[Senate Hearing 116-150]
[From the U.S. Government Publishing Office]
S. Hrg. 116-150
LENDING OPPORTUNITIES: OPENING THE DOOR TO HOMEOWNERSHIP IN INDIAN
COUNTRY
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HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 16, 2019
__________
Printed for the use of the Committee on Indian Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
39-745 PDF WASHINGTON : 2020
COMMITTEE ON INDIAN AFFAIRS
JOHN HOEVEN, North Dakota, Chairman
TOM UDALL, New Mexico, Vice Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska JON TESTER, Montana,
JAMES LANKFORD, Oklahoma BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana CATHERINE CORTEZ MASTO, Nevada
MARTHA McSALLY, Arizona TINA SMITH, Minnesota
JERRY MORAN, Kansas
T. Michael Andrews, Majority Staff Director and Chief Counsel
Jennifer Romero, Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on October 16, 2019................................. 1
Statement of Senator Cortez Masto................................ 54
Statement of Senator Daines...................................... 49
Statement of Senator Hoeven...................................... 1
Statement of Senator Schatz...................................... 47
Statement of Senator Smith....................................... 52
Statement of Senator Tester...................................... 3
Statement of Senator Udall....................................... 2
Witnesses
Kunesh, Patrice H., Director, Center for Indian Country
Development; Assistant Vice President, Federal Reserve Bank of
Minneapolis.................................................... 26
Prepared statement........................................... 27
Kurtz, Hon. R. Hunter, Assistant Secretary, Public and Indian
Housing, U.S. Department of Housing and Urban Development...... 4
Prepared statement........................................... 6
Lacounte, Darryl, Director, Bureau of Indian Affairs, U.S.
Department of the Interior..................................... 23
Prepared statement........................................... 25
Mount, Hon. Nathaniel ``Nate'', Council Member, Ft. Belknap
Indian Community............................................... 15
Prepared statement........................................... 17
Zuni, Hon. Max, Governor, Pueblo of Isleta....................... 8
Prepared statement........................................... 10
Appendix
Brockie, Terry, Member, Gros Ventre Tribe of Fort Belknap Indian
Community (FBIC); CEO, Island Mountain Development Group
(IMDG), prepared statement..................................... 59
Center for Indian Country Development--National Native
Homeownership Coalition, prepared statement.................... 63
Response to written questions submitted by Hon. Maria Cantwell
to:
Patrice H. Kunesh............................................ 67
Hon. R. Hunter Kurtz......................................... 78
Darryl Lacounte.............................................. 85
Hon. Andy Werk, Jr........................................... 73
Hon. Max Zuni................................................ 80
Response to written questions submitted by Hon. Cortez Masto to:
Patrice H. Kunesh............................................ 70
Hon. R. Hunter Kurtz......................................... 76
Darryl Lacounte.............................................. 85
Hon. Andy Werk, Jr........................................... 74
Hon. Max Zuni................................................ 80
Response to written questions submitted by Hon. Tom Udall to:
Patrice H. Kunesh............................................ 65
Hon. R. Hunter Kurtz......................................... 75
Darryl Lacounte.............................................. 84
Hon. Max Zuni................................................ 80
LENDING OPPORTUNITIES: OPENING THE DOOR TO HOMEOWNERSHIP IN INDIAN
COUNTRY
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WEDNESDAY, OCTOBER 16, 2019
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:41 p.m. in room
628, Dirksen Senate Office Building, Hon. John Hoeven,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN HOEVEN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. We will call the hearing to order.
Thank you to all of the witnesses for being here.
This is an oversight hearing entitled, Lending
Opportunities: Opening the Door to Homeownership in Indian
Country. Today, we will hear from Federal agencies and tribal
leaders on how Federal financial tools, such as guaranteed and
direct loans, are being used in tribal communities to promote
homeownership.
The dream of homeownership is a foundational principle in
any society. Home ownership provides individuals and families
with stability, safety, and the opportunity to build better
communities. This principle holds true in tribal communities as
well.
Credit also plays an important role in providing housing
opportunities. However, rural and tribal communities often have
a difficult time accessing credit, and the ability to secure a
mortgage on trust lands. Traditional models of financing do not
always work in tribal communities. In Indian Country, title
issues as well as difficulties in collateralizing tribal assets
may make investors wary of financing tribal applicants.
Local community banks and community development financial
institutions can help fill those investment needs. For
instance, in my home State of North Dakota, there are five
community development financial institutions that have awarded
nearly $6.1 million from the CDFI Fund at the Department of
Treasury.
Federal financial products, such as guaranteed and direct
loans, may also serve as resources for communities where
traditional mortgage origination practices may not be offered.
Today, we will hear from the Department of Housing and Urban
Development on how one of the most used guaranteed loan
products, Section 184 loans, are working in Indian Country.
As the Administration continues to prioritize economic
growth, such as regulatory reform, it is important that these
positive impacts are also felt in Indian Country. That is why
on January 24th, 2019, I reintroduced the Indian Community
Economic Enhancement Act of 2019 with Senator McSally. The ICE
Act, Senate Bill 212, aims to address the disparity in economic
opportunities tribal communities face by amending existing law
to increase access to capital, attract investment to Indian
communities, and lessen the cost of providing financial
services to tribal members by reducing Federal bureaucracy.
The Committee reported the bill favorably on January 29th.
The Senate passed S. 212 on June 26th. I look forward to seeing
this legislation taken up by the House, signed by the
President, and enacted into law.
Accessing credit to promote homeownership is, in many
cases, the most important investment that a family will make.
That is why we are holding this oversight hearing today. I look
forward to hearing more about how Congress can make a
difference in promoting credit access and homeownership in
Indian Country.
Before I turn to Vice Chairman Udall for his opening
statement, I want to thank all of the witnesses who are here
today. I want to especially welcome Hunter Kurtz to the
Committee. I understand this is your first hearing in D.C.
since being confirmed as the Assistant Secretary of Public and
Indian Housing. Welcome.
I also want to welcome Patrice Kunesh. I understand you
will be moving on from the Federal Reserve Bank shortly. I want
to thank you for your work in Indian Country as well.
With that, I will now turn to what you have all been
waiting for and that is to hear from Vice Chairman Udall.
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you, Chairman Hoeven.
The topic of today's hearing, Lending and Homeownership in
Indian Country, is a very important one.
Thank you to all of our witnesses here today for traveling
to Washington, D.C. for this hearing. Special thanks to
Governor Zuni, from New Mexico's Isleta Pueblo, for being here
today. Governor, it was great to see you last week in
Albuquerque for the Committee's field hearing on uranium mining
and at the groundbreaking for the visitor's center at Valle de
Oro National Wildlife Refuge, where you honored us with the
opening prayers in your native Tiwa language.
Earlier this month, I visited your pueblo where I had the
honor of presenting former Governor Torres and former
Councilman Lujan with replacement medals for their service in
Vietnam. I want to thank them again for their service to our
Country.
Turning to today's hearing, homeownership has long been the
epitome of the American Dream. Yet, even with Federal programs
like the Department of Housing and Urban Development's Section
184 Indian Home Loan Guarantee Program, homeownership remains
only a dream for too many in Indian Country.
Structural barriers, including difficulty securing home
loans on trust land, continue to prevent many Native Americans
from owning their own homes. This Administration's ongoing
failure to provide timely real estate services to tribal
borrowers and lenders has only exacerbated the problem.
In fact, the Center for Indian Country Development recently
examined the challenges to mortgage lending in Indian Country
and reported, ``promoting homeownership as a method of
increasing Native American equity and assets may be less
effective than for other populations.'' The dream of
homeownership should be attainable to everyone, no matter where
they live in the United States. It should not be more expensive
for tribal members to live on rather than off reservation.
That is why the innovative work being done by the Isleta
Pueblo's Tiwa Lending Services, a Native Community Development
Financial Institution, or CDFI, is so important. Tiwa is
directly addressing existing barriers to tribal homeownership
primarily by providing financial services such as mortgage
loans, credit counseling, Native youth financial literacy
classes to Pueblo residents and those in its surrounding
communities, and with zero percent default rate on its home and
consumer loan portfolios. Tiwa is doing a fantastic job.
Native CDFIs like Tiwa are uniquely qualified to address
the needs of tribal members and ensure that borrowers do not
default. With CDFIs like Tiwa doing such great work in Indian
Country, I am left scratching my head why the Administration
has zeroed out the funding for Native CDFIs in its annual
budget request to Congress for the last three consecutive
fiscal cycles.
Director LaCounte and Assistant Secretary Kurtz, I look
forward to hearing from you both specifically on this important
topic so that the Committee may better understand how the
Administration is addressing mortgage lending and homeownership
barriers in Indian Country.
Thank you very much, Mr. Chairman.
The Chairman. Thank you, Vice Chairman Udall.
Senator Tester.
STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator Tester. I do have an opening statement, Mr.
Chairman.
I want to start by thanking you and Senator Udall for
holding this hearing entitled, Lending Opportunities: Opening
the Door to Homeownership in Indian Country. Hopefully, when
this hearing is done, we will have some ideas on how to do
that.
To the panel, your testimony is going to be critically
important. I want to welcome you all, especially Nate Mount.
Nate, it is good to have you here. Nate is one of those guys
who left home for a while, went off and got his Juris
Doctorate, and he came back to help the Ft. Belknap community.
And his dad, Harlan, is here, who is a mainstay to the Ft.
Belknap Tribe. We want to thank you both for being here and all
the folks who are testifying.
Look, we could all go on and on and on about what is going
on in Indian Country for housing but the fact of the matter is
if you want to have a healthy community, you have to have
housing. I think if the folks who are here at the table and
other folks that are in the audience, some of us have been up
and seen the situation in Indian Country. Quite frankly, the
housing is horrible. It is just like inner city poverty, quite
frankly, on many of the large land-based tribes in this Country
and in Montana. It is no exception.
We have work to do, because it impacts everything. It
impacts getting businesses into Indian Country, it impacts
getting teachers into Indian Country and law enforcement into
Indian Country. You can just go down the list. Everything has
the foundational issue of housing. It needs some attention in
Indian Country.
I applaud the Chairman and the Ranking Member for having
this hearing. I look forward to getting some good ideas to make
getting access to capital easier and getting access to
homeownership easier, because quite frankly, what we have done
so far has not been near enough. It just has not worked to the
extent it needs to work. So I look forward to the results of
this hearing.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Tester.
With that, we will turn to our witnesses. Our witnesses
today are the Honorable Hunter Kurtz, Assistant Secretary for
Public and Indian Housing, U.S. Department of Housing and Urban
Development, here in Washington, D.C.; the Honorable Max Zuni,
Governor, Isleta Pueblo, Isleta, New Mexico; the Honorable
Nathaniel ``Nate'' Mount, Council Member, Ft. Belknap Indian
Community, Harlem, Montana; Mr. Darryl LaCounte, Director, BIA,
U.S. Department of the Interior; and Ms. Patrice Kunesh,
Director, Center for Indian Country Development, and Assistant
Vice President, Federal Reserve Bank of Minneapolis, Minnesota.
Thanks to all of you for being here. We will begin with Mr.
Kurtz.
STATEMENT OF HON. R. HUNTER KURTZ, ASSISTANT
SECRETARY, PUBLIC AND INDIAN HOUSING, U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Kurtz. Good afternoon. Thank you, Chairman Hoeven, Vice
Chairman Udall and members of the Committee, for this
opportunity to discuss lending and homeownership in Indian
Country, and the important programs that we administer at HUD
to further these important goals.
I would also like to acknowledge and thank the Committee's
staff, not only for coordinating this hearing, but for their
ongoing engagement with HUD staff on issues that impact Native
American communities.
My professional career at HUD spans multiple
Administrations. I have served both as a career civil servant
and as an appointee. I am a houser at heart and a practitioner
of HUD programs, and a true believer in the department's
mission.
Prior to coming back home to HUD in 2017, I was the Deputy
Director of the Housing and Revitalization Department for the
City of Detroit. This experience has helped me more deeply
understand housing policy on the local level.
My time in Detroit also reinforced one of the fundamental
lessons I have learned throughout my career, a one size fits
all for affordable housing does not work. The lesson certainly
also applies to our Nation's American Indian, Alaska Native and
Native Hawaiian communities.
As you know, the Office of Public and Indian Housing is
responsible for the management, operation, and oversight of
HUD's Native American Housing Community Development Programs.
These programs serve approximately 580 different, unique tribal
communities. Our staff works every day to strengthen our tribal
partnerships and develop programs that better meet the needs of
all our Native communities.
As the Assistant Secretary for Public and Indian Housing, I
have had the opportunity to work with and visit tribal
communities and learn firsthand about the housing issues and
challenges tribes face. Most recently, I had the pleasure of
visiting the Pueblo of Isleta in New Mexico. There I saw
firsthand the great work their housing authority is doing under
our programs. Specifically, I learned about how the Pueblo is
leveraging critical Indian housing block grant dollars to
construct new homes in culturally appropriate ways that meet
unique needs of the community.
Unfortunately, I did not get to meet the Governor but it is
a pleasure to meet him today. Sir, your folks are doing some
great work there.
Opportunities like this have allowed me to hear directly
from tribal leaders and see what we need to do to strengthen
and improve HUD's programs. Far too many Native American
communities struggle with severe overcrowding, lack of
affordable housing and infrastructure challenges, all of which
result in significant barriers to economic opportunity.
Like so many others, Native Americans would like to own
their own homes. However, various barriers make lending in
Indian Country difficult. In addition to factors common to
underserved markets in rural areas, the land is often held in
trust by the Federal Government and can't be sold or readily
mortgaged.
To address this need, HUD Section 184, the Indian Home Loan
guarantee Program, provides a 100 percent guarantee to lenders
and makes lenders whole in the event of a borrower's default.
The Section 184 program has been proven to be very popular and
has grown exponentially from guaranteeing less than 100 loans
in 1994 to over $7 billion in guarantees today.
Although the volumes in loans guaranteed has increased
significantly and the program has become more complex, the
regulatory framework that governs the program has remained
largely unchanged. Our hope is that updated regulations will
limit fraud, waste, and abuse as well as help families in their
homes in recognition of our government-to-government
relationship. HUD has conducted many consultation sessions with
tribes throughout the rulemaking process and intends to
continue to do so as the rulemaking moves forward.
In my experience, regulations that have been drafted in
Washington need to be mindful of how they are implemented at
the local level. What works for families in Detroit may not
necessarily work for families in Indian Country.
Thank you again for this opportunity to appear before you
today. My office has submitted official written testimony for
your consideration which provides greater detail on the status
of our programs.
I am proud of our dedicated staff who works tirelessly
alongside our tribal partners to find solutions to these
pressing needs. I am encouraged by the progress our programs
continue to make.
I look forward to addressing your questions and providing
some additional information on the status of HUD's programs in
Indian Country.
Thank you, sir.
[The prepared statement of Mr. Kurtz follows:]
Prepared Statement of Hon. R. Hunter Kurtz, Assistant Secretary, Public
and Indian Housing, U.S. Department of Housing and Urban Development
Introduction
Thank you Chairman Hoeven, Vice Chairman Udall, and Members of the
Committee for this opportunity to discuss lending and homeownership in
Indian Country and the important programs that we administer at the
U.S. Department of Housing and Urban Development (HUD) to further these
important goals. I would also like to acknowledge and thank the
Committee's staff, not only for coordinating this hearing, but for
their ongoing engagement with HUD staff on issues that impact Native
American communities across our Nation.
As the Assistant Secretary for Public and Indian Housing, I have
had the opportunity to work with and visit tribal communities and learn
firsthand about the housing issues and challenges that Tribes face. It
has also given me the opportunity to hear directly from tribal leaders
on what we need to do to strengthen and improve HUD's programs. Far too
many Native American communities struggle with severely overcrowded
housing, lack of affordable housing, and infrastructure challenges--all
of which result in significant barriers to economic opportunity. HUD
staff work tirelessly alongside our tribal partners to find solutions
to these difficult problems.
Section 184 Indian Home Loan Guarantee
Like so many others, many Native Americans would like to own their
own homes. However, various barriers make lending in Indian Country
difficult. In addition to factors common to underserved markets and
rural areas, the land may be held in trust by the Federal Government,
and cannot be sold or readily mortgaged.
One of the primary tools available to address these barriers is
HUD's Section 184 Indian Home Loan Guarantee (Section 184) program. The
program was established in 1992 to encourage private lenders to make
home loans to Native Americans in eligible Indian areas. HUD provides a
100-percent guarantee to lenders and makes lenders whole in the event
of a borrowers' default. The guarantee encourages lenders to serve a
population that has traditionally been viewed as high risk and areas,
such as Indian reservations, that have had difficulty attracting
private capital because of their remoteness and the status of the land.
Ultimately, the Section 184 program helps Tribes promote the
development of sustainable reservation communities by making
homeownership a realistic option for tribal members.
Eligibility
The Section 184 program provides access to market-rate, private
mortgage capital, and is not subject to income restrictions. The
program does not have minimum requirements for credit scores and allows
for alternative forms of credit and non-traditional income to meet the
unique needs of tribal communities. The program gives tribal members
from across the income spectrum the choice of living in their Native
community by providing access to mortgage capital. In addition to
individual tribal members, Tribes and tribally designated housing
entities (TDHEs) are eligible borrowers. This benefit of the program
makes it possible for Tribes and TDHEs to address housing shortages by
developing and financing rental housing or by promoting homeownership
opportunities for tribal members through lease purchase programs.
According to HUD's 2017 Native American housing needs study, since
its inception, the program has served as a major source of mortgage
financing for Native American families, both on and off reservations.
The program has been proven to be very popular and has grown
exponentially from guaranteeing less than 100 loans in 1994 to, at its
peak, guaranteeing over 4,000 loans--worth over $700 million--in 2017.
Regulations and Legislative Proposals
Although the volume of loans guaranteed has increased
significantly, the regulatory framework that governs the program has
remained largely unchanged. To address this issue, HUD has begun
working to update the Section 184 regulations. In February 2018, HUD
started engaging in tribal consultation to revise the program's
regulations--even before any regulations were drafted. Since then, HUD
has held 15 in-person and three teleconference consultation sessions
with Indian tribes. A draft proposed rule has been developed and placed
into clearance. Once the rulemaking process is complete, the updated
regulations will improve and modernize the program, help borrowers stay
in their homes, provide clarity to participating lenders, and ensure
the program remains sustainable for the future.
In addition to this rulemaking, in recent years, HUD has also
proposed various legislative fixes to the Section 184 program
authorizing statute--the Housing and Community Development Act of 1992.
For instance, we've proposed amending the Act to authorize HUD to
require lenders that participate in the direct guarantee process to
indemnify HUD for losses in cases involving fraud and
misrepresentation. We've also proposed changes that would allow HUD to
periodically review the rates of defaults and claims of these direct
guarantee lenders to ensure that they do not pose an unacceptable risk
to the program. All of these proposals were put forward to ensure that
the program remains strong, sustainable, and continues to meet the
needs of Native American borrowers well into the future.
Federal Partners
Mortgage lending on tribal trust land can be a time-consuming
process that reduces the appeal of lending on tribal trust land, even
with the Federal guarantee. This is in part because the process can
involve obtaining leases, securing final certified title status reports
from the Bureau of Indian Affairs (BIA), completing National
Environmental Policy Act (NEPA) reviews, securing appraisals, and other
required transactions.
To help address these barriers, HUD has been working with our
Federal partners to reduce the administrative barriers. We routinely
collaborate with the Department of the Interior to share information,
improve communication, and break down silos.
For example, HUD partnered with the BIA to host a training session
for lenders and BIA staff on mortgaging tribal trust land. The session
was oversubscribed and provided an opportunity for lenders, HUD, and
BIA staff to better understand one another's processes. Additionally,
in July 2019, the Department of the Interior published their Indian
Affairs Mortgage Handbook, which outlines the mortgaging lending
process when dealing with properties on trust land. The Handbook
provides important guidance to BIA staff for processing leasehold and
trust land mortgages on trust or restricted land; and specifically, how
to review and analyze a mortgage loan request from a lender using a
minimum, streamlined, and standardized process.
Following our training session and publication of the Indian
Affairs Mortgage Handbook, BIA processing times improved. For example,
BIA offices in several areas of the country improved their performance
in the issuance of final certified title status reports. Progress has
been made, and HUD and BIA will continue efforts to improve and
streamline the loan process on tribal lands.
Title VI
HUD's Title VI Loan Guarantee program is another critical resource
for tribal communities. This loan guarantee program allows a Tribe to
pledge a share of its annual Indian Housing Block Grant (IHBG)
allocation as collateral to attract private capital and other funding
resources to carry out affordable housing and community development
projects. By leveraging multiple sources of funding, Tribes can
significantly increase their purchasing power and develop large-scale
housing projects.
Some Tribes have used both of HUD's tribal loan programs to help
finance housing developments. For example, a Tribe can take out a Title
VI loan to develop affordable housing and on-site infrastructure. Then,
the Tribe can use the revenue generated from selling the home to a
tribal member--using a Section 184 loan--to repay the Title VI loan.
This allows the Tribe to start the process over again and continue to
increase its housing stock.
For example, in New Mexico, the San Felipe Pueblo Housing Authority
successfully used financing under the Title VI and the Section 184
programs to leverage many other sources of private and public funding
to build a 150-unit subdivision for tribal members. Not only did the
housing authority create much needed new housing, but in the process,
it also exponentially increased the size of its force account crew and
is now one of the largest employers on the reservation. Similarly, in
Alaska, the Cook Inlet Housing Authority was able to use this framework
to add 79 new housing units to its portfolio over the past six years--
including 13 units for low- to moderate-income residents.
Indian Housing Block Grant
Of course, the Indian Housing Block Grant program is also a
critical resource for low-income Native American families looking to
become homeowners.
IHBG is the single largest source of housing assistance to Native
Americans and can help Tribes support homeownership in creative ways.
For example, Tribes can use their annual block grants to provide
acquisition and down payment assistance to first-time homebuyers. Funds
can also be used to fund housing related services like housing
counseling, homebuyer education, and financial literacy. Additionally,
these funds can be leveraged with other funding sources, like Low-
Income Housing Tax Credits, to develop rental housing for low-income
Native American families and alleviate overcrowding.
Earlier this month, I had the pleasure of visiting the Pueblo of
Isleta to see firsthand all the great work the Isleta Pueblo Housing
Authority is doing under our programs. They are using these critical
IHBG dollars to construct new homes in culturally appropriate ways that
meet the unique needs of their community. For instance, they have built
a customized 5-bedroom home that can appropriately house extended
family members, are renovating homes for elders in the historic central
village using traditional adobe construction, and have even used
locally-sourced lava rock bricks to construct modern homes in their
efforts to address the shortage of housing.
As you can see, the flexibility of the IHBG program has proven to
be a significant tool in addressing the shortage of housing, helped
alleviate overcrowding, and furthered homeownership and self-
sufficiency in Indian Country.
Best Practices and Technical Assistance
Finally, HUD recognizes the importance of assisting Tribes and
TDHEs with increasing their capacity and technical expertise. This past
year, HUD hosted national best practice webinars highlighting tribal
projects that have leveraged IHBG funds with both Section 184 and Title
VI loans. The best practices include case studies that explore housing
development projects and financing methods in more detail. These well-
attended webinars generated additional interest in creative ways to
develop housing in Indian Country and fostered mentoring relationships
between Tribes and TDHEs.
HUD is also committed to exploring ways to use our technical
assistance funding to help Tribes and TDHEs enhance their development
efforts and to better leverage the assistance they receive through the
dissemination of successful tribal housing strategies.
Conclusion
In conclusion, HUD programs, such as Section 184, Title VI, and
IHBG, are successful examples of Federal programs that work to bring
the dream of homeownership to Native American communities. We are
excited about all the amazing work that has been done so far by Tribes
under these programs and look forward to continuing to find ways to
make homeownership and access to capital a reality for Tribes and
tribal members across the country.
Thank you again for this opportunity to appear before you today.
The Chairman. Thank you.
Governor Zuni.
STATEMENT OF HON. MAX ZUNI, GOVERNOR, PUEBLO OF ISLETA
Mr. Zuni. [Greeting in Native language.]
Thank you, Chairman Hoeven, Committee members and
especially, Senator Tom Udall. Thank you for having us today. I
really appreciate it.
I am Max Zuni, the Governor from the Pueblo of Isleta. It
is an honor and privilege to be here today to voice our
opinions, our issues, and our requests. Thank you so much for
having this testimony today.
I am the Governor from the Pueblo of Isleta. I have been
Lieutenant Governor for eight years. This is my first term. It
will be nine years that I have been in office. My whole goal in
this kind of administration is, of course, for our younger
people. We have close to 5,000 tribal members. We are located
in the biggest city in New Mexico, which is Albuquerque. We are
ten miles south, right in the Rio Grande Valley.
We have over 300,000 acres of land that we have to
maintain. Our community is very large. We have several
communities within the Pueblo.
Our housing, as the Honorable Mr. Kurtz said, is working
very hard building homes for our community members through the
HUD program. We formed the CDFI about six years ago and we are
just learning how to run that program. It is very effective. We
have over almost 80 members in that group now with beautiful
homes. They are very proud of what they are building.
We, of course, have a lot of young tribal members. We
encourage them to get educated, to go to college, to get a
career, and to get a good job. Our problem is that when they do
get that and they get low income, they can't qualify for some
of the home projects. They can't qualify for some of the
scholarships. They can't qualify for some of the school systems
and programs that we have. It is a deterrent for our younger
people to be told that you make a high income and you can't
qualify for things. Luckily, with the CDFI program we have,
they can come and get help to have a new home.
We encourage a lot of the tribal members in other pueblos
and other tribes to look into these programs. It works. It
helps our community. They do have their own design of what
buildings they want. They find their own contractors.
Of course, the problem we have is the stipulations that are
out there. We are considered in a flood plain, so now they
can't be supported with some of these projects. It would be
nice for them to talk to us to make sure we are not in those
kinds of situations.
The process that takes two years to get this leasing
agreement through BIA, we took over that project now, but it is
costly for the tribes. They have to hire people, specialized
people. Right now, we have to get a biologist, we have to get a
computer service, we have to get the software, so the tribes
have to know, once we take over that responsibility, what the
cost is going to be to us.
The HEARTH Act, which is really great, thank you for having
it, but of course, that is because of the flood plain issues
and the funding source. As they stated when we first requested
it, we got close to a little over $1 million, which really
helped us in the formulation of the CDFI. The tribe recently
donated a little over $3 million to help that program.
