortgage Agency

NMLS: 1186381
912 W. Baxter Drive, Suite 150
South Jordan, Utah 84095

Main: 866.563.3507
Servicing: 866.563.7572
Fax: 435.237.0022

U.S. Department of Housing and Urban Development Rescinds Letter Barring Down Payment Assistance from Nationwide Entities

August 22, 2019 By

Tribally Owned Mortgage Agency was seriously affected by the previous action and filed a Legal Challenge Against HUD’s Mortgagee Letter 2019-06, which Continues in Federal Court

The U.S. Department of Housing and Urban Development last week withdrew an April mortgagee letter that unfairly sought to restrict down payment assistance provided by nationwide governmental entities.

The government’s action, embodied in Mortgagee Letter 2019-12, rescinds the earlier letter, which has been challenged in federal court on multiple grounds by the Cedar Band of Paiutes, the Cedar Band Corporation (CBC), and the CBC Mortgage Agency (CBCMA).

Through its Chenoa Fund program, CBCMA is a successful industry leader in providing down payment assistance to thousands of borrowers, particularly those in underserved minority communities, where many families struggle to obtain home mortgages. Operation of the Chenoa Fund generates critical revenue for the Cedar Band of Paiutes, whose Indian reservation lies in a rural area of Utah.

“HUD’s latest letter is a welcome and encouraging gesture that begins to repair the damage caused by the rule change the government sought to enforce against us in April,” said Delice Tom, the newly elected chairwoman of the Cedar Band of Paiutes. “We hope this is evidence that in the future, we will not face illegal threats to our sovereign rights and our ability to generate crucial economic resources for our people.”

HUD’s initial action, in Mortgagee Letter 2019-06, sought to restrict the use of DPA by governmental entities like states, cities, or tribal governments, a move that created chaos for borrowers with loans in the pipeline. Soon after, the Cedar Band of Paiutes, CBC, and CBCMA filed a lawsuit seeking an order immediately halting enforcement of the letter on grounds that it was adopted after an improper procedural process; issued without prior notice and an opportunity to comment; and, most importantly, released without consulting with affected American Indian tribes and bands, which is legally required.

The Cedar Band’s lawsuit also charged that the letter violated tribal sovereignty and contradicted established federal policy promoting the economic development and self-sufficiency of American Indian tribes and bands.

In July, U.S. District Judge David Nuffer in St. George, Utah, ruled that CBCMA is likely to succeed in its legal challenge and issued a preliminary injunction staying the effective date of the letter until the court reaches a judgment on the merits of the case. That action required HUD to continue to insure mortgages with a down payment provided by the Chenoa Fund program.

The Cedar Band of Paiutes, CBC and CBCMA filed a motion to enforce the injunction after a HUD employee conveyed false information about Chenoa’s ability to provide DPA, and the motion is still pending.

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. CBCMA's distributions provide critical support to the Cedar Band tribal government to ensure a sustainable economy for its community, which focuses its efforts on providing basic services such as housing, healthcare, cultural and educational programs to its members. The rural nature of the Cedar Band reservation provides little in terms of natural resources and economic opportunity.