Finally, a reminder of potential:
Julia T. Brown, Community Reinvestment and Development Specialist of the OCC's Western District Office was the moderator of the panel composed of Larry E. Scrivner, Chief, Division of Real Estate Services, Bureau of Indian Affairs (BIA); Karen Garner-Wing, Director, Loan Guarantee Program, HUD-National Office of Native American Programs; H. Beth Marcus, Director, National Housing Impact Division, Fannie Mae; and Dustan R. Shepherd, President, First Americans Mortgage Corporation. (Donna Fairbanks of the Minnesota Housing Finance Agency, scheduled to be a panelist, did not participate due to illness.)
The first three panelists presented a quick overview of the roles their respective agencies play in home mortgage lending in Indian country. Larry Scrivner of BIA described the BIA's organization from the local to federal level, the kinds of real estate services in which BIA is involved, and how to obtain, through BIA, title reports on Indian land. He noted that BIA's involvement in the lending process depends on whether the mortgage is on fee simple land, trust land, or restricted land, and briefly explained the title status report. Karen Garner-Wing of HUD described HUD's new Section 184 guaranteed loan program, which is designed to increase home ownership by individuals and tribes in Indian country. She summarized program-specific requirements and also noted that Section 184 participation is restricted to tribes that have lien and leasing procedures, bankruptcy and foreclosure laws, and other procedures in place. Beth Marcus outlined Fannie Mae's commitment to purchase and securitize Indian country loans, including HUD-backed permanent loans. She also described Fannie Mae's attempts to enhance the conventional lending market, including working with BIA and HUD to develop standard mortgage documents, negotiating agreements with title companies involved in the Indian country mortgage market, and partnering with conventional lenders, nonprofit organizations, and Indian tribes.
Dustan Shepherd described his experiences as a private lender dedicated to increasing lending to borrowers in Indian country. He reiterated remarks previously made by Comptroller Ludwig that lenders interested in this market need to visit the reservations and learn about the customs and traditions of Native Americans. To illustrate that this lending segment can be profitable, he estimated that $500 million in loans can be made in Navajo Indian country in the next several years. He also reminded lenders that the government guarantee on many of these loans makes this market less risky than other loan programs.
Most questions raised during the question and answer period related to the BIA's loan approval process. Several members of the audience asked how they could help speed BIA's backlog of mortgage loan applications on Indian trust lands. Dustan Shepherd recommended that lenders make sure that loan packages include all required documentation before submitting the application. Fannie Mae's Beth Marcus mentioned that certain nonprofit organizations are developing model agreements, such as blueprints for homesite lease applications in Navajo Country, that may be adopted for use elsewhere. Standard documentation may speed up the overall loan process. BIA's Larry Scrivner recommended that tribes ask local BIA offices to give priority to processing title status report requests submitted in connection with home mortgage loans.
During the question and answer period, Nancy Jemison, Director of Economic Development at BIA, revealed that they are awaiting an opinion from BIA's solicitor clarifying BIA's role in approving contracts involving Indians. The BIA hopes the opinion and new BIA approval guidelines will set the stage to improve the inconsistent application of standards for processing loan applications and clarify other Section 184 uncertainties.
Audience members also raised concerns related to obtaining title to and title insurance on mortgage loans in Indian lands. An attorney representing lenders recommended including title insurance companies in discussions about what kinds of mortgage loans require title insurance.
Several members of the audience also questioned the intent of HUD's Section 184 loan guarantee program. An OCC staff member observed that an average loan amount of almost $90,000 did not seem to be an affordable mortgage; he was informed that high transportation costs associated with shipping modular homes to Alaska was the primary explanation for these higher loan amounts. A GAO staff member asked why the Section 184 loan program has seen many more fee simple loans than trust mortgages. A former aid to Rep. Doug Bereuter (R-NE), an architect of the Housing and Community Development Act of 1992, responded that the Section 184 loan guaranty program is not solely aimed at providing housing to low-income households on trust land; instead, it attempts to increase overall private sector lending to Native American Indians. |