But we have a waiting list of 130 people. We now have
plans, and I know you have seen it, we have plans to build
another 132 homes. It is not just for tribal members. You have
to understand. The majority of our people at home are married
to non-tribal members, they have young kids that are living
there. So we support a lot of our communities within the
Bernalillo County and Valencia County, that one of the largest
counties in the State of New Mexico. So we help a lot of
community members.
We do have a casino and resort that provides funding that
supports programs within the tribe. They do contribute a
little. Right now I am working on a revitalization program that
the tribe has offered to do homes within the village proper,
but of course, I can't get funding for it, Federal funding. I
am hoping that we can get that.
The problem, again, is some of our tribal members, when
they do have a home built, they can't qualify for a second home
within the village proper. Traditionally, we have to have some
of our tribal members living within the village proper to
revitalize our pueblo. We hope one of these days we can really
generate funding to revitalize our pueblos to come back from
having old homes and renovate them so our community members can
live within the pueblo property.
The programs are great. I really enjoy all the programs. I
enjoy BIA and the assistance they give me. I talk to them
constantly. But there are certain things within these policies
that I wish we could really change to help us to expedite some
of these lease agreements, to expedite some of these contracts
that we have. It takes almost two years to get some of these
things to go through BIA. Luckily with our CDFI, within two or
three months, they are done. Our community members are happy
that they can get a home built within a year.
I am proud because my youngest daughter just went through
that, and she has a beautiful home now. She is a really good
example of how that CDFI works, the loan program. She went to
the classes; she was taught how to budget her money. She had to
get certified and now she is very consistent in her payments
and everything. So they are good classes.
That, and we have classes for the youth of the elementary
school, high school and the colleges. They go to a symposium
for two days learning about credit. That is how Tiwa Lending
runs that program.
I wish a lot of the tribes and communities, not only for
the Native Americans but for all the high school kids and the
college kids, to go to those kinds of symposiums to learn about
how to run their credit and how to manage their funds, and when
they decide to buy a home, how to manage it. Our kids are so
excited after they finish that. They learn how to budget their
money and they don't get in debt.
So I appreciate it. I thank you so much for having this
today. I hope we can work things out. I applaud all of you for
being here today. Thank you, Senators, for giving us this time
to express our opinions, and our concerns, and our issues. I
hope we can remedy them.
Each and every one of you are always, always invited to the
Pueblo of Isleta, to tour it. We are trying as hard as we can
to have a good community. Thank you so much.
[The prepared statement of Mr. Zuni follows:]
Prepared Statement of Hon. Max Zuni, Governor, Pueblo of Isleta
Dear Honorable Chairman Hoeven and Members of the Committee:
Introduction
Ma Gu Warn. Greetings. My name is Max Zuni. I am the Governor of
the Pueblo of Isleta. The Pueblo of Isleta is one of nineteen (19)
Pueblos in New Mexico and one of twenty two (22) tribes in New Mexico.
The Tiwa language, the language spoken by the Pueblos of Isleta,
Sandia, Taos, and Picuris, is still spoken in the Pueblo and we
continue to live according to the centuries old traditions of our
ancestors. The livelihood of many Isleta residents continues to be
farming, ranching, and sale of arts and crafts and traditional foods.
Isleta Pueblo is surrounded by Albuquerque to the north and the
small towns of Bosque Farms and Los Lunas to the south. The Isleta
Indian Reservation has a land base of 330 square miles within two
counties, Valencia and Bernalillo. Isleta Reservation lands consist
primarily of tribal trust lands. Isleta residents live on both the
western and eastern banks of the Rio Grande River. The village, located
on the western bank of the Rio Grande River, remains the cultural and
spiritual center of the Isleta people and continues to be inhabited by
a large portion of the Pueblo's members. A large portion of Isleta's
residential areas are in flood zones as mapped by the Federal Emergency
Management Agency (FEMA). As discussed below, this has created a major
challenge in housing and community development.
Demographics of Isleta Pueblo
According to the 2017 U.S. Census data 3,980 people live in Isleta.
\1\ Isleta Census data shows our population as 4,200. Using U.S. Census
data, 3,738 of Isleta residents (or 93 percent) are American Indian or
Alaska Native (AlAN). Those that aren't AlAN are family members. There
are 1,083 households in lsleta.1 According to U.S. Department of
Housing and Urban Development (HUD) 2019 data, there are 579 low income
households (more than half of all households) in Isleta Pueblo that
need housing. This means that more than half of all households live in
overcrowded conditions.
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\1\ Home Town Locator of the Isleta Pueblo, 2019 Demographic Data.
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A large factor of overcrowded conditions is the lack of sufficient
income for housing. In fact, AIANs living in Isleta Pueblo experience
higher unemployment rates, lower income, higher poverty rates, and
other disparities compared to the overall U.S. and compared to non-
Native residents of New Mexico. Using HUD data, \2\ 634 or 51 percent
of Isleta's households are low income, with 21 percent falling below 30
percent of the median income. A study conducted in 2012 of New Mexico
Native American children report that 28 percent of Isleta children live
below the poverty level. \3\ In the Pueblo, the individual poverty rate
is 25.3 percent, compared to the individual poverty rate of 19.8
percent in New Mexico and the 12.3 percent individual poverty rate of
the U.S. in total. \4\
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\2\ HUD FY 2019 IHBG Estimate Allocation.
\3\ Native American KIDS COUNT 2012 Special Report, Snapshots from
the American Community Survey and other Data Sources.
\4\ 2017 ACS data.
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Isleta Pueblo families generate less income than other families in
New Mexico and the U.S. According to the 2017 American Community Survey
(ACS), the median household income in Isleta is $32,131, compared to
the state median household income of $45,674 and the U.S. median
household income of $55,322. Forty eight percent (48%) offamilies in
Isleta have a single income earner, while 20 percent of families have
no wage earner. \5\ Residents of Isleta Pueblo experience higher
unemployment compared to Native peoples off-reservation, who face
disproportionate unemployment themselves. Isleta has an unemployment
rate of 8.3 percent, more than the 6.7 percent unemployment rate for
New Mexico and the 6.6 percent unemployment rate for the United States.
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\5\ 2017 ACS data.
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For the past 16 years, the Pueblo of Isleta has provided annual per
capita payments to tribal members of anywhere between $1,000 and
$2,000. These funds are for the most part immediately spent on
disposable items. Per capita payments to minors age 18 and under are
disbursed to parents or guardians. Before the creation of Tiwa, there
was no financial education available to residents, including the youth
of the Pueblo, who could potentially have a savings of $36,000 in
principal by the time they are 18 years of age. While there is no data
available, the most likely scenario is that most children's funds are
used for disposable goods and little investment of children's funds.
While there are employment opportunities in the Pueblo, young
families with small children are unable to join the workforce for lack
of sufficient child care. Isleta's largest employers are the Isleta
Pueblo government and the Casino and Resort which manages the casino
and resort, the Lakes and RV Park, two gas stations, the Golf Course
and the Family Fun Center. Even with these employment opportunities,
many of these jobs pay at starting or close to starting wages.
Consequently, many families live paycheck to paycheck, spending a large
part of their income on rent, propane, vehicle payments, vehicle
maintenance, gasoline, groceries and disposable goods.
The Creation of Tiwa Lending Services, Inc. (Tiwa)
To address the above and to take the driver's seat to spur economic
development, Tiwa was created by the joint efforts of the Pueblo of
Isleta, the Isleta Pueblo Housing Authority (IPHA) and the Community
Development Financial Institutions (CDFI) Fund of the U.S. Department
of the Treasury. Tiwa's mission statement has always been to encourage
community development and improve the social and economic conditions of
Isleta Pueblo residents and Native Americans in surrounding
communities.
The effort began in 2009 when the Pueblo and IPHA sent
representative to a Native CDFI training funded by the CDFI Fund. It
was through this training, technical assistance provided by Oweesta,
another Native CDFI, and technical assistance funds from the CDFI Fund,
that Tiwa was created.
Tiwa was established as a not-for-profit Native CDFI on January 6,
2011 and received its 501 (c)(3) status on January 6, 2011. It was
certified as a Native CDFI on September 17, 2013. Tiwa operates from a
small 2- room tribal office located in the same building as the
Governor's office. Operating under a 5-member Board of Directors and a
staff of two (Sheila Herrera, Executive Director, and Miranda Lente,
Loan Assistant/Homeownership Counselor), Tiwa has in its 8 years of
operation accrued a mortgage portfolio of 78 loans totaling $7.4
million. Additionally, Tiwa has originated $1,209,864.00 in consumer
loans, including credit repair loans, personal loans, education loans,
business loans, and debt consolidation loans, and has provided credit
counseling to 885 Isleta tribal members and Native American youth. Tiwa
works closely with its borrowers.
Tiwa's home loan portfolio and consumer loans have a less than 1
percent delinquent status. Additionally, Tiwa provides Financial
Literacy and Education classes. To date, 2661sleta residents have
received financial literacy certificates. Tiwa also sponsors youth
financial education conferences and is a Voluntary Income Tax
Assistance (VITA) site.
Lending and Financial Services in Isleta Pueblo
Lack of credit and lack of financial sophistication present
barriers to obtaining fair financing to meet the housing and economic
needs of the Isleta community. Other than Tiwa, there are no banking or
lending services in Isleta. Prior to Tiwa, most borrowing took place
among family members and payday lenders located outside the
reservation. The presence of Tiwa and the ability of residents to take
out consumer loans have resulted in a decreased use of residents using
payday lenders located in the surrounding communities. An estimated 10
percent of applicants for home loans reveal that they use pay day
lenders to repay other debts. Banks in the surrounding communities do
not provide financial access to those with lower income and impaired
credit. Nor do they provide financial education. The majority of Isleta
Pueblo residents are first and second generation wage earners.
Purchasing is largely done with cash. The primary use of financial
services by Isleta residents and other Native Americans in the
surrounding communities are for check cashing services, car loans, and
farm equipment loans. Applicants for home loans state that they are
turned down by other financial institutions due to lack of a down
payment and/or poor credit history. These factors contribute to the
reasons why Isleta residents are not able to obtain services from
financial institutions.
Unique Benefits Provided by Tiwa:
Tiwa's products and services meet a double bottom line by providing
social returns to its borrowers and financial returns to TIWA by having
the following unique features:
All of Tiwa's lending products have flexible underwriting
criteria. Applicants are not required to have credit history.
Home loans, including loans for rehabilitation, have a maximum
loan to value ratio of 100 percent. Mortgage loans do not
require a down payment. Home loans have low interest rates
equal to the 30 year Treasury bond rate (2.12 percent as of
October 3, 2019) plus 1.375, lower than rates offered by other
financial institutions. Closing costs and origination fees can
be financed in the loan amount. Although financial institutions
in Albuquerque provide home loans to some tribal members, the
loans are limited to borrowers who have good credit and down
payment funds. These loans have higher interest rates than
Tiwa's loans.
2) Tiwa provides homeownership and financial education and
small business workshops, changing the lives of future
generations and the economic picture in Isleta. Here is a story
of one such family:
Carrie (not her real name), a member of the Isleta Pueblo,
improved her credit score by 87 points in less than two years
with the help of Tiwa. As a teen parent, Carrie didn't realize
the impact that her credit score could have on her life and her
ability to access credit. Now, as a mother of five children and
the only working member of her household, she sought a loan
from Tiwa for extra help during the holidays and was provided
with the credit counseling and education that would allow her
to create a positive payment history and rebuild her credit.
Not only did Carrie learn how to take action to positively
impact her score, she has started educating her children on the
importance of credit scores. Without the loan and counseling
from Tiwa, Carrie says she wouldn't be where she is today.
3) Tiwa requires all borrowers to either take a financial
education class that Tiwa teaches or one on one counselling
with Tiwa.
4) Tiwa collaborates with the Isleta Pueblo Housing Authority
(IPHA), the Pueblos's Tribally Designated Housing Entity, and
Pueblo of Isleta departments, such as the Social Services
Department, the Library, the Elderly Center, and the
Scholarship Office, to market its financial products and
development services. Additionally, Tiwa publishes its products
and services in the Isleta Pueblo newsletter and posts its
publications at public places in Isleta--the post office, the
Recreation Center, the Elderly Center, the IPHA Office, and the
Governor's Office. Tiwa has a website, www.tiwalending.org,
where it posts its products and upcoming homeownership
financial education workshops. To reach Native Americans in the
surrounding communities, it posts announcements at post offices
and court houses.
5) Tiwa knows its borrowers and works with them closely to
ensure they remain successful borrowers. For example, Tiwa
contacts delinquent borrowers by telephone to find out their
situation and work with them to resolve the delinquency while
the delinquency is still manageable. In a pre-foreclosure
situation, Tiwa worked closely with the family and the Pueblo
of Isleta to identify a family member who could assume the
loan. Most recently, Tiwa is working with the family of a
deceased borrower to identify a qualified family member who can
assume the loan.
Tribal Support of Tiwa
Isleta Pueblo is a gaming tribe. I tell you this so you will know
how gaming has finally brought us some of the community and economic
development benefits already enjoyed by the rest of America. Our
leaders have always known that a balancing ofthe old and the new is the
best way to live in dual worlds. We want our children to continue to
talk the Tiwa language and practice the Pueblo traditions while
obtaining the education necessary to have what the rest of America has,
a safe home and a secure future. It is with this mindset that the
Pueblo expends its gaming revenues on economic and community
development and has a land policy that allows for the free transfer of
tribal trust lands among tribal members and leasehold mortgaging for
housing development.
The Pueblo provides capital to Tiwa. By providing capital to Tiwa
to assist families become selfsufficient, the Pueblo is able to support
housing, community, and economic development on the Pueblo.
By having a land policy that allows for the free transfer of tribal
trust lands among tribal members, and mortgaging of land interests, and
removing cumbersome processes for leasing and mortgaging inherent in
traditional lending, the Pueblo is able to ensure that families have
access to financial and homeownership opportunities. As you might know,
tribal trust lands are unalienable. They can only be transferred among
tribal members. We feel we are unique as Pueblos in our policy of
making tribal trust lands freely alienable among tribal members. This
policy has allowed tribal members to use their land assignments and
residential leases as collateral not only for purposes of building a
home but to allow tribal members to obtain tribal land by purchase and
to borrow money for business purposes and to build their credit. In our
Pueblo, tribal members are able to not only mortgage their residential
lease, but also to use their land assignments as collateral for a loan.
Funding Available to Tiwa
Tiwa receives financial support from the U.S. Department of
Treasury Native American CDFI Assistance Program (NACA Program), an
annual competitive funding process; the Pueblo of Isleta; and loans
from other non-profits. It recently borrowed money from Oweesta,
another Native CDFI. Capital also comes from the revenue from the loan
portfolios. Like other Native CDFis, Tiwa's primary challenge is lack
of funding to meet the lending needs of its community, and consistently
seeks funds. For example, Tiwa has a waiting list of 29 tribal members
that desire to obtain a home loan. The NACA Funds are available on a
competitive basis, and while the application process is cumbersome and
requires grant writing experience, this funding is vital to Tiwa's
economic development initiatives.
However, the NACA Funds are insufficient for all Native CDFis
competing for the funds. As of 2018, there were 73 certified Native
CDFis, with many other working towards becoming certified. Thirty-Eight
Native CDFis, including Tiwa, benefited from the $15.3 million in
grants in FY 2018. While Tiwa applied for funding in the 2019 fund ing
round, funding awards have not yet been posted. In 2019, Wells Fargo
provided $100,000 to Tiwa for down payment assistance. Unfortunately,
Tiwa was unable to provide this funding to potential borrowers for lack
of loan funds to lend and was only able to utilize 20 percent of the
funds before the Wells Fargo timeline of one year.
Increased funding for the NACA CDFI Fund, who make such a big
economic impact in tribal communities, is vital to economic growth on
Indian reservations.
Other Major Challenges
In addition to lack of sufficient funding to lend, Tiwa faces two
other major challenges that it has been working to address, with the
assistance of the Pueblo.
1. The inability to use federal funds on flood plains.
The inability to use federal funds as down payment assistance on
flood plains means that the Isleta Pueblo Housing Authority can't
provide down payment assistance to TIWA lenders using federal funds.
Both HUD Indian Housing Block Grant (IHBG) and Indian Community
Development Block Grant (ICDBG) funds may be used as down payment
assistance. Like many other Pueblos, the River Grande river runs
through tribal lands. Sometime around 2010, without consent of the
Pueblo, FEMA aerially flood mapped Pueblo lands and published a large
part of Isleta's residential areas, including areas with HUD-assisted
homes, as being in special flood hazard areas (SFHA), also referred to
as floodplains. The Federal Flood Disaster Protection Act of 1973 \6\
(the ``Act'') prohibits the use of federal funds, including IHBG and
ICDBG, on floodplains unless a community or tribe participates in the
National Flood Insurance Program (NFIP) and purchases flood insurance.
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\6\ 42 U.S.C. 4106(a).
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While other tribes have had their lands flood mapped, it has been
with their written consent, and they have been given the option of
publishing the flood maps. In response to why Isleta was not given this
option, the FEMA response has been that after the Isleta experience,
tribes were given the publication option.
Flood insurance is expensive. The inability of low income borrowers
to use federal funds as down payment assistance for the rehabilitation
of homes on floodplains, many which are in substandard and dilapidated
condition, makes it prohibitive to qualify for a loan. Further, the
flood mapping in Isleta was done without detailed studies to determine
Base Flood Elevations (BFEs), which are necessary to obtain certified
elevations for insurance. Obtaining flood insurance will require a
borrower to engage a surveyor to conduct detailed studies to determine
BFEs.
Even if a tribe mitigates flood risks, the Act prohibits the use of
federal funds on homes on floodplains unless a tribe joins the NFIP. A
community (including a tribe) that participates in the NFIP is required
to adopt flood standards on floodplains as established by the NFIP and
enforce these standards. Adopting an approved NFIP flood ordinance is a
burdensome and costly process that requires a tribe to hire a certified
flood plain manager, develop and enforce flood standards, require
certified elevations when building or rehabilitating on floodplains,
and maintain tribal records on all new home construction and
rehabilitation. Few tribes participate in the NFIP likely due to the
administrative, technical, and financial burdens imposed by the NFIP.
States are granted an exemption from the Act's requirement that a
community join the NFIP before using federal funds on floodplains. \7\
The state exemption applies to federal affordable housing funds
provided to states, including HOME funds and CDBG funds, and HUD
regulations at 24 CFR 58.6(a)(3)--the HUD environmental regulations,
and 24 CFR Part 55.1 (b)(1)--the HUD floodplain management regulations,
implement this federal exemption. The Native American Housing
Assistance and Self-Determination Act of 1996 (NAHASDA) Reauthorization
Bill contains a provision that would give tribes the same exemption
already enjoyed by states, and allow tribes to use IHBG and other
federal affordable housing funds on floodplains utilizing a tribe's
mitigation plan, without requiring a tribe to join the NFIP. This
provision will allow tribes and their Tribally Designated Housing
Entities to provide down payment assistance funds to low income
borrowers for home construction or rehabilitation. We ask for your
support of the NAHASDA Reauthorization bill. The Pueblo of Isleta is
working on developing a flood assessment and flood mitigation plan.
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\7\ See 42 U.S.C. 4003(a)(3).
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2. Federal land laws and policies applicable to tribal trust lands.
Federal land laws, found at 25 USC 81 and 25 CFR 162, restrict the
ability of tribes to encumber land without approval of the Bureau of
Indian Affairs (BIAL and is the biggest challenge to lending on tribal
trust lands. Mortgaging land obviously encumbers land. As you may have
heard from other tribes, the BIA lease and mortgage approval and
recording process is lengthy and cumbersome. Prior to approving a
lease, BIA first conducts a title status report (TSR). Then, it reviews
and approves a lease already approved by the tribe. Then, before
approving a mortgage, if too much time has occurred since approving the
lease, it conducts another TSR. Then it reviews and approves the
mortgage. Both the lease and mortgage then get routed to the Office of
Land, Titles and Records (OLTR) for recording, most of the time in two
separate processes. Each step in the process can take months, and the
entire process can take more than a year. For example, Tiwa has waited
12 months for a TSR, 12 months for BIA approval of a lease or mortgage,
and 24 plus months before receiving the recorded lease and mortgage
from BIA.
The time it takes to close a loan on Indian trust lands deters many
lenders. To shorten the timelines, Isleta, along with Acoma and Zuni,
worked closely with Senator Heinrich to enact HEARTH in 2012. HEARTH,
which means Helping Expedite and Advance Responsible Homeownership, is
the federal law that allows tribes to enact leasing laws and approve
specific types of land leases, including residential leases, without
further approval by BIA. While HEARTH is an expensive law for tribes to
implement due to a tribe taking on BIA's role of reviewing and
enforcing leases and mortgages, preparing surveys, and conducting
environmental reviews, and the reason why it took Isleta Pueblo so long
to enact, it improves the timeline for closing on loans, making lending
more attractive on tribal trust lands.
BIA approved Isleta's leasing law in April 2019. Isleta is in the
process of planning the implementation of this law, which will require
funding to hire a leasing officer and contract with surveyors and
environmental review firms to conduct environmental reviews. Once
implemented, Tiwa anticipates that the time for closing on leasehold
mortgages will be cut by more than half. The ability to bypass the
lengthy BIA review and approval process will allow Tiwa and other
lenders to close on mortgages within weeks versus months.
However, HEARTH doesn't address the TSR process which must still be
conducted by BIA. Neither the Pueblo nor Tiwa have yet tackled this
difficult issue. What we have learned from talking with other tribes is
that while some tribes have taken on recording as a function, it is an
expensive endeavor and one which requires an expensive database
compatible with the BIA titling system. While we have discussed the
ability ofthe BIA titling system to become privatized, we realize that
this is a discussion that must involve BIA. We ask for your support in
helping tribes find a solution to this issue.
Thank you for your time in listening to this testimony.
*The photos attached with this prepared statement have been
retained in the Committee files.*
The Chairman. Thank you.
Councilman Mount.
STATEMENT OF HON. NATHANIEL ``NATE'' MOUNT, COUNCIL MEMBER, FT.
BELKNAP INDIAN COMMUNITY
Mr. Mount. Good afternoon, Mr. Chairman and members of the
Committee.
[Greeting in Native language.]
My name is Nathaniel Mount. I am the River Assiniboine
District representative on the Ft. Belknap Indian Community
Council. I am very proud and pleased to be here today speaking
on behalf of my people, the Aaniiih and Nakoda.
My father, Harlan Mount, is here with me, as Senator Tester
said. He is our current housing director and is one of our past
tribal chairmen. I am very pleased to be with him today.
Historically, our reservation has suffered from 70 to 85
percent unemployment, with a median income of $12,000 or less.
Tribal members typically live with up to three generations in a
single home. It is not uncommon to see 13 to 18 people in a
single unit.
In fact, our last HUD-built homes were constructed over 25
years ago, in June of 1994. Our tribal housing list has more
than 150 families waiting. The waiting time is about three and
a half years average.
I myself am an example of this homeownership hopelessness.
After returning from law school, I rented a place. After my
rental agreement ended, I had to go live with my parents. I had
to move in with my parents, because I could not find any
housing. There is no housing on our reservation. There is
nowhere to rent. There is nowhere to live.
Even for those that want to buy their own home, there is no
private housing market. The Ft. Belknap BIA processes only a
single digit number of residential leases each year. Between
the BIA's cumbersome title status report and the lengthy HUD
184 process, it took one of our tribal members nearly two years
to complete their private mortgage. He is the CEO of our tribal
corporation and he has submitted written testimony for himself
of his personal experience.
The delays are often so long that either borrower or the
bank usually just gives up. Simply put, we have nowhere to
live.
About ten years ago, our council created an economic
development arm, the Island Mountain Development Group. We
finally started to see a little bit of economic growth. Through
its successful e-commerce company, Island Mountain has
diversified and now employs more than 200 tribal members
locally. Through Island Mountain, we have reduced our TANF
clients by over 50 percent. In the south end of our
reservation, we have reduced our unemployment by 50 percent. We
have created a steady stream of governmental revenue.
However, without a private housing market, our positive
economic growth has hit a substantial barrier. With
improvements in our economy, we have created an emerging middle
class. However, they are trapped in poor housing.
We struggle with bringing any more employees or bringing
home tribal members after they have achieved their higher
education. We literally have no place for them to live on the
reservation. When we surveyed our Island Mountain employees
about what they needed to make their lives better, the number
one answer was access to housing.
In August, our tribe passed our HEARTH Act regulations. We
were told that the review would occur within the 120-day
timeframe. However, since then, our council has been redirected
to at least five different DOI employees, because the
designated point person of the DOI left three years ago. The
Department of the Interior needs a HEARTH Act residential
leasing czar, a one-stop, streamlined process. We are concerned
because the DOI has a backlog of 26 sets of HEARTH regulations.
We also applaud HUD's efforts to increase their staffing
for 184 loan processing. We understand that they currently
process between 3,000 and 4,000 loans annually with only four
staff. Additional staff and automation should help the backlog
of 184 loan guarantees.
At our local BIA office, there is not a single residential
leasing staffer. The realty office is short four staff. Offices
responsible for facilitating tribal housing markets must be
fully staffed.
In addition, the Senate Appropriations Committee recently
passed language encouraging the DOI to digitize our land
records, specifically Ft. Belknap. We need Indian Affairs to
provide oversight and to promote appropriations. Without
accurate and digital records, the private mortgage marketplace
will remain unavailable for Native Americans that live in their
homeland. We need access to TAAMS. We don't have access
currently to TAAMS. Our tribal land department has spent over
$25,000 on mirror software to try to recreate for ourselves the
information available on TAAMS but because the systems do not
communicate, our information is spotty, at best.
Also, we propose the creation of a priority deployment
mechanism. This will help expedite homeownership and financing.
It allows tribes to designate priority housing areas which
would then become first in line for records digitization and
additional staffing.
We also propose to clarify that which we already believe is
the case, that mortgage guarantees are categorically excluded
from Federal environmental review. This is something that is
already allowed under existing HUD regulations. We provide this
language and more in my written testimony.
In conclusion, we are working very hard to push this
boulder up the mountain for ourselves, to pull ourselves up by
our bootstraps. But most of our housing and land processes are
wholly or significantly controlled by the Federal Government.
If Congress is not willing to address the real issue, to
fully recognize our governmental sovereignty and restore full
and complete tribal jurisdiction within our boundaries, then
Congress must provide the resources for the outdated and
inefficient system that it leaves us to live and work within.
We commend HUD, the DOI, and BIA for their testimonies and
solutions. We are willing to work with and be a pilot for any
projects that might help expedite the process.
Thank you for listening to some of the things we believe
would help improve access to homeownership on Ft. Belknap. I
look forward to the other panelists and to your questions.
Thank you.
[The prepared statement of Mr. Mount follows:]
Prepared Statement of Hon. Nathaniel ``Nate'' Mount, Council Member,
Ft. Belknap Indian Community
Good afternoon, Mr. Chairman and members of the Committee. My name
is Nate Mount. I am the River Assiniboine representative on the Fort
Belknap Indian Community Council. I am pleased to be here today
speaking for our Gros Ventre and Assiniboine Tribe, our Aaniiih and
Nakoda people. I want to tell you about the home ownership challenges
we face on our vast rural north central Montana reservation, as well as
about some of things the Fort Belknap Indian Community has been doing
to try to solve these challenges for ourselves.
First, I am going to provide some context. I was born and raised on
our Reservation.
My father, Harlan Mount, our Tribal Housing Director, is here with
me today. My father served as President of our Tribal Council and has
previously come here to Washington to testify in that capacity. I grew
up watching him serve our people and am honored to be here with him
today, to try to continue to do the same.
Interestingly it was almost exactly 75 years ago that several of
our tribal leaders testified in a hearing to a Special Investigating
Committee for the House Committee on Indian Affairs, about many of the
same issues we are still testifying to today and Congress has still not
fully addressed.
The Ft Belknap Indian Reservation & Our Housing Crisis
Historically, our Reservation has suffered from high unemployment.
Indeed, until recently, our Reservation unemployment rate hovered at 70
percent, and about 85 percent on the southern end of our Reservation.
Fort Belknap also has little, if any, natural resources to develop such
as oil and gas or timber. The Fort Belknap Reservation is very remote
and economic development is difficult. We are not near a major
population center that would support a significant gaming enterprise.
We are 200 miles from the nearest airport.
We do have some modest agricultural and ranching enterprises, such
as our buffalo herds, but our geographic isolation and distance from
any significant shipping opportunity (such as air or rail) makes any
production activities more than challenging. For years, aside from the
small number of Tribal and federal jobs available working in government
services, our people have relied on seasonal firefighting work or day-
laborer wages at area ranches. We have many members who still practice
subsistence lifestyles. The median income is less than $12,000 per year
according to recent statistics.
The Fort Belknap Indian Community has more than 8,000 enrolled
members, a little less than half of whom live on or near the Fort
Belknap Reservation. For those of us who live on-Reservation, we
typically live in multi-generational housing, with two and three
generations living in two- or threebedroom homes. It is common to have
13-18 people resident in a single home. This means our children often
sleep on floors, in places they should not be. Our housing list is
presently more than 150 families-long. According to our tribal housing
director, the average wait-time on our housing waitlist is 3.4 years.
For two-bedroom units, the wait is over four years. The housing units
we do have are generally dilapidated. There has been little to no new
housing construction for twenty-five years. There is no private housing
market at Fort Belknap. The Fort Belknap BIA agency processes only a
single-digit number of residential leases each year and even when a
lease is issued, a home may not be built there for a wide variety of
reasons such as lack of infrastructure, access, surveys, certified
title and simultaneously given the near-total lack of any private
conventional mortgage options available on-Reservation, despite the
ostensible carrot of the HUD Section 184 loan guaranty program. Simply
put, we have nowhere to live.
I myself am an example of the hopelessness our people feel
regarding housing. When I returned to the Reservation following law
school, I added my name to the housing waitlist. But after years of no
movement, and my knowledge that our Tribes had already exceeded the
ten-percent threshold of housing participants who can be at 80-100
percent of median income, I abandoned my effort and took my name off
our housing list.
History of the Federally-Funded Housing Failures
How did we get to this crisis point? We have long suffered from
inattention. In 1970, a handful of low-rent units were built, followed
by a few additional units per year until 1995. The housing units that
were built in that timeframe suffer from poor insulation and other
structural deficiencies and have been susceptible to significant mold
problems. The last homes built with HUD funding were completed 25 years
ago, in June 1994.
Past Failures with Using Tax Credits to Build Housing
In 2000, Fort Belknap Housing Authority was dissolved and the Fort
Belknap Indian Community Council became the Board of Directors. Since
then, the Council has become directly responsible for housing.
Since then, we have had three tax credit home projects. These
included relocating about a dozen modular airbase homes from North
Dakota. These homes were attended by structural, financial and
political issues and sadly haven never been habitable.
In the early 2000s, Housing had a down payment assistance program
where eligible home buyers applied for and could receive $25,000. There
were a number of Tribal members selling their homes, and the buyers
utilized this. In 2004, the assistance was used to purchase homes off
of our Reservation.
In 2005, the council applied for and was approved for a tax credit
project to rehab 49 Housing units. The rehab started in March of 2006.
But our Community struggled to understand the federal tax credit laws,
resulting in a number of renters being ineligible, causing a few
homeless members.
In 2006, the Council took action to apply for approximately 25 tax
credit modular homes. The buildercontractor was a company from New
Mexico, while the units were built somewhere around Denver. This
project had a number of structural concerns that had to be corrected
right after delivery and setup. This caused a number of penalties that
included the developer's fee of well over a million dollars, plus
additional penalties.
Unsuccessful BIA Residential Leasing Program
Options through the BIA are little better. At the Agency level,
when the local BIA employees receive a residential leasing application
package, they work through a checklist of items including verifying a
correct tribal resolution, legal description, survey (if applicable),
encumbrances and/or leases, contact with any existing lessor that has a
land contract/lease for relinquishment of a particular site on trust
land for residential purposes, and other items in the nine-page local
BIA checklist.
At Fort Belknap, the BIA processes only a single-digit number of
residential leases per year. Even when they obtain BIA residential
leases, many Tribal members abandon efforts to place a home on that
land due to their inability to secure financing.
It can easily take two years for a mortgage leasehold to be
completed and finalized, from initial request to the tribal council and
through the entire process with a final recording at the BIA Land,
Titles and Records Office (``LTRO''). The size of land, number of
encumbrances (such as rights of way and service agreements), multiple
uses of land (such as part of a range unit, agricultural lease, etc.),
and other issues increase the review time to certify a particular tract
of trust land is available for residential leasing purposes. This
unreasonably long time causes many Tribal members (and their mortgage
lenders) to abandon the process of seeking a mortgage leasehold and a
Section 184 mortgage guaranty.
Despite these desperate attempts by our Tribal Council to bring
housing solutions to our people, we have been unable to do so, yet. We
lack the most basic dignity of home ownership and safe, secure shelter
for our families.
The Improving Ft. Belknap Economy--Island Mountain Development Group
But in the last ten years, our Tribal economic arm, Island Mountain
Development Group, has brought an incredible ray of hope to our
Community, creating, managing and operating e-commerce businesses,
realty and agriculture opportunities, a technology company, a
construction company and is now moving into government contracting.
Island Mountain now has more than 200 employees, nearly all of whom are
Tribal members and most of whom work in our state-of-the-art customer
contact center on the southern end of our Reservation. Our Tribal
citizens have grown up in largely subsistence households, meaning they
hunted or grew their own food. Until two years ago, the only store on
our entire Reservation was a gas station convenience store, with no
fresh food. The closest significant grocery store was 80 miles away.
Many tribal members do not have vehicles. There is very limited public
transportation (one bus per day going to the nearest grocery store).
The Tribal government is the largest employer, followed by the federal
government, and those jobs are 30 miles away from the poorest end of
the Reservation, where Island Mountain now operates.
Island Mountain has reduced the unemployment rate on our
Reservation by more than 50 percent, created a steady stream of
governmental revenue the Council has been able to use an emergency
back-stop for government programs-such as summer service and funding
our anti-meth initiative. Additionally, is Island Mountain's support in
standing up a new Tribal store and healthy food cooperative with a
orchard, greenhouses, and a professional kitchen where Tribal members
can preserve foods they grow or purchase and also learn diabetic
cooking techniques.
Emerging Middle Class
For purposes of this hearing, I am sharing this background about
Island Mountain because through their innovation, we have an emerging
middle class at Fort Belknap. Island Mountain employees have a base
salary $7/hour higher than the average Montana base salary.
The salaries and wages made possible by Island Mountain have made a
world of positive difference in the lives of these extended families.
Our estimates are that each one Island Mountain job at the call center
supports nine Tribal citizens. That means well more than 1,000 people
that are not looking to the Tribal and federal governments for
assistance-they are self-sufficient. They are financially literate.
They understand credit. They have been able to purchase automobiles and
clothe and feed their families, as well as assist grandmothers with
utility bills and support nieces and nephews and the like.
But when we survey our Island Mountain employees about what they
need to make their lives better, the number one answer is access to
housing, access to home ownership opportunities. While they are a
tremendous example of resilience, of what we can achieve for ourselves
when we pull ourselves up by our bootstraps, this most basic dignity of
having a home eludes them.
New Positive Steps Tribe Is Taking to Create Housing
The Fort Belknap Indian Community Council understands that housing
is at the center of community well-being, and is utilizing all
available tools to solve our housing crisis for ourselves.
Tribal Residential Leasing Act Under HEARTH Act. On August 5, 2019,
our Council enacted the Fort Belknap Indian Community Residential
Leasing Act, seeking to take advantage of the 2012 Helping Expedite and
Advance Responsible Tribal Homeownership (HEARTH) Act amendments to the
Indian Long-Term Leasing Act. As you know, the HEARTH Act provides
authority for Indian tribes to lease tribal trust lands directly
pursuant to tribal law, without further Secretarial approval. The
HEARTH Act is a valuable tool that: (1) empowers tribes to realize
their potential for economic growth and job creation on tribal lands,
(2) increases community development, and (3) strengthen tribal self-
determination.
Our Residential Leasing Act provides our Tribal entities another
tool with which to partner effectively and increase efficiencies in
residential leasing by removing impediments and delays attendant to the
current BIA leasing process. Our Residential Leasing Act would move
critical functions from the BIA to the Land Department and other Tribal
entities as contemplated in the HEARTH Act.
Our Council chose to narrowly focus on only residential leasing in
our HEARTH regulations in order to try to expedite the Department of
the Interior's review and approval. We have also undertaken significant
intra-Tribal implementation efforts in the two months since our passage
of our Residential Leasing Act, working with all our Tribal
departments-Tribal Land, Environmental, Housing, Planning, THPO,
utilities, etc.-and working with the BIA Superintendent, to ensure that
we are ready to begin new home construction next spring, when the
narrow window of construction that life on the Montana Hi-Line allows,
opens.The Residential Leasing Act is a tool that could be used to
support expedited private residential development, which Island
Mountain is prepared to lead for us.
Purchase of Home Building Business to Subsidize on Reservation
Builds. Island Mountain recently acquired one of the premiere custom
home-building businesses in Montana and is getting ready to start a 59-
lot subdivision construction project in Billings. This will help them
create cost and materials efficiencies for on-Reservation housing
construction as well. Additionally, we are assessing Community needs to
identify the types of housing needed--single, multiple, elder,
supportive, etc., and considering infrastructure needs like water,
wastewater, roads, broadband, schools and the overall community.
Creation of Own Mortgage Lender. Island Mountain has brought on a
conventional mortgage specialist, with 20 years of industry experience,
to help stand up Tribal mortgage products that are affordable for
Tribal members and positioned to be sold in the secondary mortgage
market to the likes of Fannie and Freddie. She is also working to
provide education modules for Tribal borrowers and procedures for
regulatory enforcement of Tribal mortgages that could benefit both our
internal Tribal mortgages and encourage third-party conventional
lenders to work with Tribal members in a manner they are presently
disinclined to do. In short, we are actively working on all aspects of
planning for housing development, save the biggest one-our residential
leasing authority-until we have DOI approval.
Still Waiting for DOI Approval Under HEARTH Act. Fort Belknap
electronically submitted our Residential Leasing Act to the Department
for review on September 10, 2019 and in-person with paper copies to
Deputy Director Jim James in Washington, D.C., on September 11, 2019.
That meeting was led by my colleague, Fort Belknap Councilman and Lands
Committee Chairman Curtis Horn. At that meeting, Councilman Horn was
informed the Department's review would include a first-level review by
the Region and a secondary review by the Solicitor's office, and that
the Department thought both levels of review could be accomplished
quickly and well within the 120-day timeframe within which the
Department must approve or disapprove the Tribe's submission (per 25
U.S.C. 415(h)(4)).
Councilman Horn shared at that meeting, and in later meetings with
Senators Daines and Tester, the grim picture of the housing crisis at
Fort Belknap despite an emerging middle class at Fort Belknap flowing
from the Tribes' economic development efforts and enthusiastic Tribal
member interest in home ownership. While we were encouraged by our
advocacy efforts here in Washington in September, in the month since,
we have seen little progress.
Instead, our Residential Leasing Act has seemingly drifted back and
forth within the Department. The Department of the Interior website
lists as the HEARTH lead a person who has not worked at the Bureau for
nearly three years. Our counsel has been directed or redirected to at
least five different DOI employees in seeking review of our narrowly
focused Residential Leasing Act.
Our submission should be capable of quick review. First, Fort
Belknap's submission is narrowly focused on residential leasing.
Second, Fort Belknap's draft is modeled on other tribes' residential
leasing regulations recently approved by the Department. Third, as we
understand Fort Belknap communicated to Mr. James and others, the Tribe
is already actively implementing its efforts, including in holding
three intra-Tribal and BIA-Fort Belknap all-day working sessions to
ensure that they are all ready to begin implementing the Residential
Leasing Act in early 2020. Indeed, my co-panelist, Ms. Kunesh, has
participated in our implementation sessions and has been a tremendous
source of help and support to us as we try to solve our housing crisis.
We are grateful to her and her Federal Reserve colleagues.
Additionally, the Fort Belknap has been working on parallel paths
with HUD on Section 184 loan guarantee reforms, our own Tribal mortgage
code, and securing third-party partners for the delivery of mortgage
options for Tribal members.
Quite literally what is holding us up from solving these problems
for ourselves is our wait for DOI's permission to allow us to help
ourselves.
We are concerned because we understand the Department has a current
backlog of 26 sets of HEARTH regulations from tribes around the country
and is averaging just two HEARTH approvals per year. We see no reason
it should take the Department four months, or longer, to review
regulations like ours which are narrowly focused, modeled after recent
approvals, and include just six pages of substantive provisions (most
of our Residential Leasing Act is definitions).
To our knowledge, we are the first Great Plains/Rocky Mountain
tribal government to adopt HEARTH regulations and one of few in rural
areas looking to utilize it. We hope that our efforts will provide an
example from which other tribes can learn in the future. To get there,
we recommend the Department's allocation of additional Solicitor
resources to HEARTH reviews, as well as the Department's identification
of a ``HEARTH Czar,'' who is a one-stop resource to help tribes
navigate the DOI HEARTH-approval process.
In addition to securing our Residential Leasing Act approval to
restore our inherent Tribal authority over our own lands and allow us
some escape from Federal bureaucratic entanglements, we believe
improvements in the accessibility and reliability of BIA land records
are essential for us to succeed in establishing a private housing
market at Fort Belknap.
Digitization of Land Documents Needed
The Senate Appropriations Committee has recently encouraged the
Department's commitment of appropriate Trust-Real Estate resources to
assist us in HEARTH implementation:
''The Committee also recognizes increased digitization of
Indian land records would increase efficiency within Trust-Real
Estate Services. Within the amounts provided, the Committee
encourages Trust-Real Estate Services to implement additional
digitization of Indian land records to promote Tribal economic
development opportunities in Indian Country, including the Fort
Belknap Indian Community.'' Report No. 116-123 to accompany S.
2580 at p. 57.
More accurate and more accessible land records are the lynch-pin to
housing financing. Creation and maintenance of a digital system for
maps and records (e.g., property interest, encumbrance and leasehold
mortgage) is essential for efficiency and third-party lenders. We
respectfully request SCIA Oversight of the implementation of this
digitization provision.
Tribes Need Access to TAAMS
We would like to get our Reservation land records much closer to
what conventional mortgage lenders observe outside reservations.
Presently, the BIA is also responsible for all relevant LTRO functions
unless tribal employees have been subject of a background check for
clearance, have been trained in the Trust Asset and Accounting
Management System (``TAAMS'') for federal records on trust lands for
access, and are covered by a cooperative agreement between the Tribes
and the BIA for various levels of access to the records system. We do
not have access to BIA's records or the TAAMs systems.
Our Tribal Land Department spent $25,000 on mirror software so we
could try to recreate for ourselves the information available in the
TAAMs system. But because the systems don't talk to each other, our
Tribal Land has only incomplete information. And what they do have is
often inaccurate, with land descriptions not matching survey records
and the like. But a certified Title Status Report is a requirement for
a Section 184 loan guaranty and our Tribal members have been
experiencing waits of a year or more to get their TSRs.
Nearly Two-Year Wait for HUD 184 Loan Guaranties
Island Mountain CEO Terry Brockie, a Gros Ventre Tribal member, is
a great example of how far afield our reality is from the norm. He is a
very credit-worthy person, serving as our CEO and before that having
held other professional jobs and having served as county superintendent
of schools. As detailed in his written testimony submitted to the
Committee, it took him 23 months, nearly two full years, to secure a
184 loan guaranty. Compare that to the standard 3-12-week range for
off-reservation commercial mortgages, or frankly the one month average
for some lenders. At that rate, Mr. Brockie waited 23 times longer than
private, non-HUD 184, homeowners. Quite simply, mortgage lenders cannot
hold underwriting open for years waiting for all the Section 184 boxes
to be checked.
Recommended Solution: ``Priority Deployment Mechanism''
We agree with HUD that it is essential to update the loan guarantee
program because it remains the same since it was established in 1992.
We also applaud HUD's efforts to increasing their staffing for 184 loan
processing. We understand that they currently process between 3,000 to
4,000 loans per year with only four staff. And keep in mind that, when
184 issues go back to the BIA at Fort Belknap, there is not a single
dedicated residential leasing person, and the Fort Belknap Agency is
presently short four realty staff. At a minimum, the Federal agencies
responsible for administering these programs should be fully staffed.
We also propose additional reforms to the 184 process that we
believe would expedite home ownership. We propose to borrow extensively
from HEARTH and Opportunity Zone language recently enacted by Congress
to add a new subsection allowing tribes to designate priority areas for
housing development. Areas so designated would be first in line for
records digitization and additional staffing support. Essentially, this
would allow tribes to fast-track mortgage guarantees for housing
priority areas on reservations. We propose that tribes make the
designations, notify the HUD Secretary, and thereafter the Bureau would
have 60 days to get the records in order and 90 days to generate
certified TSRs. We also propose to clarify that all mortgage guarantee
reviews are categorical exclusions from Federal environmental review so
that applicants do not have to do irrelevant things like obtain a
certification from the Bureau that their home in north central Montana
does not impact a coastal zone (presently an EPA requirement for 184
guaranties). The HUD regulations are a confusing patchwork of cross-
references to other regulatory sections and acts, and while we think it
is already accurate that mortgage guaranties are categorical
exclusions, it would be helpful to applicants to just state that
expressly.
Our proposed addition to 12 U.S.C.A. 1715z-13a would be a new
subsection (i)(8):
Priority Deployment Mechanism
There is established in this subsection the Priority Deployment
Mechanism for the Indian Housing Loan Guarantee Fund for the
purpose of encouraging more rapid delivery of loan guarantees
under this Section. The Priority Deployment Mechanism includes
three principal components: designation by tribal governments,
increased levels of supporting services from the Bureau of
Indian Affairs and categorical exclusion from federal
environmental reviews.
A. Designation. For purposes of this subsection (8), a tract
of land in an Indian area may be designated by a tribe as
eligible for the Priority Deployment Mechanism if the tribe
nominates the tract for designation as qualified for the
Priority Deployment Mechanism and notifies the Secretary in
writing of such nomination.
B. Bureau of Indian Affairs Assistance. Upon designation and
notification as set forth in subsection 8(a) herein, the
applicable Bureau of Indian Affairs Land Titles and Records
Office shall digitize all land records associated with the
designated tract within 60 days of notice of the designation.
The Bureau of Indian Affairs shall deploy personnel as needed
to review land records associated with any tract designated as
qualified for the Priority Deployment Mechanism in order to
facilitate delivery of certified Title Status Reports to the
Department in connection with any loan guarantee application
under this Section within 90 days of the date of the borrower's
application.
C. Categorical Exclusion from Additional Environmental
Reviews. Because tribal governments will make designations
under subsection 8(A) pursuant to any applicable tribal
environmental laws and are making such designations to
prioritize land for Indian area housing developments, any tract
designated pursuant to subsection 8(a) as qualified for the
Priority Deployment Mechanism shall be categorically excluded
from any additional federal environmental review requirements,
including but not limited to as provided in 24 C.F.R.
1005.105(e), 24 C.F.R. 1000.20, 24 C.F.R. Part 50, and 24
C.F.R. Part 58 because priority deployment of loan guarantees
under this Section do not alter physical conditions in a manner
or to an extent that would require review under NEPA or other
laws and authorities applicable to other Department actions.
Conclusion
Thank you for listening to our long list of things we believe would
help improve access to home ownership for Fort Belknap Tribal members.
We are working very hard to push this boulder up the mountain for
ourselves. What we really want is for the Federal government to get out
of the way- to put these decisions and processes about our lands back
in our inherent Tribal authority. We believe this is consistent with
self-determination policy and the only way our people will be able to
experience the dignity of secure, affordable, dignified housing on our
Reservation.
The Chairman. Thank you.
Director LaCounte.
STATEMENT OF DARRYL LACOUNTE, DIRECTOR, BUREAU OF INDIAN
AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR
Mr. LaCounte. Good afternoon, Chairman Hoeven, Vice
Chairman Udall, and members of the Committee.
My name is Darryl LaCounte. I am the Director of the Bureau
of Indian Affairs at the Department of the Interior. Thank you
for the opportunity to provide testimony on behalf of the
department regarding homeownership in Indian Country.
As a part of a joint effort with our Federal partners, the
BIA Division of Real Estate Services helps tribal members
purchase homes. As a matter of fact, it is the top priority
within our Real Estate Services Program, to process the land
sales, the leases and the mortgages associated with housing for
American Indian people to afford them the opportunity to
achieve the security and satisfaction that comes with
homeownership.
Tribes oftentimes do not agree with each other on
priorities based upon their local communities and economies,
but I am quite certain that all tribal leaders would agree
there is no higher priority than housing in Indian Country for
their people.
The department has taken very important steps to further
homeownership in Indian Country. On July 15th, 2019, the
department completed the Mortgage Handbook. I personally signed
the Indian Affairs policy, 52 Indian Affairs Manual 4:
Processing Mortgages on Trust Properties. This handbook clearly
documents the procedures required to be successful in our
mortgaging program within our Real Estate Services programs. It
is the primary resource for BIA Division of Realty staff, and
part of our effort to standardize and streamline the mortgage
process.
We have also created the Contact Guide for Mortgage Lending
in Indian Country. The Contact Guide was prepared for the
specific purpose of supporting the lending process in Indian
Country.
Before the application process begins, lending officers who
take applications from prospective borrowers should use this
guide to ensure the appropriate office of the BIA is involved
and the correct processing codes are included on all mortgaging
applications in all phases of the process. Using this guide
will expedite the lending process in Indian Country.
In February of 2018, the BIA Office of Trust Services began
a two-year initiative to develop a BIA Enterprise Land and
Resource Data Warehouse to expand data sharing capabilities
utilizing existing business data repositories and analytical
tools. The BIA Enterprise Land and Resource Data Warehouse will
serve as a critical component of a DOI-wide Enterprise Data
Warehouse. The BIA initiative will consolidate all data from
BIA's various business subsystems within the Trust Asset and
Accounting Management System, known as TAAMS, and those other
standalone data tools, including other systems that assist our
real estate programs in managing trust and restricted lands for
the benefit of tribes and individual Indian owners.
This initiative will allow BIA to integrate data from the
TAAMS system and other data sources into operational data views
that can easily be accessed as a single point for strategic and
operational reporting and analytical needs. The data warehouse
will support land management processes to best manage and
maintain thorough standardized core business processes and
data, while enabling line of business details to be captured.
It will provide other advantages by decreasing operational
costs, supporting the modernization initiatives based on
reusing and minimizing development activities, and providing
management with tools to effectively direct land and resource
management activities.
Additionally, by integrating organizational data that is
fragmented in offline systems, the data warehouse and the use
of these dashboards will reduce the impacts on transactional
systems like TAAMS, and its subsystems, that were not designed
or are conducive to handling large volumes of complex queries
and unique reports. The data mining capabilities also allow
access to large volumes of historical data that reside in
disparate systems and will assist in responding to compliance
questions, legislation, and other data needs.
The solution requires expanded database management,
development, and software delivery services, as well as
training, interfaces, and continued updates of security
measures to remain secure and in compliance with government IT
standards.
BIA recognizes that the business processes and rules,
information requirements, and supporting data for each of the
above major land and natural resource management phases, have
significant similarities that are applicable to natural
resource management for both Indian and Federal land. That is,
there are significant opportunities for process and data
standardization within the accompanying component re-use.
In conclusion, the BIA is committed to providing a state-
of-the-art data solution for managing the mortgages and
increasing homeownership on Indian trust lands and developing
tools to enhance these opportunities. BIA continues to
coordinate with HUD so that they may access pertinent
information, such as title status reports through a data
portal, to assist in further advancing homeownership in Indian
Country.
Mr. Chairman, thank you for the opportunity to testify
today. I am glad to answer any questions from the Committee.
[The prepared statement of Mr. LaCounte follows:]
Prepared Statement of Darryl Lacounte, Director, Bureau of Indian
Affairs, U.S. Department of the Interior
Good afternoon Chairman Hoeven, Vice-Chairman Udall, and Members of
the Committee. My name is Darryl LaCounte and I am the Director of the
Bureau of Indian Affairs (BIA) at the Department of the Interior
(Department).
Thank you for the opportunity to provide testimony on behalf of the
Department regarding homeownership in Indian Country. As a part of a
joint effort with our federal partners, the BIA Division of Real Estate
Services helps tribal members purchase homes. The Assistant Secretary--
Indian Affairs has made it a top priority to advance Indian Country
economic development efforts and help individual Indians achieve the
security and satisfaction that comes with homeownership.
Resources Furthering Homeownership
Mortgage Handbook
On July 15, 2019, the Department completed the Mortgage Handbook.
This handbook documents the procedures required to implement the Indian
Affairs policy, 52 IAM 4: Processing Mortgages of Trust Properties. It
is a primary resource for BIA Division of Realty staff, and our effort
to standardize and streamline the mortgage process.
Contact Guide
We have also created the Contact Guide for Mortgage Lending in
Indian Country (Contact Guide). The Contact Guide was prepared for the
specific purpose of supporting the lending process in Indian Country.
Mortgage production proceeds in four phases: origination, processing,
underwriting and closing. However, before the application process
begins, lending officers taking applications from prospective borrowers
should use this guide to ensure the appropriate office of the BIA is
involved and the correct processing codes are included on all mortgage
applications and in all phases of the process. Using this guide will
expedite the lending process in Indian Country.
External Portal
In February 2018, the BIA Office of Trust Services began a two-year
initiative to develop a BIA Enterprise Land and Resource Data Warehouse
to expand data sharing capabilities utilizing existing business data
repositories and analytical tools. The BIA Enterprise Land and Resource
Data Warehouse will serve as a critical component of a DOI-wide
Enterprise Data Warehouse. The BIA initiative will consolidate all data
from BIA's various business subsystems within the Trust Asset and
Accounting Management System (TAAMS) and those that are standalone data
tools (Geographic Information System, National Irrigation Information
Management System, National Indian Oil and Gas Evaluation Management
System, Tracking Accountability and Productivity System, Probate Case
Management and Tracking System, Realty Tracker, and Cadastral Automated
Reservation System). This initiative will allow BIA to integrate data
from the TAAMS system and other data sources into operational data
views that can be easily accessed as a single point for strategic and
operational reporting and analytical needs.
The data warehouse will support land management processes to best
manage and maintain thorough standardized core business processes and
data while enabling line of business details to be captured. It will
provide other advantages by decreasing operational costs, supporting
the modernization initiative based on reusing and minimizing
development activities, and providing management with the tools to
effectively direct land and resource management activities.
Additionally, by integrating organizational data that is fragmented
in offline systems, the data warehouse and the use of these dashboards
will reduce the impacts on transactional systems like TAAMS, and its
subsystems, that were not designed or conducive to handling large
volumes of complex queries and unique reports. The data mining
capabilities also allows access to large volumes of historical data
that live in disparate systems and will assist in responding to
compliance questions, legislation, and other data needs.
The major phases and related data that support land and natural
resource management are:
Ownership Management (managing ownership information to
specific parcels of land);
Inventory Management (inventory of land holdings and
encumbrances);
Use Authorization Management (managing permitting, leasing,
rights of way activities);
Planning (planning activities to maintain and conserve the
natural resource);
Compliance (lease compliance activities);
Monitoring and Auditing (availability and accessibility of
natural resources); and
Custodial Management (maintenance of the land and natural
resources).
The solution requires expanded database management, development,
and software delivery services, as well as training, interfaces, and
continued updates of security measures to remain secure and in
compliance with government IT standards. BIA recognizes that the
business processes and rules, information requirements, and supporting
data, for each of the above major land and natural resource management
phases, have significant similarities that are applicable to natural
resource management for both Indian and Federal land. That is, there
are significant opportunities for process and data standardization with
accompanying component re-use.
Conclusion
Mr. Chairman, the BIA is committed to providing a state-of-the art
data solution for managing the mortgages and home ownership on Indian
trust lands and developing tools to enhance these opportunities. At the
direction of the Secretary, BIA continues to coordinate with HUD to
develop a HUD Dashboard to access pertinent information, such as Title
Status Reports, to advance homeownership in Indian Country.
Thank you for the opportunity to testify today. I am glad to answer
any questions from the Committee.
The Chairman. Thank you.
Director Kunesh.
STATEMENT OF PATRICE H. KUNESH, DIRECTOR, CENTER FOR INDIAN
COUNTRY DEVELOPMENT; ASSISTANT VICE
PRESIDENT, FEDERAL RESERVE BANK OF MINNEAPOLIS
Ms. Kunesh. Chairman Hoeven, Vice Chairman Udall and
members of the Committee, thank you for the opportunity to
testify today on the crisis of lending and homeownership in
Indian Country.
My name is Patrice Kunesh. I am the Director of the Center
for Indian Country Development at the Federal Reserve Bank of
Minneapolis. The views I express here today are not necessarily
those of the Minneapolis Fed or the Federal Reserve system.
The Center for Indian Country Development is the Federal
Reserve system's national research center focused on Native
Nations' economic issues. We are based at the Minneapolis Fed,
whose region is home to more 45 tribal Nations and also to you,
Chairman Hoeven, Senators Tester, Daines, and Smith.
Becoming a homeowner has long been considered the path to
creating social and economic health and wealth for many
Americans. However, Native Americans have largely been denied
this opportunity, especially those living on reservation trust
lands. In my short time here today, I would like to share a
handful of key messages to guide you in your policymaking.
First, tribes have sovereign authority over their lands but
they do not have control over the complex Federal processes to
put those lands to good use. As we move forward to improve
access to housing and affordable lending, we need to fix a
collection of byzantine processes that create untenable
impediments. For example, the 184 program from HUD is a very
popular, much needed program. But in recent years, 93 percent
of those loans have bypassed reservations, mostly because of
administrative burdens.
Second, there is the human element. Those impediments have
deprived real people and real families, Native people and
Native families, much like my own on the Standing Rock
Reservation, from building personal assets. Those processes
also have discouraged investment to create prosperity among our
Native communities.
With that context in mind, let me offer a few
recommendations. For one, there must be an expansion of access
to capital and credit in Indian Country. As conventional
lenders have retreated from Indian Country, Native community
development financial institutions, or Native CDFIs, have
become critical sources of capital for home loans. They
intimately know the lending needs and capacity of their
constituents. Tapping into their strengths and their network
and supporting them with more funds could deliver all of the
Federal key programs, such as the HUD 184 Loan Guarantee, USDA
Rural Development 502 and the Veterans Affairs Native American
Direct Loan.
For another, I recommend using innovative loan products and
delivery systems. For example, at USDA, it is expanding access
to public capital by providing Native CDFIs in South Dakota
relending authority to deploy 502 home loans on trust lands.
That could mean access to millions of dollars of housing
investment in Indian Country, and should be expanded
nationwide.
But we need even more innovation to support this
persistently underserved population, such as pooling leasehold
mortgages and access to a secondary market. Recent Center for
Indian Country Development research found that Native borrowers
for homes on reservations are significantly likely to have
higher-priced mortgages, with rates nearly two percentage
points higher than for non-Native borrowers outside the
reservation. In 2016, that meant that the average Native
American borrower would pay $107,000 in more interest over a
30-year mortgage. This, I believe, is a matter worthy of your
concern and examination.
Chairman Hoeven, members of the Committee, the Native
population is growing at a rate far higher than the national
rate. So is real per capita income, although it remains
stubbornly low. There is a scarcity of housing supply on
reservations and an enormous unmet need.
That is why seeking solutions to Native American housing
and lending crises can deliver a substantial return on
investment to our economy. Even more important are the
powerful, life-changing impacts that homeownership could bring
to families, along with the needed hope homeownership can
instill in our Native communities.
Thank you so much for this opportunity. I look forward to
your questions.
[The prepared statement of Ms. Kunesh follows:]
Prepared Statement of Patrice H. Kunesh, Director, Center for Indian
Country Development; Assistant Vice President, Federal Reserve Bank of
Minneapolis
Introduction
Chairman Hoeven, Vice Chairman Udall, and members of the Committee:
Native nations' economies and populations are among the fastest
growing in the United States, yet the gap in homeownership rates
between tribal lands and the rest of the country remains unacceptably
wide. Despite Native households' steadily increasing credit scores and
strong preference for homeownership, a smaller share of Native
households own homes today than in 2000, and homeownership rates among
American Indians are lower than the nation as a whole. \1\
Some of this gap is due to limited resources, but restricted access
to credit and capital is stifling the development of Indian Country
housing stock. Administrative burdens, lack of access to land title
records and data, and inter-agency inefficiencies have reduced
conventional lender participation in trust land lending. In addition,
federal programs geared toward mortgage lending for Native people
largely bypass reservations. Even when Native borrowers are able to
secure a home loan on the reservation, their mortgages are higher
priced: nearly 2 percentage points higher than for non-Native borrowers
outside the reservation. \2\
This testimony presents an analysis of these trends and proposes
reasons for the incongruity between homeownership rates and signs of
other economic growth in Indian Country. It also shares examples of
tribal government institutions that are making homeownership work on
trust lands and of federal agencies pursuing innovative housing finance
efforts to meet the dire need for housing in Indian Country.
The Center for Indian Country Development (CICD) at the Federal
Reserve Bank of Minneapolis uses its expertise in economic research and
community engagement to better understand housing challenges and find
solutions. \3\ The CICD is the national economic research initiative
within the Federal Reserve System. Our research reveals a complex web
of historical and legal forces that make it unreasonably difficult to
use much of tribal lands for the benefit of Native people for mortgage
lending and other economic development. \4\
Native Americans and Housing
Today, 573 federally recognized Indian tribes \5\ control about 60
million acres of land in the United States. The vast majority of these
tribal lands are held in trust \6\ by the federal government and are
encompassed within American Indian reservations. Social and cultural
connections to Indian Country remain strong among the 5.2 million
American Indian and Alaska Native (AIAN) peoples. \7\ This is a rapidly
growing population. \8\ About 60 percent of Native people live on or
near reservations (also referred to as tribal areas in the U.S.
Census). \9\ Options for housing in tribal areas are extremely limited,
and households confront a very different market than the one found in
non-tribal areas.
There is a drastic need to increase both the supply and quality of
housing in tribal areas. In 2017, HUD estimated that 68,000 housing
units were needed to ease overcrowding and replace substandard homes in
tribal communities, and the units needed today likely have increased.
We believe this number underestimates the severity of overcrowding on
reservations. About 16 percent of reservation households are
overcrowded, \10\ compared to 2.2 percent of the general population.
\11\ All told, severe overcrowding, poor quality housing stock, and a
rapidly growing population mean the real need for additional housing
units is likely substantially higher than the 2017 estimate. The
precise level of need is difficult to gauge because some tribal-level
data generally is unavailable. \12\ The social consequences of
substandard and inadequate housing are distressing. They include
chronic disease and other health problems, as well as harmful effects
on childhood development. \13\
Additional housing units are also required to meet the demands for
homeownership in Indian Country. About 75 percent of Native households
in tribal areas report a strong desire to own their home, \14\
confirmed by survey findings from recent community needs assessments.
\15\
Tackling homeownership on trust land also would address fundamental
issues that affect the entire spectrum of economic development in
Indian Country and unlock potential for community benefits though
investments on reservation lands. For example, creating private
homeownership opportunities in Indian Country relieves pressure on
traditional housing programs that largely administer a stock of
subsidized rental properties. Quality, affordable rental housing and
repairs to existing owner-occupied and rental properties are necessary
but not sufficient for supporting continued economic growth in Indian
Country.
Tribes have sovereign authority over their lands, but they do not
have control over the federal processes to put these lands to good and
productive use. The Bureau of Indian Affairs at the U.S. Department of
the Interior (BIA) oversees the process for approving loans on trust
lands. The path to homeownership on trust land requires navigating this
complex maze of intraand inter-agency steps and touch points.
Fundamental reforms are needed to standardize the mortgage review
process and make it efficient and reliable for lenders and borrowers
alike. \16\ Overcoming decades of housing deficits and meeting the
pressing demands for homeownership across Indian Country require
targeted investments across an array of new housing construction and
housing preservation. The key now is to align processes and policies,
backed by a firm commitment to accountability and transparency.
Enduring Benefits of Investing in Native Communities
A growing body of evidence shows the long term benefits of
investing in Native communities and the positive economic impact on
tribal institutions. \17\ The need is great and Indian Country is
poised to take advantage of these investments.
As a whole, the Native population is growing much faster than the
national population, increasing by almost 27 percent between 2000 and
2010, compared to an overall U.S. rate of about 10 percent. While AIAN
household income is still far behind other demographic groups, Native
people overall have realized a steady increase in real per capita
income. \18\ Social and cultural connections to Indian Country remain
strong, with a high percentage of tribal citizens, about two thirds,
living on or near reservations.
Indian Country is a distinctively important component of the
national economy. Collectively, tribes are the 13th largest employer in
the United States. Tribal government gaming and other reservation
businesses employ more than 700,000 people and offer benefits and
diverse occupational opportunities. Tribal revenue delivers billions of
dollars into local economies and contribute significantly to their tax
base.
Evidence suggests that tribal revenues positively influence
reservation households. For example, modest increases in income to
tribal citizens tend to dramatically improve measures of educational
attainment, arrest rates, and civic engagement. \19\ Other benefits
from enhanced income stabilization include decreased rates of smoking,
alcohol consumption, and obesity.
Positively changing household incomes also improves economic
opportunities in the long run. The CICD's recent assessment of Indian
Country data from the Opportunity Atlas finds that Native children
growing up in tribal statistical areas show greater upward mobility for
all parental income levels. \20\ This suggests that investing in
reservation communities equates to investments in our children, and
offers the hope of healthy and productive lives. \21\
To sustain continued growth and address intergenerational wealth
gaps, these investments must include housing. Stable, safe, and
affordable homes not only support a healthier and more educated
workforce, but they allow community members to take and keep jobs,
raise families, and build a vibrant economy where businesses flourish
and children thrive.
Federal Programs with Native American Mortgage Products
After centuries of disastrous federal policies that impoverished
and decimated Native communities, Congress in the 1960s began to enact
legislation affirming tribal rights, strengthening tribal autonomy, and
establishing resources to build reservation economies. The Indian Self-
Determination and Education Assistance Act of 1975 (Public Law 93-638)
authorized ``Indian Tribes and Tribal Organizations to contract for the
administration and operation of certain Federal programs which provide
services to Indian Tribes and their members.'' \22\ Subsequently, many
tribes moved to self-governance and assumed full responsibility for the
design and implementation of their programs without federal oversight.
In 1996, Congress moved to explicitly address the intersection of
tribal sovereignty and housing. The Native American Housing and Self-
Determination Act (NAHASDA) \23\ recognized the rights of tribal self-
governance and encouraged expansion of reservation housing options by
allowing NAHASDA-allocated funds to be leveraged for new home
construction. To further encourage homeownership opportunities,
Congress enacted the Helping Expedite and Advance Responsible Tribal
Homeownership (HEARTH) Act of 2012. \24\ The HEARTH Act was designed
specifically to enhance self-governance over tribal lands and promote
the efficient leasing of those lands for housing and business purposes.
To exercise this authority, tribes must first adopt leasing regulations
and submit them for approval to the BIA. This review process has itself
become a bureaucratic hurdle to the development of trust lands.
Currently, 26 tribal residential leasing regulation applications are
awaiting BIA approval; only three tribal leasing regulations have been
approved in FY19. \25\
Several federal programs support mortgage lending to Native
borrowers. \26\ These include the HUD Section 184 Home Loan Guarantee
program (the Section 184 program), the Veterans Affairs Native American
Direct Loan program (VA NADL), and the Department of Agriculture Rural
Development Rural Housing Service 502 Direct Loan program (RHS 502).
Collectively these programs have billions of dollars in loan authority.
Sadly, not much of these funds and resources are reaching Indian
Country, even when programs are designed specifically for AIAN
borrowers. To deploy this enormous capital opportunity in Indian
Country, we must have a normalized and complementary inter-agency
lending process in Indian Country.
The HUD Section 184 program was established in 1992 with the
specific mission of facilitating homeownership and increasing access to
capital in Native communities. HUD describes the Section 184 as
``synonymous with home ownership in Indian Country.'' \27\ The Section
184 program has greatly expanded the supply of mortgage credit to
Native borrowers by mitigating private lender risks. It provides
lenders with a 100 percent guarantee for mortgages to Native borrowers,
thus eliminating concerns related to the collateralization of trust
land. In addition, its utility for new construction as well as existing
homes, low down payments, low interest rates, and protection from
predatory lending make the Section 184 program a very popular funding
option for Native borrowers.
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While the Section 184 program has expanded access to mortgage
finance for Native borrowers of all income levels, it has largely
bypassed reservations. Only 7 percent of 184 program capital funded
homes were on reservations in recent years, resulting in billions of
dollars of federally guaranteed funds supporting communities outside of
Indian Country. See Figure 1. Other federal programs that support
mortgage lending on trust lands, the RHS 502 and the VA NADL programs,
also are woefully underutilized on trust lands.
The VA NADL program is meant to serve Native veterans on
reservation lands. \28\ The program is similar to the VA standard home
loan, offering favorable terms such as no down payment requirement and
low interest rates. Today, American Indians, Alaska Natives, and Native
Hawaiians serve in the military at one of the highest rates per capita
of all population groups: 133,000 veterans identify as Native.
Currently, there is a potential NADL-eligible population of 20,013
Native veterans who reside on trust land. However, between 2013 and
2015, the NADL program originated an average of 21 loans annually (the
height of lending was 2003 with 120 loans and 2010 with 103 loans). It
is noteworthy that most of these loans are made in Hawaii and the
Pacific Island territories. This disproportionate use of the program
outside of the lower 48 is possibly due to an established
infrastructure in Hawaii for veteran benefits.
The RHS 502 program offers a path to homeownership for low- and
very-low-income families living in eligible rural areas, home to most
of Indian Country. Rural Development's webpage notes, ``Providing these
affordable homeownership opportunities promotes prosperity, which in
turn creates thriving communities and improves the quality of life in
rural areas.''
Rural Development invested more than $6.2 billion in Indian Country
between 2001 and 2018. \29\ About half of those funds, $3 billion, were
invested through the Rural Housing and Community Facilities programs
for much-needed facilities such as community and senior centers,
hospitals and clinics, schools and food distribution centers. However,
of the 6,575 loans made through this program in 2014, only seven were
to Native borrowers on tribal lands. As with the other federal
programs, we need to ensure that Rural Development programs and
resources are responsive to the current housing needs of tribes and
tribal members on rural trust lands.
These powerful financial tools, established to help a most
deserving population, are not reaching Native borrowers on trust land.
To address problems underlying this system failure, the lending
infrastructures in federal agencies that support the mortgage process
must be normalized. They must follow a standard streamlined process,
similar to ``one stop''-type \30\ model mortgage loan program, which
can rely on a 30-day Title Status Report (TSR) turnaround from the BIA.
They also needs trusted lending partners and program supports to reach
Native borrowers in areas far from the lenders. Partnerships with
Native Community Development Financial Institutions (CDFIs) and tribal
housing entities are also important to connect the funds with
institutions that understand the homeownership process in Indian
Country. These partnerships could transform Indian Country.
Experienced Native CDFIs and tribally owned financial institutions,
such as banks and credit unions, \31\ provide much-needed credit
building services and mortgage products to Native borrowers. These
Native CDFIs are perfect partners to connect Indian Country with
federal home loan programs, but their services are limited only by the
amount of funding they have available.
For example, on the Pine Ridge reservation in South Dakota, Lakota
Funds, the first Native CDFI, and Mazaska Owecaso Otipi Financial,
offer affordable housing loans as well as home buyer and financial
education. In the summer of 2019, they and the Four Bands CDFI on the
Cheyenne River Sioux reservation were approved as re-lending
intermediaries for the USDA 502 program. Loans to these Native CDFIs
(33 years at 1 percent) will be used for housing on trust land. While
USDA has struggled to connect 502 money with Native homeowners on trust
land, Native CDFIs already have steady pipelines of mortgage-ready
borrowers and the community presence necessary for long-term
relationships to ensure successful homeownership.
Then, there are state-based initiatives, such as the New Mexico
Tribal Homeownership Coalition and the South Dakota Native
Homeownership Coalition. They, along with broader associations that
provide technical support and advocacy such as the National American
Indian Housing Council and CICD's National Native Homeownership
Coalition, support a systems approach to shoring up the professional
staff needed to plan, finance, and build homes in Indian Country. These
local and regional coalitions are establishing important networks to
support a well-functioning housing market, that includes contractors,
inspectors, and appraisers.
Challenges to Mortgage Lending on Trust Lands
Making HUD 184 Work on Trust Lands
Despite the lack of any legal impediment to mortgage lending on
trust lands, tribes and Native people continue to be unduly hindered in
using their lands for good and productive purposes. Indeed, obstacles
to effective use of trust lands for housing purposes remain severe and
troubling.
For example, the large majority of mortgages to Native borrowers
under the Section 184 program are now on fee land. \32\ This is due in
large part to the rapid expansion of the program in 2004 to off-
reservation areas following a lengthy period of little or no tribal
implementation of the program. \33\ The number of Section184 mortgages
made annually on trust land typically is in the low hundreds and has
shown no sustained growth since the early 2000s. \34\ Because Section
184 loans have federal guarantees and present no risk to the lender,
their limited use on trust land reflects impediments other than
borrowers' creditworthiness or other financial characteristics.
While the BIA is making good efforts to streamline its mortgage
process, \35\ institutional systems complicate the full utilization of
the Section 184 and other federal mortgage programs on trust lands.
These include an elaborate review process, bureaucratic delays, and the
complexity of lending to low- and moderate-income borrowers. Holders of
trust land must use a leasehold interest as collateral, which requires
the tribe to issue a leasehold interest to the borrower, who then uses
that interest as collateral. These transactions require two certified
title status reports (TSRs) from the BIA and various federal
environmental reviews and appraisals, which cumulatively result in a
lengthy and involved process. \36\ In a recent HUD-sponsored survey of
lenders, ``mortgage lending on tribal trust land remains a time-
consuming process that reduces the appeal of lending on tribal trust
land, even with the federal guarantee. Lenders report that Section 184
Program loans can take up to 6 to 8 months to process and close; in
some cases, it can take even longer.'' \37\ (A chart illustrating the
Bureau of Indian Affairs Mortgage Package Business Process is
attached.)
These transactions are recorded in the BIA's Trust Assets and
Accounting Management System (TAAMS) to track and record title on trust
lands. The TAAMS system, designed to manage probate estates and
payments of income from trust property, also includes property maps. It
was not designed to function as a national recording system for real
estate transactions on reservation lands. Nor is it publicly accessible
like county property records. Moreover, because different areas of the
BIA manage different information in TAAMS, it can become excessively
difficult to issue the required real property records and TSR
certifications. One immediate way to address the bottleneck is to
provide HUD and tribes access to TAAMS, including certification for
designated tribal individual users.
The continued difficulty of mortgage lending on trust land is
suggested by both Figure 1 and the BIA mortgage package process
(attached).
The High Price of Mortgage Financing for Native Americans
Access to affordable capital has been a constant challenge for
aspiring Native American homeowners. However, new CICD research shows
that mortgage loans with Native Americans as the primary borrower are
also systematically more likely to be higher-priced. \38\ Thus, even
when private capital manages to reach Native borrowers in Indian
Country, they may pay an unjustifiably high premium that greatly
diminishes the possibility of accumulating equity and building wealth.
Using public data from the Home Mortgage Disclosure Act (HMDA),
\39\ the CICD study examined first-lien home purchase loans with
attention to ``higher-priced loans.'' The term ``higher-priced'' is
defined in the data set as loans that have a rate greater than or equal
to 1.5 percentage points above the Average Prime Offer Rate (APOR), and
the rate spread of loans conditional on them being higher-priced,
referring to the difference in percentage points from the APOR for a
given loan. We wanted to know the answer to two questions: (1) What
proportion of Native American loans are ``higher-priced,'' and (2) What
is the rate spread of those loans?
The CICD's findings show that loans with Native Americans as the
primary borrower have an average interest rate nearly 2 percentage
points above the average loan for non-Native Americans. These higher-
priced home loans are found predominately on reservation lands. Around
30 percent of mortgages for Natives on-reservation were high-priced,
compared to only 10 percent for non-Natives near reservations (see
Figure 2, Proportion of High-Priced Loans On and Near Reservations).
Native Americans burdened with high-cost mortgages had the highest
average rate spread of any group in the U.S. For Native Americans on
reservations with high-priced loans, the average spread in 2016 was 5
points above APOR. As an example, a Native American on-reservation with
a higher-priced loan buying an average-priced home in 2016 could pay
roughly $107,000 more in interest for a 30-year mortgage than a non-
Native borrower off the reservation.
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In the context of the high price of mortgage financing for Native
Americans on trust land, it must be noted that Native buyers tend
toward manufactured housing--and loans for manufactured housing often
come with high-priced financing. The CICD analyzed HMDA data from
2004--2016 and found that Native Americans were far more likely to
apply for manufactured housing loans across the U.S., but especially on
reservations. \40\ For example, in 2016, over 75 percent of home loan
applications by Native borrowers on reservations were for manufactured
homes. By comparison, only 5.1 percent of all home loan applications in
the U.S. for the same year were for manufactured homes. \41\ The data
also showed that Native applicants had much higher denial rates for
manufactured-home loan applications than for site built homes. For
example, in 2015--2016, about 75 percent of applications for
manufactured-home loans from Native borrowers on the reservation were
denied.
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The prevalence of manufactured housing on trust lands may derive
from the difficulties Native borrowers face in trying to finance site-
built homes on their homelands. When purchasing a manufactured home,
buyers may finance their home as personal property, a chattel mortgage
similar to an auto loan, rather than as real property as in a typical
mortgage. In so doing, borrowers may circumvent some of the delays
associated with building on trust land. The simplicity of this
financing, however, comes with a high price, may be subject to captive
financing, and may place additional risk on the borrower. The CICD
study on high-priced financing found that the prevalence of
manufactured housing on reservation lands accounts for 25-35 percent of
Native borrowers' higher cost of financing. Another CICD study shows
that 67 percent of manufactured home loans to Native Americans were
made by only two companies. \42\ When Native borrowers purchase a
manufactured home as personal--rather than real--property, they risk
owning a less stable asset (the home alone) relative to traditional
mortgage-holders, whose property value is tied both to their home and
the land underneath it. While manufactured housing can offer less
expensive construction and upfront costs, the higher interest rates,
and denial rates--along with the potential for captive financing--raise
serious concerns about the current use of manufactured housing in
Indian Country. \43\
Opening Doors to Homeownership in Indian Country through Tribal Self-
Governance
Several tribes and tribal housing authorities have created
successful homeownership programs on trust lands by asserting self-
governance over land leasing and titling processes. They also have
developed internal capacity to manage complex financing arrangements
and implement large-scale housing development. In doing so, they have
demonstrated to their communities and to the rest of Indian Country the
powerful impact of making affordable credit available to Native
borrowers and creating an efficient lending process.
In the southwest, the San Felipe Pueblo of New Mexico built the
Black Mesa View subdivision in the heart of its community and created
full service home building, housing preservation, and related
businesses that employ a wide range of workers and create opportunities
to develop a skilled tribal workforce. \44\ Employment from
construction projects created a wide ripple effect as jobs were created
over other sectors of the community, including manufacturing, retail,
and business services.
In Montana, the Confederated Salish and Kootenai Tribes of the
Flathead Reservation established a tribal land office that assumes much
of the BIA's lease processing and title work. The Tribes' housing
program helps borrowers throughout the reservation become homebuyer
ready and complete the mortgage process efficiently, while building up
a dedicated and skilled tribal workforce in the process. \45\
Meanwhile, tribally-owned Eagle Bank provides a ready source of capital
for mortgages at competitive interest rates. Overall, the Salish and
Kootenai are building a dynamic housing market that attracts a skilled
and educated workforce.
On the high plains, the Cheyenne River Sioux Tribal Housing
Authority has an ambitious 400-unit housing development project
underway on tribal lands in Eagle Butte, South Dakota. When completed,
Badger Park will offer an array of design options and affordable price
points, mainly using factory-built construction. Financing for this
impressive project is multi-layered and complex. Designing and
executing construction plans required years of careful work, starting
with a comprehensive community needs assessment. \46\ Their patience
and diligence paid off. More than a dozen families moved into these
homes last spring, and scores more will be homeowners by the end of the
year. The economic impact on the community emanating from this housing
development is exponential, with increased demand for local goods and
services, such as groceries and gas, and access to community amenities,
such as schools and financial services.
In the Midwest, the Ho-Chunk Nation of Wisconsin effectively
implemented the HEARTH Act and now provides land, leasing, title, and
realty services within the boundaries of its 15,000-acre reservation,
comprised mostly of trust lands. \47\ In addition, Bay Bank, owned by
the Oneida Nation in Wisconsin, supports a sizable HUD Section 184
mortgage portfolio for Native borrowers across the northern Midwest
region.
The success of these tribes and the achievements of several others
is illustrated in Figure 4, which shows by state the total number of
HUD Section 184 mortgages from 1995 to 2015, and the percentage of
those mortgages on trust land. Montana and Wisconsin are among the
small group of states that rank at least moderately high in both
important metrics, demonstrating that mortgage lending on trust land is
viable if fully engaged with existing laws and programs.
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What is strikingly important is that all of these projects are
being accomplished under the mantle of tribal self-determination and
self-governance, producing models of success for all tribes. Additional
case studies are explored in the CICD's Tribal Leaders Handbook on
Homeownership.
Policy Considerations
Bringing housing and homeownership opportunities to all of Indian
Country requires capacity, commitment, creativity, and collaboration.
To do this, we need a multifaceted approach to normalize lending on
trust lands, leverage billions of dollars or federal funding, and
generate broad reservation-based economic development. Here are some
suggestions:
1. Focus on trust land
CICD research has shown that most of the public resources for
mortgage finance to Native households are being utilized on fee simple
lands. Lender surveys suggest that the additional complexity of lending
on trust land depresses the availability of credit and capital for home
loans. The barriers to building housing or otherwise leveraging
opportunities on trust lands limit Native people's ability to live
wherever they chose and to pursue meaningful economic development
strategies in their communities.
Addressing the issues with trust land homeownership will require
coordination and collaboration across the multiple federal agencies
that assist Indian Country with homeownership. In order to maintain
this focus, better data practices are needed to identify and map high-
needs rural areas and persistent poverty counties, and overlay them
with high Native populations on or near trust land. The Department of
the Interior should provide tribes with current, accurate, and easily
accessible information about their trust lands, along with data on land
ownership and encumbrances (including rights of way).I772. Modernize
the lending process on trust land
Streamlined processes and reliable data are key components of a
modern and efficient lending system on trust lands. To better
understand housing needs and determine whether these programs are being
put to good use in Indian Country, lenders and tribes both need access
to data on a timely basis and in a transparent manner. Requests for
updated data often go unheeded, even though the data are generally
available and sharing is not burdensome. Furthermore, data sharing,
analysis, and reporting are critical to allocating scarce resources and
holding federal programs and private lenders accountable to
constituents.
Additionally, the BIA lending system must be streamlined to meet
the market demand from Indian Country. This includes reform of the BIA
title, lease, and land records processes to conducting environmental
reviews on trust lands. The importance of well-trained and responsive
BIA and tribal staff cannot be underestimated--they are essential to
supporting an efficient lending process in Indian Country. \48\ But
their apparent priorities do not seem congruent with the pressing need
for supporting more housing development. Many tribes, tribal housing
authorities, and other housing developers have yet to utilize the full
potential of their programs for housing development on trust land.
Consequently, every year millions of federal funds fail to reach Indian
Country. Thus, modernizing the lending process requires a laser-focus
on tribal selfgovernance and land development tools such as the HEARTH
Act and private sector financing.I773. Expand access to capital and
credit in Indian Country: increase funding and technical assistance for
Native CDFIs
As conventional lenders retreat, Native CDFIs are emerging as
critical sources of capital. With local presences and professionals
experienced in Indian Country, Native CDFIs are wellpositioned to
service private mortgages, federal direct loans, and federal mortgage
guarantees. Native CDFIs also can be started with a much lower barrier
to entry than banks and even credit unions, and so are easier to access
as vehicles for credit on reservations while also providing essential
services like small business loans and, in some cases, depository
accounts.
In 2017, the CICD and the Minneapolis Fed's Community Development
Department, with help from the Native CDFI Network and First Nations
Oweesta Corporation, surveyed certified Native CDFIs across the U.S.
about their programs and funding. Findings from this study suggest
there are large unmet lending opportunities in the industry. \49\ When
asked about what prevents their organization from providing programs
and services, respondents overwhelmingly cited limited financial
resources as the leading factor. The estimated additional amount needed
to meet Native CDFI funding needs in 2017 was around $96 million. These
additional funds would be used primarily to expand existing services,
but also to expand into new services or new service areas (staff and
capital). This includes technical assistance in becoming certified
relenders and sellers of mortgages to Fannie Mae.
Actions to support Native CDFIs with capital and technical support
will be vital to expanding homeownership in Indian Country.I774. Use
innovative loan products.
Access to capital includes having funds to loan and also the
ability to maintain liquidity. This is even more critical for community
lenders who provide services to high-need markets, such as Indian
Country. Federal agencies and lending institutions should explore a
wide range of capital and investment opportunities that support Native
homeownership. The USDA Rural Development pilot program in South Dakota
using Native CDFIs as re-lenders of the Section 502 direct home loans
on trust land demonstrates the capacity and opportunity for growth of
the loan program and the Native CDFI.I775. Support investment pools and
secondary markets.
Indian Country also could benefit from innovative solutions that
address lenders' concerns about risk and to shore up capital for
investment needs. On the mortgage lending side, First Nations Oweesta
Corporation is becoming a national capital pool for Native CDFIs.
Another possibility is pooling leasehold mortgages as a way to offer
investment-quality mortgage-backed securities to a wide range of
investors. On the risk side, the Sisseton Wahpeton Tribe in South
Dakota has established a risk mitigation pool to reduce the liquidation
risk of mortgage lenders operating on trust land, even as the Tribe
supports to maintain heir homes and credit.
Access to secondary markets is essential to create liquidity and
keep capital circulating for more mortgage lending. Loan products such
as Fannie Mae's Native American Conventional Lending Initiative single-
family loan program provide an important mechanism for community banks,
credit unions, and Native CDFIs. It helps to deploy conforming
conventional loans that can be readily sold on the secondary market
pursuant to a tri-party agreement between Fannie Mae, the tribe, and
the lender. This type of arrangement is a useful model for other
lenders to consider because it provides a structure that ensures
efficiency of funding, suitable loan servicing, and appropriate
remedies, all of which support better systems for tribes.
Opening Doors to Homeownership in Indian Country
Indian Country's growing population, positive economic growth, and
increasing demand for homeownership present a momentous opportunity for
tribal communities, lenders, and the United States. Innovative tribes
and lenders are already finding a way to expand housing and
homeownership opportunities in Indian Country despite generations of
economic deficits, lagging infrastructure investments, and heavy
bureaucratic burdens. They are re-establishing a connection to the land
and igniting the engines of economic self-sufficiency. Indeed, today's
tribal leaders are framing their efforts with community-determined
goals and designing new paths forward to lift and support their people.
We need to recognize and support these efforts, and foster this
forward momentum. This means tackling the procedural barriers head on,
ensuring access to capital at fair rates, and creating more housing
options on trust lands. Opening the door to homeownership also means
instilling hope for future generations of Native communities and
families. This work--bringing new resources and ideas into action in
Indian Country--requires many hands. It can be done only through
partnerships, collaborations, and community commitments.
ENDNOTES
\1\ See Listokin, David et al., Mortgage Lending on Tribal Land: A
Report from the Assessment of American Indian, Alaska Native, and
Native Hawaiian Housing Needs, U. S. Department of Housing and Urban
Development, December 2016 (hereafter Mortgage Lending on Tribal Land
Report). ``Actual'' homeownership here refers to non-rental status.
\2\ Feir, Donna. The Higher Price of Mortgage Financing for Native
Americans, CICD Working Paper 2019-06 (2019) (hereafter Higher Price
Mortgage Financing for Native Americans).
\3\ See the Center for Indian Country Development website for
research paper and research resources, including the Tribal Leaders
Handbook on Homeownership (2018) (hereafter TLHH). The CICD published
the TLHH as a comprehensive guide to the mortgage lending process in
Indian Country and a resource for addressing challenges to
homeownership. It includes ``best practice'' case studies illustrating
how tribes overcame financial and institutional obstacles through
innovation and perseverance to create homeownership in their
communities.
\4\ For a thorough discussion on the history of and contemporary
issues facing mortgages on trust land, see Davila, Christina, and Keith
Wiley, Exploring the Challenges and Opportunities for Mortgage Finance
in Indian Country, Housing Assistance Council, Washington, D.C., 2018.
\5\ Federally recognized American Indian tribes and Alaska Native
villages have a government-togovernment relationship with the United
States and possess inherent rights of self-government (i.e., tribal
sovereignty). Because of this political relationship, the federal
government has a general trust obligation to promote the welfare of
Native peoples by providing housing, health care, and other services on
reservations and tribal areas.
\6\ Trust lands are tribal lands held by the federal government in
trust for the use and benefit of tribes and Native people, most of
which are located within reservations. Trust lands may not be
encumbered or conveyed without the consent of the federal government.
\7\ As used herein, the term Native people will be used
interchangeably with the U.S. Census category of American Indian and
Alaska Native (AIAN).
\8\ From 2000 to 2010, the growth rate for the total AIAN
population in tribal areas was 12 percent. See Pindus, Nancy, G. Thomas
Kingsley, Jennifer Biess, Diane Levy, Jasmine Simington, and
Christopher Hayes, Housing Needs of American Indians and Alaska Natives
in Tribal Areas: A Report from the Assessment of American Indian,
Alaska Native, and Native Hawaiian Housing Needs, U.S. Department of
Housing and Urban Development, Office of Policy Development and
Research, January 2017 at 15-18 (hereafter HUD Tribal Area Study). The
U.S. Census Bureau forecasts continued growth rates for the AIAN
population, projecting a rise in the AIAN-alone population to about 4.2
million people by 2030. See Pettit, Kathryn L.S., G. Thomas Kingsley,
Jennifer Biess, Kassie Bertumen, Nancy Pindus, Chris Narducci, Amos
Budde. Continuity and Change: Demographic, Socioeconomic, and Housing
Condition of American Indian and Alaska Natives. U.S. Department of
Housing and Urban Development, Office of Policy Development and
Research, Jan. 2014, at 8.
\9\ HUD Tribal Area Study at 10. This report studied ``tribal
areas,'' as used by the U.S. Census Bureau, which generally includes
Indian reservations and counties that encompass or surround them.
\10\ For a more thorough discussion of the problems of
overcrowdedness in Indian Country, see: Overcrowded Housing and the
Impacts on American Indians and Alaska Natives. Field Hearing before
the U.S. Senate Committee on Indian Affairs, S. Hrg. 115-404, August
25, 2018.
\11\ HUD Tribal Area Study, Exhibit ES.3, at XXI.
\12\ National data on Native communities is aggregated and
reported as generalized observations, lacking much contextual
information at the tribal level. To better understand the needs and
assets of their communities, several American Indian tribes have
undertaken tribe-specific community assessments, including a more
accurate reservation census count, the number of habitable housing
units, and a survey of housing needs.
\13\ Taylor, Lauren A., Housing and Health: An Overview of the
Literature, Health Affairs Health Policy Brief, Jun. 7, 2018.
\14\ HUD Tribal Area Study at 86.
\15\ (a) ``Housing Needs and Homeownership Study,'' Yankton Sioux
Tribe and Big Water Consulting, June 2019; (b) ``Housing Needs and
Homeownership Study,'' Standing Rock Community Development Corporation
and Big Water Consulting, June 2019; (c) Case Study: Housing Needs
Study, Cheyenne River Housing Authority, Eagle Butte, South Dakota,
TLHH at 48 (hereafter Housing Needs Case Study); (d) Model Housing
Needs Assessments, TLHH Appendix at 141.
\16\ Kunesh, Patrice H., Creating Sustainable Homelands through
Homeownership on Trust Lands, in ``Meeting Native American Housing
Needs,'' Rural Voices, Housing Assistance Council, Washington, D.C.,
Fall 2017.
\17\ (a) Akee, Randall K. Q., Katherine A. Spilde, Jonathan B.
Taylor, The Indian Gaming Regulatory Act and Its Effects on American
Indian Economic Development, Journal of Economic Perspectives 2015 v.
29, 185-208; (b) Akee, Randall K. Q., Maggie R. Jones, Sonya R. Porter.
Race Matters: Income Shares, Income Inequality, and Income Mobility for
All U.S. Races. Demography 2019 v. 56, 999-1021.
\18\ The modest increase was $9,650 in 1990 to $14,355 in 2018 (a
48 percent increase, compared to a 9 percent increase for all
Americans).
\19\ Akee, Randall K. Q., William E. Copeland, Gordon Keeler,
Adrian Angold, E. Jane Costello. Parents' Incomes and Children's
Outcomes: A Quasi-Experiment Using Transfer Payments from Casino
Profits. American Economic Journal: Applied Economics 2010 v. 2: 86-
115.
\20\ Feir, Donna, The Landscape of Opportunity in Indian Country:
A Discussion of Data from the Opportunity Atlas. CICD Working Paper
2019-03 (2019).
\21\ Feir notes that this is exploratory research and the findings
are nuanced depending on the particular unit of observation (census
tracts versus tribal statistical areas). This study seeks to ascertain
the experiences on census tracts covered by tribal statistical areas,
which approximate American Indian reservations.
\22\ Indian Self-Determination and Education Assistance Act of
1975. Public Law 93-638. 88 Stat. 2203-2217, Jan. 4, 1975.
\23\ Native American Housing Assistance and Self-Determination Act
of 1996. Public Law 104- 330. 110 Stat. 4016-4052, Oct. 26, 1996.
\24\ The HEARTH Act of 2012, Public Law 112-151, which creates a
voluntary, alternative land leasing process available to tribes,
amended the Indian Long-Term Leasing Act of 1955, 25 U.S.C. Sec. 415
(July 30, 2012).
\25\ CICD staff conversation with Sharlene Round Face and David
Moran, U.S. Department of the Interior Bureau of Indian Affairs HEARTH
Act Training, Sept. 4, 2019, Albuquerque, New Mexico.
\26\ A list of Federal Mortgage Programs for Native Americans is
attached.
\27\ U.S. Department of Housing and Urban Development Section 184
Indian Home Loan Guarantee Program. https://www.hud.gov/section184,
accessed Oct. 9, 2019.
\28\ The NADL program, which began in 1992, focuses on assisting
veterans who live on federal reservation lands, Alaska Native villages,
and Hawaiian Homelands. The NADL program differs from the standard VA
loan in a fundamental way--it is not a guarantee made by private
lenders, but a direct loan made by the VA. The NADL requires that
tribes establish memoranda of understanding (MOU) with the VA that
delineate how the program operates and the responsibilities of both the
tribe and the federal government, including the process to
collateralize the loan on trust land.
\29\ See ``Collaborating for Prosperity With American Indians and
Alaska Natives Rural Development Programs for Tribes, Tribal Families,
Children, and Communities,'' USDA Rural Development Innovation Center
(2018). https://www.rd.usda.gov/files/508_RD_TribalReport_2019.pdf
\30\ U.S. Department of Housing and Urban Development and U.S.
Department of the Treasury. 2000. One-Stop Mortgage Center Initiative
in Indian Country: A Report to the President. Washington, DC: U.S.
Department of the Treasury.
\31\ For a full list of Native American financial institutions and
the scale and scope of their assets, see Mapping Native American
Financial Institutions, a dynamic map of Native owned banks, credit
unions, and community development institutions.
\32\ HUD Tribal Area Study at 86.
\33\ Mortgage Lending on Tribal Land at 10.
\34\ Analysis of data provided by HUD conducted by Center for
Indian Country Development staff.
\35\ For instance, the BIA recently released a mortgage handbook
to delineate its review and approval process. U.S. Department of the
Interior, Bureau of Indian Affairs, Division of Real Estate Services,
52 IAM 4-H, Indian Affairs Mortgage Handbook, July 15, 2019.
\36\ Along with the leasehold (similar to owning a townhouse or
condominium in which the land and the dwelling unit are separate
property interests), the Bureau of Indian Affairs must approve a land
survey and environmental review, and then issue a certified title
status report on the property (delineates the legal description and
encumbrances on the property). The process for obtaining a final TSR
can be lengthy and involved. The HEARTH Act of 2012 creates an
alternative land leasing process that encourages tribes to make their
own decisions about leasing and leverage their lands for optimal
development.
\37\ Mortgage Lending on Tribal Land at viii.
\38\ Higher Price Mortgage Financing for Native Americans.
\39\ Home Mortgage Disclosure Act of 1975, 29 U.S.C. 2801-
2811.
\40\ Todd, Richard M. and Kevin Johnson, Race, location, and
manufactured-home loans on American Indian reservations, CICD Blog,
Dec. 4, 2018.
\41\ Todd, Richard M. Manufactured-Home Lending to American
Indians in Indian Country Remains Highly Concentrated, CICD Blog, Dec.
1, 2017 (hereafter Highly Concentrated Lending).
\42\ Highly Concentrate Lending. Both of these two lenders are
owned by Clayton Homes.
\43\ For a more comprehensive discussion of manufactured housing
in Indian Country, see: Manufactured Homes: An Affordable Ownership
Option. Ch. 11, TLHH.
\44\ Case Study: Large-Scale Tribal Subdivision Black Mesa View,
San Felipe Pueblo, New Mexico. TLHH at 25.
\45\ Case Study: Homebuyer Readiness Program, Salish and Kootenai
Housing Authority, Pablo, Montana. TLHH at 57.
\46\ Housing Needs Case Study.
\47\ Case Study: HEARTH ACT Implementation, Ho-Chunk Nation
Reality Division, Black River Falls, Wisconsin. TLHH at 88.
\48\ Indian Programs: Interior Should Address Factors Hindering
Tribal Administration of Federal Programs. U.S. Government
Accountability Office, January 2019.
\49\ Kokodoko, Michou, ``Findings from the 2017 Native CDFI
Survey: Industry Opportunities and Limitations,'' CICD Working Paper
No. 2017-04, November 2017.
The Chairman. Again, I would like to thank all of the
witnesses for being here. We will have five minute rounds of
questions. I am going to start with Mr. Kurtz.
My first question is, why do tribes need separate MOUs with
each Federal agency that offers home loan products? Examples
would be, you have the 184 loan MOU with HUD, but then if they
want to do a VA loan, they need a separate MOU with VA.
Mr. Kurtz. Not to split hairs, but we don't require an MOU
which, in our world, is a lot more technical document. We do
have to sort of sign off on the tribes involved with the 184
process. But I think that is a real interesting point, to look
at how we could standardize the certification across the
Federal Government. That is something I am happy to look into.
The Chairman. That is something you might be able to work
on?
Mr. Kurtz. Absolutely.
The Chairman. Why is the 184 Home Loan Guarantee Program so
underutilized on the reservation?
Mr. Kurtz. Well, the program was designed to provide
housing opportunities for Native Americans living anywhere, not
just on reservations or trust land. But we are going through a
rulemaking process right now to try to reduce some of the
regulations in the 184 program to bring them up to industry
standards. In that process, we are looking at ways we can
increase the amount of loans on trust lands. But we also always
have to sort of walk a fine line here, because there are some
areas of the Country that don't have any trust lands, such as
Oklahoma or Alaska. So it is always a bit of a fine line about
how we go about doing that.
The Chairman. What are your priorities in this new post?
Mr. Kurtz. I have three main priorities in sort of
everything I do. I call them my three Ps, it is people,
programs and properties. Trying to help the people, that is why
I work in the affordable housing industry. Providing someone
with a home is, in my mind, one of the easiest ways we can help
people.
Our programs, how we can reform, make our programs better
and more streamlined, and how we can give more local control.
As I said in my testimony, what works in Detroit, which I could
go on about for hours about, it doesn't mean it works
everywhere else in the Country, and how we get our programs to
work well. And then properties, involve how do we provide
people with decent, safe and affordable housing? I honestly
think one of the things we are doing that encompasses all three
is the reforms to the 184 program, as well as our competitive
program for the Indian Housing Block Grant Program.
The Chairman. Do you think we should have a separate Indian
Housing Program, separate from the Public Housing Program?
Mr. Kurtz. I do, sir. Public housing is the 800 pound
elephant at HUD. Budget-wise, it is a massive program. We need
to elevate the Office of Native American Programs to have the
Assistant Secretary work fully and solely on these really
unique and important issues that are faced by Native Americans
across the Country.
The Chairman. Thank you.
Councilman Mount, how come the mortgages are higher priced
on the reservation versus off?
Mr. Mount. The main thing is that there are so many Federal
impediments to getting a home loan on trust land that the
interest goes up, it increases costs to the mortgage lenders.
Not only that, banks also have huge misconceptions about
lending on reservations. They are a little biased about it.
I have one example. As a commercial loan, our tribal
corporation, Island Mountain Development Group, they took out a
commercial loan for a new call center. They were required to
put 50 percent down, which was $400,000, and their interest
rate was 16 percent.
The Chairman. Sixteen percent, really?
Mr. Mount. Yes. It is ridiculous. A lot of it is just
misconception.
The Chairman. What about a categorical exemption for
lending on the reservation?
Mr. Mount. Categorical exclusion?
The Chairman. Yes.
Mr. Mount. Oftentimes, it is really burdensome; it is
really messy. And it is unnecessary. I also have one example
for that, also. One of our tribal members was getting a home
loan through the 184 process, the CEO of our corporation. He
had to get an EPA specialist to come and say that he was not
going to disturb any coastal land in north central Montana.
[Laughter.]
Mr. Mount. It is ridiculous. It is unnecessary and
burdensome.
The Chairman. Director LaCounte, you talked about TAAMS.
You are getting that expedited. That is holding up some of
these loan applications. You are going to take care of that?
Mr. LaCounte. I am taking care of that, absolutely.
The Chairman. You have to keep working on that. They have
to have a streamlined process, so that is not holding up
things.
Mr. LaCounte. We have definitely made some major changes.
The Chairman. You talked about it a little bit but just so
you are staying on it. Of course, the key is at the end of all
the things you talked about, we have streamlined the process
and they are getting the approvals.
Mr. LaCounte. The portal I spoke about will allow the
tribes, HUD, anybody to get to the data without having to
actually get into the system and go through the background
checks and the training that is required.
The Chairman. You went through it pretty well, but just so
you are watching to make sure that results in the expedited
approvals.
Mr. LaCounte. I will do that.
The Chairman. Because I know guys like Senator Tester are
amazing with technology and computer systems, but guys like me
have a little more trouble. I just want to make sure once you
have done all that computer work, it actually gets the
applications through the process expeditiously.
Ms. Kunesh, how do we get some of those innovative programs
to be used, so that people know about them out there in Indian
Country and use them? What do we do?
Ms. Kunesh. The Native CDFIs are everywhere and we have
seen this in the Honorable Governor Zuni's testimony. Native
CDFIs, I think, are really filling a void of lending in Indian
Country. They are considered closest to the constituents. They
know their communities, they are preparing people to be
homeowners, not just your financial education but an
understanding of the responsibilities of maintaining a home.
They are originating loans; they are actually creating loan
products that serve and meet the community needs.
I support Native CDFIs stepping into this role and through
the 502 program, for example, at USDA. I worked at USDA and I
saw the billions of dollars that go out into community support
and community building but bypassing reservations. So using
Native CDFIs to be the re-lenders to support that lending.
That could work for HUD, perhaps that could work for VA.
But they are ready, willing, and a well-trained workforce. Not
only that, but they are working with Fannie Mae, for example,
to create a secondary market. A 30-year mortgage is a
substantial investment not just for the borrower but a huge
commitment for the lender. So we need a secondary market to
sell these loans and replenish the capital in Indian Country.
They need more capital. We did a survey of Native CDFIs a
few years ago. The very conservative estimate at that point was
about $48 million of unmet lending need that their constituents
were needing. We think it is probably triple that number. So,
more capital, more support and using them to deliver the
programs is important.
The Chairman. When you talk about selling those loans, are
you talking about guaranteed or are you talking about non-
guaranteed loans?
Ms. Kunesh. These are non-guaranteed loans. These are
conventional loans.
The Chairman. So that is more challenging, who could be the
broker to sell those unguaranteed loans. How about on
guaranteed?
Ms. Kunesh. On guaranteed, those are, of course, the
Federal Government guarantees those loans.
The Chairman. But unguaranteed, give me a for instance.
Ms. Kunesh. A conventional loan, a 30-year mortgage, Native
CDFI, there is a wonderful example out of Maine, it is the Four
Directions. They have a 30-year mortgage, and stacking those,
two, three, four, ten mortgages, add up to a lot of money. They
need to replenish not only their capital but they need to sell
those loans, get them off their portfolio. They are being
trained by Fannie Mae to be able to sell those loans, to be
certified to sell those loans to Fannie Mae. That relieves them
of the obligation.
They may take on some servicing needs on the back end, too,
so they are also able to create an income revenue.
The Chairman. Thank you. Vice Chairman Udall.
Senator Udall. Thank you, Mr. Chairman.
Governor Zuni, the Tiwa Lending Service partners with your
Pueblo's housing authority and other Isleta government offices
to make the dream of homeownership a reality for tribal members
in and around the community. It has been incredibly successful.
You testified after only eight years in operation, Tiwa has
a mortgage portfolio totaling $7.4 million and a zero percent
default rate. That is truly incredible.
As a Native CDFI, how does Tiwa accommodate the unique
factors such as poor and no credit having a chilling effect on
traditional mortgage lending in Indian Country?
Mr. Zuni. That is because they had to be certified, they
had to go to the classes, and they are really devoted. The
people who go to Tiwa Lending, of course, they have to pass
certain things. But because of the process, it is a shorter
process.
Right now I think we have 78 members in that group. They
are really enjoying that program. They design their own homes,
they get their own contractors, and appropriation is done quite
quickly through the Tiwa Lending. That is why a lot of our
tribal members now, and I am hoping other tribal members
throughout the Nation, can go to that process. It is a very,
very nice program for each tribe to have.
Senator Udall. How would Isleta Pueblo's residents finance
their home loans without Tiwa?
Mr. Zuni. They would have to go to the HUD Program. There
is not a mortgage company that would associate with our
sovereign Nation. It is hard for them to go to a bank in the
city areas to get a program because of our trust land. So it is
very difficult for anybody to go outside unless it is a mobile
home, which they can take away, but not a permanent home.
Senator Udall. Director LaCounte, we just heard Governor
Zuni describe the unique role that Tiwa Lending Services has in
promoting and enhancing Isleta Pueblo's tribal economy,
particularly as it relates to homeownership. And Ms. Kunesh
testified that Native CDFIs are ``critical sources of capital
as traditional lenders retreat from tribal economy.''
So why has the Administration proposed to completely
eliminate funding for the Native CDFI Program for the past
three fiscal years?
Mr. LaCounte. My understanding is that they believe there
are other Federal agencies that are much more equipped to
handle housing than the Bureau of Indian Affairs. That is my
understanding, Senator.
Senator Udall. But there is no doubt this is a crucial,
crucial program. Can you commit to advocating to ensure that
this vital funding is not on the chopping block in future
fiscal cycles?
Mr. LaCounte. I can commit to attempting to do that.
Senator Udall. Good. That is what we want you to be working
at.
Ms. Kunesh, I was alarmed to see in the chart on page five
of your written testimony which seems to indicate that the
number of Section 184 loans that HUD guarantees on fee and
trust lands has been in decline since 2016. Is that right?
Ms. Kunesh. Yes, sir.
Senator Udall. Can you explain how CICD arrived at this
conclusion?
Ms. Kunesh. We obtained data from HUD. We had data up
through I think 2015, 2016, and then I think on Friday, we got
additional data and were able to put together the graph. We see
a noticeable dip in the volume of lending since 2016.
Senator Udall. Mr. Kurtz, the CICD's chart, based on HUD's
own data, appears to contradict your testimony that the HUD
Section 184 program is a continuing success. Can you explain
the drop in Section 184 lending since 2016?
Mr. Kurtz. Since 2016, we have actually seen a 50 percent
increase in the amount of lending in trust land. So we are
seeing an increase after that little drop.
Senator Udall. Since then. But it is accurate what they are
saying here about what happened?
Mr. Kurtz. Yes, in 2016, there was a decline, but we are
seeing that increase. We hope that our regulations we are
currently working on will further that increase in trust land.
Senator Udall. So, lenders aren't leaving the market then?
That is what we are really worried about with those kinds of
numbers.
Mr. Kurtz. I am sorry?
Senator Udall. Are lenders leaving the market?
Mr. Kurtz. I can't say for certain. I don't believe so. But
coming from the City of Detroit, we also saw a lot of
underserved lending in areas. It is a problem that all of us
need to work together to try to limit its effects.
Senator Udall. Mr. Kurtz, the Center for Indian Country
Development examined loans that were made to tribal members for
manufactured mobile homes, and found these loans are not only
more prevalent among Native Americans living on trust land but
also more costly than loans for conventional brick and mortar
homes. A primary reason for this trend appears to be that
mobile home loans simply take less time than a typical mortgage
for homes built on trust lands, even though mobile homes
depreciate in value quickly and are not as durable as
conventional brick and mortar-built homes.
In light of this finding, is HUD exercising oversight into
the current use of manufactured housing in Indian Country?
Mr. Kurtz. We do have oversight, in the sense that we need
to ensure that manufactured housing property, that the property
meets certain standards that are statutorily set, as well as
any additional standards that the tribal leaders can place on
the property. Because of the sovereignty, the tribes can place
additional regulations, if you will, on what a property can
look like in the 184 program.
Senator Udall. Are you concerned with the CICD's findings
that loans for manufactured housing come with high-priced
financing and that this financing may be subject to captive
financing?
Mr. Kurtz. I was unaware of that issue, but we will
definitely look into it.
Senator Udall. Thank you.
How does HUD work with lenders and borrowers to ensure that
the borrowers receive the best possible rate for their home
loan, and that they are not taken advantage of by the lender?
Mr. Kurtz. We have dedicated staff that does monitoring to
ensure that the program is working effectively. If there are
issues, we try to address them.
Senator Udall. Thank you, Mr. Chairman.
The Chairman. Senator Tester.
Senator Tester. Thank you, Mr. Chairman and Ranking Member
Udall.
First things first, it is good to see Tony Walters, former
ace, crack staffer of the Indian Affairs Committee in the
audience. It is good to have you here. He is known amongst my
crew as the urban Magic Johnson of the hardwood.
[Laughter.]
Senator Tester. At any rate, Mr. Kurtz, you talked about
Section 184 reforms, how it is going to give more local
control. I do not want to put words in your mouth but that is
what I heard, right?
Mr. Kurtz. Yes.
Senator Tester. So tell me, Nate Mount just talked about
the fact that there is climate change, but I do not know that
it is quite to the extent of having coastal waters in Montana
anytime soon.
But can you tell me how it is going to empower Native
Americans, give them more local control so they will not have
to jump through those kinds of silly hoops?
Mr. Kurtz. We are looking at ways across the department to
address some of the environmental issues that are faced by the
programs, the environmental regulations faced by the programs.
Senator Tester. You are part of HUD. What he talked about
was EPA. Are you going to be able to impact that kind of stuff?
It looks to me like somebody needs to make sure they have a
job.
Mr. Kurtz. It is kind of ridiculous, what we are hearing
today.
Senator Tester. Not kind of, it is.
Mr. Kurtz. I am happy to look into it.
Senator Tester. I would just hope that when you do your--
look, there are reasons for certain levels of regulations
because of taxpayer dollars and all that, but the truth is that
you have to stay grounded. Hopefully you will do that. I really
do think if we can empower local tribes and hold them
accountable, I think we will get a better result.
Mr. Kurtz. I couldn't agree with you more, sir. I was a
career civil servant for six years at HUD, and had the unique
opportunity to write some rules and regulations that I had to
implement when I was in the City of Detroit. They made a lot
more sense when I was sitting here than they did in Detroit.
Senator Tester. Do you work, does HUD work, or do you know
if HUD works with many tribal CDFIs?
Mr. Kurtz. We do. CDFIs can be lenders in the 184 program.
Senator Tester. How prevalent is that?
Mr. Kurtz. There are a handful. I could not tell you the
exact number. I would have to get back to you on that.
Senator Tester. Do you look for opportunities with tribal
CDFIs?
Mr. Kurtz. I don't believe we actively do, but it would
make sense. It is something to look into.
Senator Tester. Do you think you could do that?
Mr. Kurtz. We definitely could look into it.
Senator Tester. Once again, I think there is an opportunity
to really get to a problem. Nate talked about it. Did you say
75 to 85 percent unemployment in your neck of the woods? If you
drove up there, you would say, am I in the inner city of
Chicago, because the housing us really tough.
Nate, Ft. Belknap I think became the first Montana tribe to
submit a tribal leasing regulation for BIA approval. Is that
correct?
Mr. Mount. Yes.
Senator Tester. When did you do that?
Mr. Mount. We did it in September of this year.
Senator Tester. So it has been a month?
Mr. Mount. Yes.
Senator Tester. Have you heard anything back from BIA?
Mr. Mount. This morning we spoke with one of the
solicitors, Mr. Dave Moran. He assured us that the process will
be streamlined, but we are really concerned because we do have
a backlog.
Senator Tester. Did he tell you when he was going to get
back with a response saying yea or nay?
Mr. Mount. He didn't give us an exact date, no. He said it
would be within the 120-day timeframe, but there is a backlog
there.
Senator Tester. Darryl, you knew this was coming. What can
you add to this conversation about getting this approved, which
will enable Ft. Belknap to execute and approve individual
rental leases?
Mr. LaCounte. What I have witnessed and seen since I got to
D.C., Senator, is that although I am not an advocate of
centralizing any programs, I am centralizing the HEARTH Act
approvals. Because as he requested in his testimony, not
knowing that I was doing that, I am looking for that same
person, that HEARTH czar that knows the system.
I will also add that the solicitor's office has committed
to me in the past two weeks that they will add another
solicitor besides Mr. Moran, whom he just mentioned. We are
definitely addressing it.
Senator Tester. So I got it. In order to have a good
centralized system, you have to have continuity of employment.
I don't need to tell you about BIA's lack of continuity in
employment. I don't know how many people you have worked with,
Nate, but it is probably more than five, maybe more than I have
fingers, actually.
That is a real problem and a real frustration. Can I get
some sort of commitment from you, Darryl, you will see that
they get their approval ASAP?
Mr. LaCounte. Certainly.
Senator Tester. That is good.
Mr. LaCounte. We are going to address the hurdles that are
there.
Senator Tester. I have one more and then I am going to turn
it over. You talked about the Enterprise Data Management System
and how this is going to bring TAAMS and other fragmented
databases into one. How close are you to having that to
reality? I think it is a great idea and I applaud the effort. I
think the Chairman said the same thing. How close is it to
reality?
Mr. LaCounte. It is within a year.
Senator Tester. Within a year?
Mr. LaCounte. Yes.
Senator Tester. So when we have this hearing next year, it
will be done and people like HUD, the staff they want, and the
local tribes can get access to that database?
Mr. LaCounte. The portal itself should be within a month,
the portal to get to the TAAMS data. But the bigger database
that incorporates other systems is not ready.
Senator Tester. They will have access to TAAMS within a
month?
Mr. LaCounte. Access to the data in TAAMS.
Senator Tester. In TAAMS?
Mr. LaCounte. In TAAMS.
Senator Tester. That is cool.
Mr. LaCounte. Let me rephrase.
Senator Tester. They will get back to me if they do not
have access.
Mr. LaCounte. I had better give myself two months.
[laughter.]
Senator Tester. Okay, you have 60 days. That sounds good.
Thank you very much. I appreciate all your testimony. Tell
Neel Kashkari hello.
The Chairman. Senator Schatz.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Mr. Chairman. Thank you to all
the testifiers.
Governor, thank you for being here. I am going to start
with you. Talk to me a little bit about the process of becoming
a CDFI. How long did it take, how hard was it, how much
organizational capacity, manpower, person power did you need?
Mr. Zuni. They started that in 2009. We finally got it
approved in 2013 if I remember correctly. It was about a three
to four year process.
Senator Schatz. I assume you are talking to other tribal
leaders. Is that similar in terms of how long it takes to
accomplish?
Mr. Zuni. Yes, to get the funding and everything done and
CDFI certification.
Senator Schatz. I do not want to lose this opportunity for
you to tell us how we can help these individuals from the
Executive Branch to expedite this process because we have 60-
odd Native CDFIs, 3 in Hawaii, but we have 500-plus tribes and
Native organizations. If this ends up being the solution
because the private lenders are skittish about being in this
market, then we need to do a lot better than 60. We really need
to scale this up and make it workable. Because you are a well-
organized tribe, well led, you are able to kind of plow through
the bureaucratic morass.
My question is, how can we make it quicker and how can we
ask these people to make it quicker?
Mr. Zuni. Of course the help through you, to expedite it by
changing the policies or whatever you can, and working with the
BIA and HUD to eliminate some of these obstacles that we face.
Senator Schatz. Mr. Kurtz, what do we need to do about
this? I don't believe most of this is required by statute. I
just think this is a regulatory thicket that has sort of
emerged over many, many years. And in your defense, CDFI, when
we developed the statutes, including those that govern the
agencies that you are in charge of, we didn't anticipate this
solution to kind of emerge. But now that it has, what do we do
about making a CDFI like a 18-month process or a 12-month
process and not a labyrinth that has to be navigated?
Mr. Kurtz. The CDFIs are managed at the Treasury Department
so I am not really able to speak to that issue.
Senator Schatz. Is there anyone who can speak to this
issue?
[No audible response.]
Senator Schatz. Let me do it this way, Mr. Kurtz. This is
the problem. Somebody comes to the Federal Government and says,
your housing, so help me do housing. Then you say, well, I do
this portion of housing and you have to go talk to this other
agency. And you have to talk to another part of the agency that
I am in charge of, and on and on. Especially when you are in
the development business, you have to deal with a bunch of
stuff on the private sector side, county approvals and
everything else, then they end up sort of stuck not even
knowing who they are supposed to talk to first.
Mr. Kurtz, can you help us by reducing to writing a
flowchart on how all of this is supposed to work? I am going to
ask you to do it. You can do it with BIA or whomever.
But it seems to me that we should not be satisfied with
``that is Treasury.'' I get that is Treasury. I understand how
the government works. But the question becomes how do we make
this manageable for someone whose full-time job is not to
become a CDFI. You just got just passed a note. Is it useful
information to all of us?
Mr. Kurtz. I hope so. We are happy to increase the
participation of CDFIs in the 184 program. We would love to do
that. The creation of CDFI, I am happy to talk to the Treasury
Department to have a better understanding about how that works
and see if there are ways we can assist in increasing the CDFIs
in tribal lands.
Senator Schatz. Governor, was there a document, say a one-
page document that says here is your punchlist, who you have to
talk to and in what order?
Mr. Zuni. No. It took quite a while to get it through.
Senator Schatz. Can we work together between our Federal
agencies and develop a one-page punchlist of here is what you
need to do to become a CDFI?
Mr. Kurtz. Absolutely. I would have to talk to Treasury
about that.
Senator Schatz. The other question I have, and I didn't
quite get the answer following up on Vice Chairman Udall's
question, are private lenders leaving the market?
Mr. Kurtz. I think we are seeing generally there have been
less 184 loans over the last few years. But as a proportion, we
are seeing an increase in the trust land loans taking place.
Senator Schatz. Okay. Can we get some fidelity on that
data, how it all breaks down?
Mr. Kurtz. Sure.
Senator Schatz. I think the other question is, if there are
major shifts in what is happening in the lending market, not
just the sort of raw data on, it used to be 40 percent private
lenders and now it is 32 percent, but why? Also, whether we
should be concerned because if the needs are being met, I don't
care whether it is a CDFI or some other way to get the capital
into the community. But the question I have is what exactly is
happening with private lending? Is it problematical enough to
rise to the level of public policy, or is it just sort of the
vagaries of the market?
Can you get back to us on both what the data shows and then
what, if anything, we need to do about it?
Mr. Kurtz. Absolutely.
Senator Schatz. Thank you.
The Chairman. Why did Wells Fargo pull out of the 184
program? They were one of the larger participants.
Mr. Kurtz. I would have to get back to you on that, sir, on
the details.
The Chairman. Senator Daines.
STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. Thank you, Mr. Chairman.
It is an honor to have Council Member Nate Mount with us
here today. It is always nice to have another Montanan. Welcome
to Washington. It is great to see a friendly face, another
Montana face here in Washington.
I read your testimony and I have heard firsthand about Ft.
Belknap's struggles with housing. I applaud the direction the
tribe is taking, to think about how we can move to greater
homeownership. It is an important step forward and you have my
full support.
I have been active in leading the digitization of land
records, which I know can speed up the loan process but, as we
all know, there is a whole lot more that we can do.
Council Member Mount, thank you for coming here today to
speak about the housing issues facing Indian Country and for
your efforts in providing a most fundamental need. That is
hope.
My first question is for you. Could you detail the issues,
some of the problems you face, and how we can and how we need
to be more helpful to assist homeownership for Ft. Belknap and
also for other Montana tribes?
Mr. Mount. Yes, thank you, Senator Daines.
The biggest problem that I highlight in my testimony is the
TSR process. That was one of the bigger problems. Solving that
would include your providing oversight, Indian Affairs
providing oversight. I know this isn't the Appropriations
Committee, but you can provide oversight and also promote the
appropriations. We need that. We need to be able to digitize
our records so that we can have accurate information for
potential homeownership.
The other main issue was not really an issue but it was the
proposition of a priority deployment mechanism. I don't know if
you recall that in my testimony. It would basically allow the
tribes to designate housing areas, notify the HUD Secretary and
then thereafter BIA, the Bureau, would get the TSRs done within
a 90-day process period.
Senator Daines. You brought up the 90-day process, three
months. I have a question for Director LaCounte.
These housing difficulties are well known by tribes across
Montana. We just heard from Council Member Mount from Ft.
Belknap who spoke about the struggles they face, some of the
inefficiencies in working with the BIA.
He talked about the challenges. My question for you is, how
is BIA making this easier for tribes like Ft. Belknap and
others in Montana to access needed resources for homeownership?
Because at the end of the day, we are in the customer service
business. That is a customer. We are responsible to provide
customer service.
So if we think about the tribe as a customer, and you are
in the business of providing customer service in the BIA, how
can we help?
Mr. LaCounte. First off, a TSR is a title status report. To
hear 90 days, there is no 90-day timeframe. I ran that Land
Titles and Records Office. I gave them three days to put a
title status report out. I think HUD and others have confused
the tribes with that issue. I think it is oftentimes the lease
itself. It is not the title status report.
Better communication, we can do that. But this is our
priority, and it was my priority when I ran the Land Titles and
Records Office in Billings, Montana. I am surprised to hear the
testimony I am hearing today. I am going to get on the phone
when I get out of here and say what the heck happened. Because
when I left it was running quite well.
Senator Daines. Well, any help you can provide, if you have
a stove piped organization, whether it is HUD or BIA, we need
help. The last thing is a customer, Ft. Belknap being a
customer, they do not want to hear, well, it is an internal
problem here with the bureaucracy. So your leadership to help
sort that out, they do not need to hear excuses, but need to
see results on this, would be most appreciated.
Mr. LaCounte. Right. I am going to look into that one. I
take that one personally.
Senator Daines. Thank you.
If we can take this from three months to three days, I
think Council Member Mount might even buy you a dinner
somewhere.
Mr. LaCounte. I can't take it.
[Laughter.]
Senator Daines. Just checking on the ethics there. Good
work.
I have one last question. Ft. Belknap established the
Island Mountain Development Group as the economic arm for the
tribe. Island Mountain has done some admirable things to bring
economic opportunity to the tribe and the surrounding areas and
create jobs. It is a great story.
They have had experience, they being Island Mountain, with
difficulties with Indian housing loans. They know this process
can take over two years to complete. I came from the private
sector, where the Federal Government could probably take a few
lessons from, where efficiency and accountability is demanded
and expected. In the private sector, housing loans typically
are three months to complete. We are seeing two years in some
cases here in Indian Country.
Director LaCounte, the Federal Government takes two years
to complete the home loan process. The private sector, three
months. What actionable steps can be taken to align the
outcomes with the Federal process here with what we see in the
private sector? How do we take it from two years to 90 days?
I am not talking about the first issue, where we need to go
from 90 days to three days. I am talking about the whole home
loan process taking up to two years. You can help us on that
one too.
Mr. LaCounte. I will do what I can. What I am hearing here
today, is, he said it politely. I will be more direct and to
the point. There are a whole lot of lending institutions that
don't want to loan money on reservations or to Indian people.
They stall, delay. They do not provide us what we need and
sometimes they just go away.
I have a great example on Ft. Belknap. The former president
of the Ft. Belknap Indian Community, the last one, not
President Werk but President Azure, went to USAA, who proudly
serves veterans, at least that is what their TV ads tell us.
President Azure is retired military with a pension. He had
called me, I called him a friend. He called me a couple years
ago and said, would you be a reference for me. I am having a
difficult time getting a loan from USAA, who supports veterans.
Well, he is the President of the Ft. Belknap Indian
Community, he is a veteran on a pension and they wanted nothing
to do with him. He never got a loan from them. I am proud to
say he is now my superintendent there, and hopefully he will
try to get a loan again. That is the reality we live with.
I will do anything I can to reduce that process, but there
are a whole lot of people who do not want to loan money out
there. I will say that on the record.
Senator Daines. Thank you for your candor. If we just keep
circling the airport and not talk about what is really going
on, we are not going to land the plane. We need to get to the
bottom of this because what the tribe is doing in Ft. Belknap
is moving tribal members through to homeownership. I think that
is a critical part of continuing to move people up through the
American dream and into a path to prosperity.
It starts many times with homeownership. As Milton Friedman
once said, and I told the tribe this last time they were in my
office, Milton Friedman once said, nobody washes a rental car.
Home ownership is very important. Thank you.
The Chairman. Senator Smith.
STATEMENT OF HON. TINA SMITH,
U.S. SENATOR FROM MINNESOTA
Senator Smith. Thank you, Mr. Chair and Vice Chair Udall.
I want to thank all of you for being here. I really very
much appreciate it, for your testimony and your work to figure
out what we can do to remove barriers to homeownership amongst
Native communities.
I would like to especially welcome Patrice Kunesh for being
here today to share the great work that is being done at the
Center for Indian Country Development at the Minneapolis Fed.
It is wonderful to see you, and also the sister of my friend,
Mary Kunesh Podein, who is a Minnesota State legislator doing
amazing work with colleagues in Minnesota on missing and
murdered indigenous women, which is something many of us on
this Committee have been working on as well.
Thank you so much for being here. We are so lucky to have
you as a resource in Minnesota.
My office has been doing a series of meetings and listening
sessions all over Minnesota on the question of shortages of
housing across the board. We have had two meetings specifically
focused on the issues on Native-specific challenges with
housing and security and homeownership. Everywhere I go, people
tell me the same thing, which is what we all know as humans, if
you don't have a safe, affordable place to live, nothing else
in your life works. It is just really foundational.
A lot of the conversations that I have had with tribal
leaders touch on this issue we have been talking about today
around how we can make use of the HUD Section 184 program,
especially on trust lands. This program is meant to encourage
homeownership on tribal lands, but we just know it is not
working as well for families living on trust land.
Here is an example. The Minnesota Chippewa Tribe Finance
Corporation is a lender in my State and has made over $10
million in HUD 184 loans since 2006. But they have been
hesitant to use the program for properties that are on trust
land because they face such long delays in getting the
certificates of guarantee, which is what we have been talking
about.
They say if these delays were not such an issue, they could
make 30 percent more loans than they already do. Let me just
ask you, Mr. LaCounte, what do you think is causing these
delays?
Mr. LaCounte. Oftentimes, I would guess they are looking at
leasehold mortgages. Oftentimes, you have to carve out a small
piece of an existing tract to identify the boundaries that are
being held under this leasehold.
Senator Smith. Kind of the complexity of trying to
establish?
Mr. LaCounte. You are basically establishing a tract within
a tract which is going to require a survey. In your fine State,
you can only survey certain months of the year. I would guess
that is the majority of the holdup, because we recently opened
a title office specific to the Midwest region which is centered
out of Minneapolis. That title office is in Ashland, Wisconsin.
That is all they do is serve that region. My guess it is
probably that.
Senator Smith. It is really around kind of the complexity
of it.
Mr. LaCounte. Correct.
Senator Smith. Ms. Kunesh, what would be your perspective
on this? I would love to know what your research has told us
about what is causing these delays, and what we could do about
it.
Ms. Kunesh. What we have heard from the field, both from
the lenders and from BIA, is that there are about 83 touch
points for every single TSR. It involves multiple program
offices from the Bureau of Indian Affairs.
We have included a graph of the BIA TSR process, but it is
actually more complex than that in that it is decentralized
into area regional offices. There is a lot of variation between
area offices, and there is actually variation within area
offices.
So we believe there needs to be centralization and
standardization. We heard Mr. LaCounte talk about streamlining
the HEARTH Act. I think there needs to be a lending housing
czar as well.
Going back to an earlier question, I think the HEARTH Act
really is a good model, as well as one-stop mortgage. The
ability to have one mortgage form, one process across all the
agencies, I think really could support Mr. LaCounte in his
work.
Senator Smith. This would make a big difference in terms of
helping solve this overall problem of homeownership if we are
able to fix this.
Ms. Kunesh. I definitely think so. We talked a lot about
184. But again, we have 502 from RD and we have the Veterans
Affairs Native American Direct. If we had a one-stop mortgage
process within the Federal Government that we could support the
BIA with its new technology, I think we would get more lenders
to the market, I think we would see much more activity on
reservation lands, and creating more homeownership, yes.
Senator Smith. Would you say we are losing lenders?
Ms. Kunesh. I have heard directly from lenders and from
folks in the field that lenders are retreating from the 184
program because of the administrative hurdles and processes. It
is something that I really do not know that we can appreciate,
that if we don't get a second certified TSR within a certain
period of time, those lenders are penalized. Sometimes they
have to buy back those loans. So they are hesitant to get
involved in a program that is uncertain, maybe unstable, and
they don't know that is going to support them.
Senator Smith. Thank you. I know I am out of time but if my
colleague will allow me just a moment more?
This is a problem we obviously need to work on and to fix.
I appreciate your comments very much. Meanwhile, I have been
working with my colleague, Senator Rounds from South Dakota, on
a bill that would allow lenders to take advantage of this HUD
guarantee and make more loans on trust land. What the bill
would do is, it would allow HUD to issue the certificate of
guarantee before BIA issues the final title status report.
While this is causing a big delay that is creating a lot of
problems for people, we could just allow for HUD to issue the
certificate ahead of time.
Then what would happen is that lenders would temporarily
take on the risk of borrower default, just until the final
title status report is issued. In Minnesota, lenders like the
Minnesota Chippewa Tribe Finance Corporation agreed that this
would make it a lot easier for them to use the HUD 184 program
on trust land, and it seems to me, reduce one hurdle that is in
the way while we are trying to solve the fundamental problem
here.
I just wanted to mention that to my colleagues. I would
love to have you take a look at this proposal. Maybe now that I
am out of time, I can follow up with the rest of you and see
whether, Mr. LaCounte in particular and Mr. Kurtz, how you
think we might make this work.
Thank you.
The Chairman. Senator Cortez Masto.
STATEMENT OF HON. CATHERINE CORTEZ MASTO,
U.S. SENATOR FROM NEVADA
Senator Cortez Masto. Thank you. Thank you all for being
here.
Let me follow up on what Senator Smith has talked about. In
Nevada, our number one issue is housing as well. I have been
throughout the State to our urban and rural areas and our
tribal communities talking about housing. Council Member Mount,
I think you said, is the number one issue you are seeing is
housing as well.
Like my colleague from Minnesota, we are trying to address
this issue and what we can do at the Federal level to make it
pencil out. So we are building more housing and affordable
housing.
Let me talk about one area, though, which is manufactured
housing. I am curious. First of all, I am going to open this
up. Let me ask just the panel in general who are willing to
speak to this, the quality of manufactured housing, is it
different today than what it was of past? I have heard concerns
about the quality of manufactured housing is not worth
investing in, or taking out that loan, and bringing it into our
communities. But I also know that it has changed over the
years. There is an opportunity now to really find some good
quality manufactured housing that can come into our communities
and address our housing concerns.
Can somebody address the quality issue? Is there a quality
issue with manufactured housing? Ms. Kunesh?
Ms. Kunesh. If I may, Senator, we have studied manufactured
housing in Indian Country. There are very high standards for
manufactured or modular, factory-built homes. So I don't
believe it is an issue of quality.
We do have some very old units in Indian Country. I think
those are much fewer now. But the opportunity to create
homeownership through modular homes is actually quite exciting.
And it is not a quality issue. What we find oftentimes it is
access to the market. We have found in our research, through
HMDA research that of all Native American applications for home
loans, 70 percent of those loans are for manufactured housing.
We have a graph in our written testimony that shows both
the application as well as the denial rates. Seventy percent of
those applications also are denied. We find that it is a
captive market. Only two lenders represent the vast majority,
they are also are manufacturers of homes. So in terms of the
high price of loans on reservation, we see that manufactured
housing accounts for 35 percent of that high interest rate. It
is quite substantial.
Senator Cortez Masto. Thank you, because you are leading
right into my next question. I think there is an opportunity
for manufactured housing. I thought the report you put
together, you just identified it, has me concerned. Not only is
it a captive market, but I am concerned about steering, quite
frankly. What I have seen is, there was an article in the
Seattle Times in 2015 that reported that a Clayton Homes
salesperson told a Navajo woman shopping for a manufactured
home that Vanderbilt was the only lender that finances on her
tribal land. That was not true.
I do have a concern that what we are seeing more of is this
type of predatory opportunities occurring on tribal land. The
article that I was referring to is part of a series of articles
on predatory manufactured housing in the Seattle Times from
2015 to 2016. They found that Native Americans were targeted by
steering practices by manufactured homes sales people. That was
before the CFPB, which is the Consumer Financial Protection
Bureau, banned the practice. However, Congress reversed the
prohibition when it passed S. 2155.
That is my concern, is that now we are going to go back to
the days of steering and more of this happening in our
communities. I think it is incumbent upon all of us to really
highlight what is going on and demand that the prohibition is
put in place, because we are seeing what is happening.
So I guess for purposes of Mr. LaCounte and Mr. Kurtz, do
you have any concerns? Is your data telling you that what you
are seeing, or any type of steering or activity when it comes
to manufactured homes in our tribal communities?
Mr. Kurtz. I have not seen anything about steering with
manufactured home loans. But I will say to the quality issue,
however, you can almost get better built than stick built with
manufactured homes. We actually had an expo last year about
innovative housing methods on the Mall. I believe we are going
to have it again this year. We will be sure you get an invite
to seeing some of these innovative manufactured housing
processes.
Senator Cortez Masto. There is an opportunity here.
Mr. Kurtz. Yes.
Senator Cortez Masto. Mr. LaCounte, do you see any type of
steering? Are you concerned? Is this on your radar at all?
Mr. LaCounte. My concern would be that there are so few
lenders out there that in certain cases, you would only have
access to one for any given land base. That would be my concern
more so than anything. Like I said earlier, there are a lot of
people who are very reluctant to loan money in Indian Country
to Indian people on trust lands, on restricted lands.
Senator Cortez Masto. Ms. Kunesh, what are you seeing? Are
you seeing that? Is there any concern about steering or any
type of activity like that, taking advantage?
Ms. Kunesh. I think the data show that there is some
concern, definitely. We recently published a paper, and my
colleague, Richard Todd, really looked at race and location. We
looked at manufactured housing specifically.
But to the question of who is lending, we are finding that
Native CDFIs are actually starting to look at the manufactured
housing market as well, really most importantly, to give their
constituents, their borrowers, an option. Sadly, it is just not
well known.
If someone is really direly needing a home and there is a
manufactured home available, it sounds very enticing. They will
go the quick route rather than the longer route. So I do think
perhaps Native CDFIs also have a very important role in this
market.
Senator Cortez Masto. I have one final follow up.
Ms. Kunesh, you talked about HMDA data.
Ms. Kunesh. Yes.
Senator Cortez Masto. Because that was really important for
you to gather the information you did in your report.
Ms. Kunesh. Yes.
Senator Cortez Masto. I have concerns that really, the
Dodd-Frank Wall Street Reform and Consumer Protection Act
actually required that lenders report 22 additional data
points. But that has since changed, again going back to the
legislation that I just talked about. That is no longer the
case.
Ms. Kunesh. Right.
Senator Cortez Masto. Without access to that information,
is that having a negative impact on the information you can
gather to determine what is happening, whether the steering is
going on, whether there are predatory practices, or whether
there is discrimination? I am curious. Or do you have access to
that data?
Ms. Kunesh. We do have access to HMDA. However, it seems
that the current HMDA data captures only about 80 percent of
mortgages in rural areas. Nevada is the most rural State in the
Nation. So we don't know exactly what is going on, for example,
in these large territories, these large regions.
But it can get even lower than 60 percent or even 30
percent when we talk about Indian Country. Indian Country is
largely invisible in the data. We are often called Asterisk
Nation because we don't appear to merit a note in terms of
mortgage lending or in terms of demographics. We know a lot
about disparities, but we don't know the real contextual
details.
So HMDA is very, very important, I would say vitally
important, to really understanding who is lending, where they
are lending, who is not lending, and then to dig down deep to
why they are not lending.
Senator Cortez Masto. Thank you. Let me say that is why I
introduced the Home Loan Quality Transparency Act. I think we
need to ensure that that HMDA data, all of that data, is made
available, so that we can identify areas to potentially prevent
any type of predatory lending or discrimination. But I identify
areas that we need to focus on when it comes to housing needs
across this Country, including in our rural and tribal
communities.
Thank you.
The Chairman. Mr. Kurtz, what are the lending institutions
that are lending in Indian Country like with the 184 program?
Both Wells Fargo and BofA no longer are doing it. Who is?
Mr. Kurtz. Smaller banks, but I will have to say that we
have sort of a number of institutions that are interested in
participating in the 184 program. We hope that the new
regulations that we are in the process of working on will
expedite and allow them to join the program.
The Chairman. Director LaCounte, Section 3 of the Helping
Expedite and Advance Responsible Tribal Ownership Act of 2012,
the HEARTH Act, requires the BIA to conduct a study regarding
the history and experience of Indian tribes that have chosen to
assume responsibilities for operating the Indian Land Title and
Records Office functions from the BIA. What is the status of
the report? When can we expect it?
Mr. LaCounte. I do not know. I will get some direction
there. I will get back to the Committee.
The Chairman. Okay. Thank you.
Vice Chairman.
Senator Udall. Thank you, Mr. Chairman.
Mr. Kurtz, New Mexico is home to 19 pueblos. Traditional
pueblo homes are adobe and can be over 100 years old. They
often do not have running water or plumbing. But families
continue to use these residences for ceremonial feast day
gatherings or for other cultural purposes. So it is not unusual
that many pueblo families have an additional primary place of
residence that can accommodate 21st century living on the
reservation.
Native CDFIs, like Tiwa, understand this unique New Mexican
reality. I would like to know what HUD is doing to work with
the pueblos on this issue. What is HUD doing to ensure that the
Section 184 program works for pueblo homeowners who want to own
and occupy a modern home on their reservation while continuing
to own and maintain their traditional pueblo residences?
Mr. LaCounte. First of all, I saw some of these homes just
a few weeks ago in your Pueblo. They are really fascinating.
Senator Udall. In Isleta.
Mr. LaCounte. Yes, in Isleta.
We do have the Indian Housing Block Grant Program as well
as the Indian Community Development Block Grant Program that
can provide funds to rehab these homes. But there are some
statutory requirements about the 184 program in what the homes
need to have, like running water and electricity.
Senator Udall. You will work with us on that, to make sure
that works for these situations?
Mr. LaCounte. I would be happy to get back to you.
Senator Udall. Governor Zuni, this is a serious issue, is
it not?
Mr. Zuni. Yes, it is because like I stated one time some
people aren't qualified to have two loans through the HUD
Program. Traditionally, if you do have a home, a new housing
development, and they are appointed for a position, then they
don't qualify for a traditional home. It is very hard on them.
The one thing that I stated, we don't want to lose our
traditions and our customs. We have to maintain them as much as
we can.
Senator Udall. Thank you.
Mr. Kurtz, the Native American Housing Assistance and Self
Determination Act, or NAHASDA, is a critically important
program for addressing the housing needs of Indian Country,
which for many tribal communities is substantial. When compared
with the national average, tribal households are three times
more likely to live in an overcrowded house, and eleven times
more likely to live in a house that has inadequate plumbing.
NAHASDA's authorization expired in 2013. Unfortunately, we
have been unable to reauthorize this Federal law because some
members object to including Native Hawaiians, for misguided
reasons, although Native Hawaiians are already included in
NAHASDA.
I have introduced legislation and amendments to reauthorize
NAHASDA so tribes can have budget certainty and clarity that
the Federal Government is upholding its trust and treaty
responsibilities to provide safe and suitable housing for
tribes. But my efforts have failed largely due to the
aforementioned Native Hawaiian issue.
Now, I would like to get the Administration's position on
this issue. Do you agree that NAHASDA should be reauthorized to
include all Native communities that currently benefit from its
Federal housing programs?
Mr. Kurtz. We would support the reauthorization of NAHASDA
in whatever form we receive it from Congress.
Senator Udall. But my question is a little more specific.
You accept all of the folks that are in NAHASDA now and all the
tribes that are in NAHASDA now?
Mr. Kurtz. We support the reauthorization of NAHASDA.
Senator Udall. Okay. Thank you very much.
Thanks, Mr. Chairman. Thanks to all the Senators who came
today and participated.
The Chairman. With that, I want to again thank the
witnesses for their testimony. The hearing record will be open
for two weeks.
With that, again, thank you and we are adjourned.
[Whereupon, at 4:21 p.m., the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Terry Brockie, Member, Gros Ventre Tribe of Fort
Belknap Indian Community (FBIC); CEO, Island Mountain Development Group
(IMDG)
My name is Terry Brockie. I am an enrolled member of the Gros
Ventre Tribe of the Fort Belknap Indian Community (FBIC) in north-
central Montana, and I am the Chief Executive Officer of Island
Mountain Development Group, the economic development arm of FBIC. I
first want to commend the intent and initiative of the Senate Committee
on Indian Affairs to address the lack of home ownership that exists by
Tribal Members.
I would likely be considered affluent as compared to the overall
Tribal membership, yet I too am only two generations removed from
poverty. I myself obtained my own home financing through the HUD-184
program, and it was a terrible experience.
I submit this testimony in the hope that other Tribal members
across Indian Country can utilize this important program for Tribes and
not experience my frustration and significant delays.
The Fort Belknap Indian Community (FBIC)
The Fort Belknap Indian Reservation is homeland to the Gros Ventre
(Aaniiih) and the Assiniboine (Nakoda) Tribes. The Fort Belknap Indian
Reservation is geographically isolated in Montana, located forty miles
south of the Canadian border and twenty miles north of the Missouri
River. The Fort Belknap Indian Reservation encompasses an area
consisting of 675,147 acres. The main industry is agriculture,
consisting of small cattle ranches, raising alfalfa hay for feed and
larger dry land farms. Fort Belknap has a tribal membership of 8,000
enrolled members, with annual median income of less than $12,000.
Problems With Accessing Housing & Financing In Montana
In Montana, Native Americans Have The Most Significant Housing Crisis
A 2013 report sponsored by the National American Indian Housing
Council found that 40 percent of on-reservation housing in the United
States is considered substandard, compared with 6 percent of all U.S.
housing outside Indian Country.
Nearly one-third of reservation homes are overcrowded. A 2017
report by the YMCA Missoula titled Montana Racial Equity Report
(https://ywcaofmissoula.org/wp-content/uploads/2017-Montana-Racial-
Equity-Report-Full.pdf) elaborated specifically on Montana:
Housing Discrimination in Montana:
In 2003, the U.S. Department of Housing and Urban
Development (HUD) conducted a study in Montana, Minnesota, and
New Mexico on housing discrimination. HUD found that Native
Americans are discriminated against more often than any other
ethnic minority in renting housing.
In Montana, Native American renters experienced consistent
adverse treatment comparable to White renters 28.6 percent of
the time.
While the HUD investigation was conducted in 2003, this
issue of rental discrimination has not gone away. In 2014, the
Montana Human Rights Commission received fifty complaints of
housing discrimination against Native Americans on the basis of
race. Other complaints of racial discrimination included 37
from African Americans and none from White Americans.
Lack of Access to Private Credit/Mortgages Off-Reservation in
Montana:
In Montana, American Indians are 8-10 percent more likely to
have a mortgage application denied than non-American Indians
with the same or similar credit, and in general, minority
applicants are more likely to have loan applications denied
than White applicants.
Problems With Accessing Housing & Financing On Ft. Belknap
Historical Housing Issues on Ft. Belknap
The norm on my reservation is a non-existent housing market. On my
reservation, new home ownership has been almost non-existent (almost no
new homes in 25 years) due to a lack of access to capital on Trust
Lands, among other issues. Most forms of historical home ownership on
our reservation have been in the form of HUD mutual-help and tax-credit
ownership. If for some reason and in rare circumstances, an individual
Tribal member has collateral, they may be eligible for a conventional
mortgage. I know of one individual, who is married to an enrolled
Tribal member, that utilized a substantial herd of cattle as collateral
to obtain credit for their home.
Because of the lack of a housing market, our tribal membership has
a lack of knowledge about a conventional home mortgage process (e.g.,
the importance of credit building, credit score, debt-to-income ratio,
etc.). In fact, the Tribal membership has been conditioned to only
utilize a designated Tribal housing entity, thus creating a dependence
on federal housing programs and funds.
Diversification in the scope of financial products and delivery of
those products is necessary to the autonomy for Tribes to utilize the
home mortgage process through CDFIs, etc.
It is important to allow Tribal membership to build credit, equity,
and have a home that appreciates rather than depreciates in value.
Because of the non-existent home market and ignorance about the home
mortgage process, perceptions are often skewed as to what the overall
value of home ownership brings for the financial health to the
individual, family, and community. The idea of a 30-year home mortgage,
fixed interest rate, and the six-figure price often associated with the
purchase of a home is often intimidating to a Tribal member that may be
one generation removed from poverty.
Shifting Income Demographics & Increased Demand for Middle Class
Housing
During this past generation, there have been many changes that
include growth in tribal economies (like Ft. Belknap the past 7 years)
and a new variance in borrower demographics within reservations. As
such, I strongly feel that policy makers should reward tribal members
seeking genuine independent homeownership, outside of the federal
programs that foster a more dependent mindset. Tribal members need
options like all Americans.
Our tribal nation has historically struggled with 80 percent
unemployment. IMDG now employs almost 200 full-time employees, and we
are growing. We recently had two job openings and had approximately 40-
80 job applicants for each opening. In the southern part of the
reservation where our headquarters are located, we have reduced public
assistance by 48 percent.
As our employees thrive and grow, they enter a new middle class for
our community and are ready for home ownership. Yet we have no housing
inventory to offer them. In order to buy a home, most have to live and
commute 60 or more miles away from our reservation. In addition, for
the handful of employees we would like to recruit from other locations,
the lack of housing is a significant deterrent to working for us.
My Personal Experience with HUD 184 Program--23 Times Slower Than
Private Sector
I am only aware of two other Tribal members, besides myself, on the
Fort Belknap Indian Reservation who have completed the private loan
process to secure a home. I began the Section 184 process on July 2nd,
2014 and signed the final document (to the best of my recollection) on
May 10th, 2016. The process took me 23 months to secure my home through
the HUD Section 184 Home Buyer Program and live on my reservation.
Broken TSR Process
In my experience, the certified Title Status Report (TSR) process
is dysfunctional and remains the BIGGEST problem in the entire home
application process. For the Tribal lease that I had approved through
my Tribal Council, it took over 12 months to secure a certified TSR
from the BIA for my home application. After much work and clarification
of the lease and home loan process had occurred, the local BIA then
submitted my home ownership application to the Regional BIA office for
title review and recording.
The single biggest impediment to the successful use and
implementation of the HUD 184 program is the slow process for BIA/
Tribal/HUD approval of the paperwork and approval requirements for
trust lands. Specifically, the Title Status Report (TSR) process takes
too long to be practically useful. The BIA Rocky Mountain Region is a
substantial impediment in this home approval chain. We are uncertain if
it is understaffing, underfunding or lack of experience, but any
process that takes approximately 23x longer than a regular private
marketplace transaction is clearly broken.
These unwarranted delays are particularly costly in regions like
ours where the winters are harsh and the building seasons are very
short. Thus, quick timing in coordination with the tight building
seasons is essential to creating private housing development on the
reservation.
Many provisions in the HUD regulations put deadlines and
requirements on the borrower in order to reduce the risk on HUD.
However, almost nothing in the regulations put any requirements on HUD
or DOI or the Tribe to ensure the process is quick and efficient for
the borrower, thus reducing the borrower's and builders' risks.
Additional Government Bureaucracy in a Private Sector Timeline
In addition to the TSR process, there were many other delays in the
governmental processes. Most of my home loan application documents
required a Tribal chairman's signature as the authorized signer on
behalf of a Tribe. I am not sure if this is a CFR, HUD, or is something
Tribes have the autonomy to change. Perhaps this could be addressed
through the Tribe itself, but nevertheless it was often hard to track
down our chairman due to his availability and accountability to 8,000
tribal members. I had one step in my home loan process that sat on the
Director of Realty's desk for over 2 months. I had to constantly check
on the status of their review of my application.
I was told that I needed EPA forms filled out that required a
designation and environmental review if my home was located next to a
wetland or coastal plain (there are none at Ft. Belknap). Just finding
the proper Tribal official that could certify (which may be non-
existent for some Tribes) and sign on the form created another
bureaucratic exploration within the Tribal Government. There are many
other examples, such as the coastal management form, that the potential
homeowner needs to search out the proper individual or program as it
relates to forms or proper signatures for the forms. This was a costly
and time-consuming process when you are working full-time and have to
take personal time off, often to have it wasted because an individual
was not there, no one is certified to review, or the Tribe is unsure
who an individual should be directed to.
With respect to HUD, my application finally was submitted to the
regional HUD office in Denver at the end of the fiscal year and I was
told that they had placed a freeze on approval of individual home loan
packages in order to perform fiscal year end auditing. They said it
would take two weeks. It actually took five to six weeks. In addition
to the BIA bureaucratic process that took many months, this additional
delay meant that it would be another 8 months until my home mortgage
was completed.
HUD Underwriting Rigidity
We recently visited with the Assistant Secretary for Policy
Development and Research at HUD and several members of ONAP, and we
questioned these representatives on how often underwriting guidelines
are reviewed considering changing markets and what data is used to
determine policy changes balanced with wise risk management. We were
told that the policies have not been updated since the inception of the
HUD 184 program in 1992, and there is no transparency in data used for
consideration. What was originally considered flexible underwriting is
now considered rigid underwriting due to the vast changes in markets
and housing applications since 1992. This rigidity limits eligibility
with outdated, unsupported restrictions. Tribal members deemed
ineligible due to these restrictions may easily qualify with
alternative programs offered off of the reservation. The limiting
factor is the location of the home--thereby discouraging growth on
trust lands in tribal communities. Loans offered through other federal
entities undergo regular reconsideration supported by current data. The
HUD 184 program underwriting, policies, and processes need significant
updating to remain an effective source of financing, and to increase
the impact of the program's original intent.
Chronically Underfunded and Under-Resourced
In my opinion, tribal departments (especially in the Plains and
Rocky Mountain Regions) are chronically underfunded, under-resourced,
and do not have updated leasing practices--all contributing to
inefficiencies in the home loan process. Additional funding to enhance
Tribal governments for residential housing would be beneficial.
Lack of Appropriate Home Appraisal Process
In addition, with regard to the home appraisal process, the
appraiser could not find a single home on my reservation that could be
utilized as a comparable home to give value on reservation. This shows
the genuine lack of knowledge about the tribal housing market and
struggle appraisers have in even looking for reservation based
comparable homes.
Contrast with Private Sector--23 Times Slower
In contrast, prior to the purchase of my current home on my
reservation, I was going to purchase a home through a conventional home
mortgage process off-reservation. That whole process would have taken
no more 30-90 days from the beginning of the application process to
actual home ownership with my family. In three weeks, I was pre-
approved by a financial institution, met with a realtor, searched for a
home, selected a home after the negotiation of price, and scheduled the
home inspection process. At the time, I was informed it would have been
another 2 to 3 weeks to be in the home.
Many individuals who begin the Section 184 Home Buyer Program
understandably lose patience in the process due to the substantial
bureaucracy and inefficiency of the program, and so do the mortgage
providers. Despite qualifying, having all my paperwork completed
correctly, and my housing all lined up, it took 23 months to complete
my mortgage through the HUD 184 process.
Consequently, and to no one's surprise, there is also a direct
correlation to the reduction in the banks that are willing to provide a
Section 184 loan package due to these delays. Mortgage lenders told me
inasmuch, it is not economically viable for them to participate in
lending under HUD 184 because of the federal government's delays.
One mortgage lender shared with me that on average they generally
close their mortgages with one (1) month.
Which means it took the CEO of our economic development corporation
23 times longer to obtain a HUD-184 home mortgage on trust land on the
Ft. Belknap reservation than in took an average consumer anywhere else
in the United States. Twenty-three (23) times longer.
Potential Solutions
In addition to having been thinking about these reforms ourselves
for a very long time, we have been meeting with several mortgage
providers for their insights and input. Almost twenty years ago, in the
2000s, there were nearly 30 banks and lenders participating in the HUD
184 program, we understand that today that is now in the single digits.
When we met with mortgage providers, their recommendations for reform
matched with ours below and those included in Ft. Belknap Councilman
Mount's oral and written testimony.
TSR Process: Give Tribal Control & Digitization
Perhaps most importantly, federal resources must be made available
to update and digitization land records on the reservation. We
appreciate the recent language in the Interior appropriations bill
regarding digitization, but there needs to be follow up oversight from
the Senate Committee on Indian Affairs.
''The Committee also recognizes increased digitization of
Indian land records would increase efficiency within Trust-Real
Estate Services. Within the amounts provided, the Committee
encourages Trust-Real Estate Services to implement additional
digitization of Indian land records to promote Tribal economic
development opportunities in Indian Country, including the Fort
Belknap Indian Community.''
Report No. 116-123 to accompany S. 2580 at p. 57.
Another solution would allow for the Tribes to have more control
over the certified TSR process or for any and all parties involved to
be able to work with the BIA in a shared data platform. A good example
would be for Tribal designated entities to secure access to the BIA's
TAAMS system efficiently to obtain any and all available information on
the property.
Off of the reservation, a title search is performed and reported in
a preliminary title report, and once the loan is perfected, a final
title policy recognizing the new mortgage lien(s) is issued within 90
days to support the standard mortgage cycle. Currently, HUD requires
the Certified TSR--somewhat equivalent of the final title policy--prior
to a Section 184 loan guarantee. The borrower themselves have no
control over the lack of efficiency and timeliness; yet the borrower is
inadvertently punished when their mortgage documents have expired prior
to loan guarantee.
Congressionally Mandated Streamlining
In my experience, there are way too many entities involved in the
Section 184 process: individual home buyer, Tribal departments, agency
and regional BIA, EPA, HUD, and lending institutions. The overall
process needs to be streamlined to give Tribes and tribal designated
entities more control and more accountability to the individual
homebuyers.
My tribal council recently passed its version of the Hearth Act for
Residential Leasing purposes only. When it is approved by the BIA, I
believe this will help reduce the multi-layered bureaucratic process to
become more manageable to individual homebuyers. However, even this BIA
approval process is months behind.
In my experience, there is too much disconnect and blame between
the various participating agencies: BIA, HUD, and Tribes. A more
simplified, sequential process needs to be created that clearly defines
who does what and when, with strict timelines and clear guidelines in
place with instruments to hold entities accountable. I feel this is
absolutely essential to enable potential homeowners on reservations to
have an expedited home buying experience, like a conventional home
mortgage process off-reservation.
A federal, top-down mandate is needed to direct all participating
federal entities to be consistent across all state and regional levels
and to utilize a simplified Section 184 program and other services that
are applicable in Indian Country.
A few additional recommendations include:
Use HUD 184 ``Collected Fees'' to hire more regional HUD and
BIA loan staff
Have the private banking sector review, edit and streamline
the HUD 184 and TSR paperwork process
Adopt the ``Priority Deployment Mechanism'' as outlined by
Councilman Mount in his oral and written testimony
Conclusion
The federal government's inefficiencies significantly hinder
individual tribal member homeownership on reservations and on trust
lands and must be addressed by Congress. The existing multi-layered
bureaucratic process encourages an environment in direct contrast to
federal fair housing mandates, and in effect, creates a system of
unfair housing practices for tribal members on trust lands. Tribal
members have no choice but to follow these unclear procedures and have
no remedies for costly delays--and, quite often, simply do not obtain a
home of their own. The lack of consistency and accountability nullifies
the original intent and initiative in offering these programs.
______
Prepared Statement of the Center for Indian Country Development--
National Native Homeownership Coalition
detailed policy considerations
Improve the Title Status Report processes for lending on trust
lands--The U.S. Department of the Interior through the Assistant
Secretary of Indian Affairs and the Director of the Bureau of Indian
Affairs should establish a standard process for all offices (national,
regional, and area offices) to provide timely TSRs on trust lands with
clear and concise instructions to lenders and tribes. In addition,
definite processes should be established to ensure that the Second
Certified TSRs are provided to lenders within 30 days of an initial
request. DOI should actively communicate the standard process to
lenders and external business partners. BIA should implement a
transparent tracking system for the TSR process and providing an
escalation process for lenders when TSR standards are unmet, such as a
hotline number.
Improved TSR processes will generate additional lender
interest in Indian Country and greatly improve the application
process for borrowers on trust land.
Require BIA to examine tribal leasing regulation approval process
and approval Provide technical assistance to support tribes in adopting
HEARTH Act regulations--Only 40 tribes have adopted some form of HEARTH
Act leasing regulations, while 26 tribal applications for residential
leasing are pending in the BIA. This low number appears to indicate a
problem with tribal adoption and implementation of the HEARTH Act. The
backlog also is concerning because the BIA's recent approval record is
only two or three tribal regulations per year. The BIA should perform
an assessment to understand why so few tribes are implementing the
HEARTH Act.
In addition, funding is needed for technical assistance to support
tribal residential leasing programs, including establishing a tribal
land recording system and digitization of land records. Recent
appropriations prioritizing digitization efforts for the Fort Belknap
Indian Community in Montana could present a model process for
supporting other tribes' assumption of land and leasing
responsibilities.
Technical assistance could increase tribal uptake of the
HEARTH Act leasing regulations, which could facilitate economic
development and homeownership opportunities on trust land.
Deploy Native Community Development Institutions as re-lending
intermediaries for all federal home loan programs to increase the
supply of credit in Indian Country--Congress should permanently
authorize the USDA Rural Development, HUD, and the VA to deploy Native
CDFIs as re-lenders of those mortgage programs in Indian Country (other
Native serving financial institutions as well). All of these agencies
have limited staff resources to reach Native borrowers on tribal lands.
Native CDFIs have direct and extensive experience operating on tribal
lands and they intimately know their communities. In addition, they
provide extensive financial and homebuyer education to their clients.
Native CDFIs in South Dakota are demonstrating the value of the pilot
program by connecting eligible borrowers with the 502 direct loan
program, supporting the application process, and servicing the loans.
Native CDFIs enhance Rural Development's reach into Indian
Country, and likewise could similarly extend the reach of the
VA NADL and further support the HUD Section 184 loan guarantee
program on national scale.
Clarify the foreclosure process and support tribal strategies for
risk mitigation involving federal mortgage products in Indian Country--
Despite standard provisions in Tribal Leasing Agreements that prescribe
tribal courts as the court of competent jurisdiction for purposes of
judicial recourse, a misperception among federal agencies and lenders
about options for handling delinquent loans associated with leasehold
mortgages on trust land has unfairly deprived American Indians and
Alaska Natives of critical capital. Language is needed to clarify that
the Department of Justice is authorized to pursue foreclosures through
tribal courts pursuant to the mortgage agreements between tribes and
federal agencies. To the extent federal agencies lack knowledge about
tribal court systems, they should be permitted to contract with
qualified attorneys to pursue foreclosure actions in tribal courts;
currently this is not an option with the HUD 184 Loan Guarantee
Program. In addition, federal agencies should recognize and support
tribal risk mitigation strategies that alleviate the tensions around
jurisdiction and streamline the foreclosure and eviction process.
Providing lenders with more certainty about their rights to
recourse and remedies will increase the supply of credit for
transactions involving trust land.
Improve data quality and access to information on loans in Indian
Country--Policy makers and program managers need access to current and
accurate data to assess the performance of their programs and services.
However, high quality, detailed data are not readily available to the
public, and most available data are outdated. Access to complete data
in a timely manner permits more engagement and better decisionmaking
around allocation of scarce resources.
The following are a few specific areas to address:
HMDA data should identify whether a loan occurred on or off
reservation lands and whether the loan occurred on trust land
or fee land in either case.
The loans should indicate the year the tribe opted into the
184 program and the year the off-reservation lands were
designated by the tribe.
HMDA loan records should specifically identify Section 184
loans, and direct loans from government agencies such as the VA
and USDA should be reported to HMDA.
Access to lending data will help identify effective strategies
for supporting AIAN borrowers.
Encourage investment in Indian Country through Community
Reinvestment Act--The CRA requires depository institutions to meet the
credit needs of all segments of their service areas, especially
distressed and underserved census tracts (low- and moderate-income
communities). Currently, a lender's service area is defined by its
physical offices and branches. American Indian reservations rarely have
branches and offices located nearby. Encouraging CRA-related activity
on trust lands requires a multi-faceted approach, such as:
Deem services to low- and moderate-income reservation
residents as serving high-need areas regardless of whether
locations are part of a lender's service area.
Place a higher CRA value on lending activity to this
population without limitations, which would give these lands
additional value for a large lender.
Greater access to capital and credit for Native CDFIs would
allow them to expand their successful programs and serve the
consumer needs of Native communities.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Patrice H. Kunesh
Question 1. What can Congress do to alleviate burdens to on-
reservation mortgage lending and reverse the downward trend?
Answer. Congress already has created powerful tools to support on-
reservation mortgage lending, such as the Department of Housing and
Urban Development (HUD) 184 Loan Guarantee program, the Veterans
Affairs (VA) Native American Direct Loan program, and the U.S.
Department of Agriculture Rural Housing Service 502 direct and
guaranteed loan programs. Congress also has enacted the Helping
Expedite and Advance Responsible Tribal Homeownership (HEARTH) Act to
facilitate tribally directed land-use development. These programs,
however, lack a standard mortgage process and all mortgages on trust
lands must be approved by the Department of the Interior's Bureau of
Indian Affairs (BIA), whose unique land titles and records system
differs from the industry's processing and recording standards. Thus,
despite access to substantial public capital and the potential for
significant private lending, these institutional challenges discourage
lenders from lending to Native borrowers who reside on their
reservation homelands.
What is needed is a coherent and consistent process that lenders,
developers, and borrowers can rely upon. This means:
1. Creating a unified mortgage process for federal housing
programs, including a uniform mortgage application much like
the previous ``one-stop'' mortgage program, along with a
standard cross-agency Memorandum of Agreement that recognizes
tribal laws and delineates available remedies.
2. Normalizing the land title processes within the BIA and
conforming the title recording system (the Trust Asset and
Accounting Management System, or TAAMS) to industry standards
(accessibility, accuracy, and accountability).
3. Establishing a standard process for all BIA offices
(national, regional, and area offices) to issue timely Title
Status Reports (TSRs) on trust lands with clear instructions
and accessible support to lenders and tribes. In addition,
definite processes should be established to ensure that the
Second Certified TSRs are provided to lenders within 30 days of
an initial request.
4. Implementing a transparent tracking system for the BIA's
TSR process and providing an escalation process for lenders,
such as a hotline number, when TSR standards are unmet.
5. Providing funds for technical support to tribes for HEARTH
Act programs, including digitization of tribal land records.
Recent appropriations prioritizing digitization efforts for the
Fort Belknap Indian Community in Montana could present a model
process for supporting other tribes' assumption of land and
leasing responsibilities.
6. Requiring Indian Housing Authorities and Tribally
Designated Housing Entities to be included in HUD's housing
counseling program. Currently, the program's regulation, 24 CFR
214.103(a), expressly applies to private or public nonprofit
organizations and units of local, county, or state governments,
which has been interpreted to exclude tribes from participating
in this very meaningful program.
In addition, reauthorization of the Native American Housing
Assistance and Self-Determination Act (NAHASDA) would allow tribes to
build new housing stock, preserve existing housing units, and leverage
their NAHASDA dollars for bigger projects. Congress also could allow
tribes to use their NAHASDA funds for middle-income households that
earn up to 120 percent of area median income (AMI) to reach a broader
pool of potential home buyers. This more accurately reflects the higher
costs of housing in rural Indian Country communities.
There are additional ways Congress can incentivize lending to
Native borrowers on reservation lands and increase the pool of private
lenders in the HUD 184 program. These include:
1. Authorizing Native community development financial
institutions (CDFIs) (and other Native American financial
institutions) as lender intermediaries and servicers of federal
home finance programs; and
2. Monitoring agency progress to ensure these institutional
reforms are implemented. Congress and this Committee should
regularly monitor agency progress and create a national Native
homeownership scorecard. That scorecard would annually report
the number of mortgage loans issued to Native borrowers on
trust and restricted lands, track the BIA's TSR processing
timeframes by regional office, and track the approval of tribal
leasing regulations under the HEARTH Act. This reporting
mechanism would reflect an important accountability
consideration, improve the delivery of federal programs and
services, and help capture the social and economic impact of
increased housing and homeownership on reservation communities.
Question 2. What can the BIA and tribes do to address these issues?
Answer. Both the BIA and tribes have distinctive responsibilities
in addressing these issues. In fulfilling the federal government's
trust responsibility to Native tribes and people, the BIA is a vital
resource to tribes in almost every aspect of economic and community
development, including creating an on-reservation housing market to
meet the demand for more affordable housing stock. Likewise, in
exercising sovereign authority over their lands, tribes are responsible
for creating conditions conducive to reservation investment and
community development. However, the Government Accountability Office
(GAO) has recently found that severe underfunding of federal trust
obligations has ``impeded the efficient deployment of federal programs
and services specifically intended to benefit tribes and Native
peoples, which in turn has discouraged private investment in Indian
Country.'' \1\
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\1\ Funding these federal trust obligations is addressed in a
recent report from the GAO, Resource Constraints and Management
Weaknesses Can Limit Federal Program Delivery to Tribes, GAO-20- 270T.
Nov 19, 2019. Accessible at https://www.gao.gov/products/GAO-20-270T.
This report adds to the GAO's report published earlier this year,
Improving Federal Management of Programs that Serve Tribes and Their
Members, Substantial Efforts Needed to Achieve Greater Progress on
High-Risk Areas, GAO-19-157SP. Mar 6, 2019. Accessible at https://
www.gao.gov/products/GAO-19-157sp.
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As noted above, I recommend that the BIA use its authority to
establish and implement a coherent and consistent process that lenders,
developers, and borrowers can rely upon. In addition to these
recommendations, BIA should examine its HEARTH Act tribal leasing
regulation review process and provide technical assistance to support
tribes in adopting tribal regulations. Only 40 tribes have adopted some
form of HEARTH Act leasing regulations, while 26 tribal applications
for residential leasing are pending in the BIA. The backlog is
concerning because the BIA's recent approval record is only two or
three tribal leasing regulations per year. The BIA should perform an
assessment to understand why so few tribes are implementing the HEARTH
Act. Overall, the BIA should improve its data quality and provide
broader access to information on loans in Indian Country in a timely
manner.
In addition, the BIA should do the following:
1. Normalize the land title processes within the BIA and
conform the title recording system, TAAMS, to industry
standards (accessibility, accuracy, and accountability).
2. Establish a standard process for all BIA offices (national,
regional, and area offices) to issue timely Title Status
Reports (TSRs) on trust lands with clear instructions and
accessible support to lenders and tribes. In addition, definite
processes should be established to ensure that the Second
Certified TSRs are provided to lenders within 30 days of an
initial request.
3. Implement a transparent tracking system for the BIA's TSR
process and provide an escalation process, such as a hotline
number, for lenders when TSR standards are unmet.
Tribes also have an important role in creating conditions conducive
to residential lending and exercising an expansive governance role in
promoting investment within their territories. Tribes have sovereign
authority over their lands, but they do not have control over the
federal processes to put their lands to good and productive use.
Nevertheless, one of the most demonstrable ways tribes exercise
sovereignty is through their judicial systems. This includes ensuring
the enforceability of contracts through laws that establish rights,
remedies, and recourse options in tribal courts, and establishing a
secured transactions law along with a lien-filing system.
Tribes that have succeeded in expanding homeownership opportunities
for tribal citizens have pursued self-governance over residential
leasing by:
1. Adopting HEARTH Act regulations,
2. Assuming BIA Realty and Land Titles and Records Office
functions through 638 contracts or compacts, and
3. Promoting community-wide financial education and home buyer
readiness. As importantly, tribes should actively pursue
relationships with private lenders and help them better
understand the unique qualities of Indian Country and support
their engagement in lending on trust land. \2\
\2\ Jorgensen, Miriam and Hope Nation Consulting, LLC. Mortgage
Lending on South Dakota's Indian Trust Land: Findings from a Survey of
Lenders. South Dakota Native Homeownership Coalition. October 2019.
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______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Patrice H. Kunesh
Question 1. What impact would the reforms that you outlined in your
testimony have on the number of additional units built?
Answer. We believe that our proposed reforms could have a
significant increase on the number of affordable housing units
throughout Indian Country. The number of additional housing units
actually achieved (built and preserved), however, will depend on the
collective commitment to closing the housing gap for Native Americans
from federal, state, and tribal governments, as well as private lenders
and other stakeholders in Indian Country. Investments in housing
directly impact investments in other key areas, such as education and
business.
Question 2.How long will it take to clear this backlog?
Answer. In 2017, HUD estimated that Indian Country needed 68,000
additional units to alleviate dire overcrowding conditions. We believe
that number is on the lower bound of what is required to meet the full
spectrum of housing needs and strong demand for homeownership. In
addition, the Native population is young and a fast-growing
demographic, such that housing needs are increasing as well.
The Center for Indian Country Development (CICD) at the Federal
Reserve Bank of Minneapolis has not researched how long it will take to
clear the backlog and close the housing gap in Indian Country, nor is
it familiar with studies specifically addressing this question.
However, Congress could request such a study to better understand the
resources and time required to address the housing need. For example, a
goal of building 50,000 units and preserving 5,000 more units across
Indian Country within five years would require coordinated federal
mortgage programs, streamlined processes, and engaged lenders. A
central federal Indian Country housing hub could orchestrate the
implementation of such a plan, harmonize federal home loan programs,
and support the diverse geographies of Indian Country.
Question 3. How can we improve on the current structure for HUD 184
loan guarantees on tribal trust lands?
Answer. As HUD currently is updating its regulations, it should
consider several recommendations from Indian Country. These
improvements include: establishing processes compatible with other
public and private home finance products and consistent with industry
standards (including technology compatibility); creating a streamlined
process for participating lenders that absolutely ensures the issuance
of Certificates of Guarantee in a timely manner; permitting Native
CDFIs to deliver and service HUD loans; and amending the HUD Housing
Counseling regulation, 24 CFR 214.103(a), to include tribes and
Tribally Designated Housing Entities (TDHE) as entities eligible to
participate in HUD housing counseling programs. In addition, the 184
program should be expanded to offer interim financing for new home
construction.
Question 4. What impact does having to hold mortgage loans at the
primary lender pending Ginnie Mae approval have on the ability of that
lender to issue more mortgage loans?
Answer. A functioning, reliable secondary market is necessary to
meet the growing housing needs in Indian Country. Holding mortgages as
the primary lender limits the amount of capital available to lend and
impedes the lender's ability to meet the borrowing needs of the
community. In addition, holding a mortgage pending Ginnie Mae approval
creates additional risk and increases the cost of lending in Indian
Country. For example, if the BIA fails to issue the final (second)
certified TSR, or if HUD is late in issuing its Certificate of
Guarantee, Ginnie Mae reclassifies the loan as ``defective'' and the
lender must take the loan back. This process creates more uncertainty,
greater risks, and increased costs that effectively can--despite the
federal guarantee--discourage lenders from participating in the program
and cut off capital to Indian Country.
Question 5. Can you also discuss what steps the private sector
could take to improve the ability to make and close mortgage loans on
trust lands?
First, the private lending sector must be able to understand the
lending system in Indian Country and rely on the rights and remedies
delineated in the mortgage documents. To support this goal, the
mortgage process for Native borrowers on trust lands must be
normalized, using standard forms and consistent processes across
federal home loan programs. Lenders also should actively foster
relationships with tribal governments, tribal housing authorities, and
developers--engaged lenders are more informed, more supportive, and
more successful. This insight comes from a recent South Dakota Native
Homeownership Coalition survey of lenders who offer mortgages on trust
lands in South Dakota, including CDFI loan funds. \3\ Lenders indicated
general awareness of the HUD 184 program, yet cite borrower credit
history as a barrier to lending on trust land. Some lenders pointed to
the lack of affordable housing as their reason for low engagement. In
addition, some financial institutions were unaware of the remedies
available in the event of delinquency and foreclosure of a HUD 184
loan. One bank offered that ``instead of complaining, we need to step
in and try to understand and work towards understanding.''
---------------------------------------------------------------------------
\3\ Mortgage Lending on South Dakota's Indian Trust Land: Findings
from a Survey of Lenders. South Dakota Native Homeownership Coalition.
October 2019.
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In addition, the secondary market for mortgage loans is critical to
bringing private capital to reservations. Thus, technical and financial
support to Native-serving financial institutions in becoming direct
Fannie Mae mortgage lenders is needed in order help Indian Country
reach the secondary market.
Question 6. What policies would you recommend to incentivize the
building of affordable rental housing?
Answer. As with homeownership and commercial development,
incentivizing affordable rental development on trust land requires
normalizing lending processes on trust lands and coordination among
federal programs. The need to incentivize affordable rental
construction, however, is not only an Indian Country problem. In the
area of Low Income Housing Tax Credits (LIHTCs), recent CICD research
\4\ shows that Indian Country (Figure 1) is part of a national trend of
decreased LIHTC construction since the 2008 financial crisis (Figure
2).
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\4\ Whaley, Kenneth. ``Low Income Housing Tax Credits and
Affordable Rentals in Indian Country.'' CICD Working Paper 2019-07.
Forthcoming, December 2019.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Affordable rental programs must be matched to the community's
needs. Many rental projects in Indian Country are single-family
developments that are in need of substantial updates to make them safe
and habitable. Thus, LIHTC developments that build desirable, multi-
use, quality homes could factor into a bold plan to meet Indian
Country's housing needs and long-term community vision of
homeownership. Furthermore, to realize Indian Country's full potential,
one option would be to streamline LIHTC requirements to make lease-to-
purchase programs more accessible and successful. Where possible, these
projects should be supported with wraparound services for tenants,
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including financial and homeownership education.
Question 7. Would you agree that affordable rental housing is
important for overall economic growth, part of the necessary
infrastructure for the 21st century, and a good way to create jobs in
Indian Country?
Answer. Yes. In Indian Country and elsewhere, housing is
inextricably entwined with community health and well-being. Much of
Indian Country remains in persistent poverty, which means affordable
rental housing will be needed for the foreseeable future. Indeed,
because Indian Country's housing needs span all income levels,
affordable rental housing is a necessary complement to homeownership.
Moreover, affordable rental housing can offer the opportunity to build
savings and prepare for future homeownership, especially when LIHTC
units are converted to owned units.
Figure 3 shows a map of LIHTC housing in Tribal Statistical Areas
(TSAs). Many large reservations have relatively few LIHTC projects. Of
the 41,000 LIHTC projects reported in 2017, 1.5 percent were in TSAs
and 2.8 percent were in statistical areas neighboring TSAs. Of those in
tribal areas, 45 percent were in Oklahoma. We suspect that the
substantial LIHTC development in Oklahoma is due to the status of the
land (prevalence of fee or restricted fee land), as well as population
density compared to more rural reservations.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Response to Written Questions Submitted by Hon. Catherine Cortez Masto
to Patrice H. Kunesh
Question 1. Will the expanded Home Mortgage Disclosure Act (HMDA)
data required by Dodd-Frank factor into future reports?
Answer. The Center for Indian Country Development (CICD) plans to
continue its research on HMDA data as it relates to mortgage lending to
Native borrowers. We already have begun reviewing the recently released
2018 HMDA data. We believe continued collection of the new HMDA
demographic variables is valuable to understanding the real lending
landscape in Indian Country and the rest of the U.S.
Question 2. What future directions will the CICD explore in
mortgage financing for Native Americans?
Answer. The CICD is engaged in an array of research projects
focused on lending systems, credit scores, and Native American
financing institutions. We plan to go further with our HMDA analysis
using the expanded 2018 HMDA data. For example, in previous HMDA
reports, the lack of credit score information seriously impeded our
understanding of the links among creditworthiness, lending, and costs.
The expanded HMDA 2018 data no longer censor the nonhigh- priced
interest rates (rates less than 1.5 points above the Average Prime
Offer Rate), which will provide a better picture of the overall lending
situation in Indian Country. We now plan to examine how HMDA's credit
risk data impact our findings on the higher price of mortgage finance.
Question 3. What policy recommendations for the manufactured-
housing market should we consider to lower the cost of mortgages for
home buyers, especially Native Americans?
Answer. Native American borrowers on trust lands tend to prefer
manufactured homes (likely a reflection of the land status) and are
highly vulnerable to high-priced loans for manufactured homes. The
pricing of manufactured-home loans varies widely depending on the
region of the country, location on or off reservation trust lands, and
the availability of diverse financing sources. However, as noted in our
testimony, Native borrowers pay considerably more for home loans
located on reservation trust lands.
The manufactured-housing industry is a highly concentrated market
of manufacturers and lenders. This close relationship requires
significant institutional changes beyond our purview. However, we
understand the value and importance of educating Native communities
about these concerns and have included a chapter on manufactured
housing in the CICD's Tribal Leaders Handbook on Homeownership. Such
information should be more broadly shared and addressed with tribal
housing authorities and specifically included in HUD housing counseling
programming. Another way to reduce the cost of manufactured homes is to
make sure they are included as eligible types of housing in all federal
home loan programs, which could offer lower interest rates for those
loans.
It also is important to recognize that the high price of home loans
to Native borrowers could be reduced overall by normalizing the
mortgage process on trust lands.
Question 4. Could you elaborate on why many Native American
families are unable to access HUD's Section 184 loan guarantee?
Answer. The historical data indicate that Native American families
have widely used the HUD Section 184 home loan guarantee program,
particularly since 2004. The program has made it possible for thousands
of Native people across the country to become homeowners. It also has
been instrumental in building wealth and assets in Indian Country,
including personal financial management (financial education and credit
building). Thus, the HUD 184 loan guarantee program has been critically
important for Indian Country economic and community development.
However, the extent to which HUD 184 mortgages are used by Native
borrowers mostly on fee land and generally off-reservation indicates a
structural issue rather than a financial impediment. See Figure 4.
Normalizing trust land lending in the BIA and establishing a
cooperative BIA-HUD interagency relationship would shore up the loss of
lenders from the program and encourage more private lender
participation. It also would ensure that all federal housing programs
can reach the populations and places they are designed to serve.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Standard mortgage forms and efficient processes would go a long way
to curb the exit of private lenders from the HUD 184 program, as would
modernizing HUD's digital mortgage infrastructure (which is
incompatible with some private lending systems). Moreover, to reach
more Native borrowers on trust lands, HUD should authorize and train
Native CDFIs as Section 184 lenders. Tribes can do their part by taking
a more active role in ensuring that tribal legal and judicial systems
fully support mortgage lending within their jurisdictions, and building
relationships directly with lenders would be helpful. \5\
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\5\ See footnote 3.
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Question 5. Why are Native American and Alaska Native-reservation
loans notably less likely to be Federal Housing Administration (FHA)-
insured, VA-guaranteed, or Rural Housing Service-guaranteed than other
loans?
Answer. We are not able to respond fully to the likelihood of
reservation-based mortgage lending being outside a federally insured or
guaranteed program. For Native borrowers, however, accessibility is not
impeded by any legal or financial factor. Thus, potential impediments
may be structural issues within the programs. Normalizing trust land
lending in the BIA would encourage the increase of private lender
participation in these federal programs.
Question 6. Fannie Mae and Freddie Mac have a duty to serve
manufactured-home buyers and rural communities. What involvement have
Fannie Mae and Freddie Mac had in providing affordable financing for
Native American communities?
Answer. Indian Country also is included in Fannie Mae and Freddie
Mac's Duty to Serve initiatives. Since its inception, representatives
from both Fannie Mae and Freddie Mac have been members of the CICD's
National Native Homeownership Coalition. Collectively, our coalition
has supported problem-solving and institution-building conversations
with tribes and other organizations working in Indian Country on home
buyer education, mortgage lending systems, and access to secondary
markets.
For example, Fannie Mae currently is working with two Native CDFIs
so that they can become Fannie Mae direct mortgage lenders, while also
working to connect other Native American financial institutions with
the secondary market. Fannie Mae also has extended its lending
relationship with four tribal nations, and an three more formal
relationships are pending approval of tribal governments. In addition,
Fannie Mae has established loan service agreements with four Native
lenders. These agreements recognize the value of supporting the success
of homeownership at the local level and are essential to well-
functioning housing markets in Indian Country. Freddie Mac has
supported the South Dakota Native Homeownership Coalition's research
and report on Mortgage Lending on South Dakota's Indian Trust Land:
Findings from a Survey of Lenders.
Question 7. The Federal Home Loan Bank (FHLB) also has an
affordable housing mission. What investments in Native American
homeownership has the FHLB made? Is there a regional Bank that is a
leader in serving Native American home buyers and reservation
communities?
Answer. The FHLB of Des Moines (FHLB-DM) has been quite engaged in
this area and it would be ideal for all FHLBs with a trust land
footprint to develop a similar program. The FHLB-DM's Native American
Homeownership Initiative is a readily accessible source of down payment
assistance to Native borrowers and the FHLB-DM has continued to
increase the amount of funds available to this program. In November
2017, the FHLB-DM issued a $5 million grant to enhance the role of
Native CDFIs--proven vehicles for bringing capital and financial
education to Native communities--in mortgage lending and preparing home
buyers.
The FHLB of Chicago also provides some down payment assistance for
trust and restricted lands, and it purchases HUD 184 loans, functioning
as a secondary market for the Oneida Nation's Bay Bank in Green Bay,
Wisconsin.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Andy Werk, Jr.
Question 1. What is the biggest obstacle to homeownership and
affordable housing?
Answer. Unfortunately, the Fort Belknap Indian Community is in an
affordable housing crisis with multiple major obstacles to
homeownership and affordable housing for our Tribal citizens. For
example, our homeland unemployment rate has averaged 70 percent, the
median household income is low at $12,000 per year, and we have
overcrowded homes with an average of 13-18 residents per single home.
Additionally, our current housing wait list has more than 150 families
waiting for any housing opportunity and the average wait-time for that
list is 3.4 years.
The Fort Belknap Indian Community also has limited infrastructure
available to support homeownership and affordable housing. Even with
the older and limited housing units that serve the Reservation (see
response to question 3, below), existing infrastructure appears to be
at capacity in the few developed areas in the Community. Further,
significant environmental issues (e.g., old trash dumpsite) must be
addressed before any development can be pursued and the limited
existing housing is not maintained well due to limited funding for
tribal environmental oversight.
In addition to the conditions on the ground, a substantial
impediment to the successful use and implementation of federal housing
programs (like the HUD Section 184 program) as well as any private
investment in Indian housing, is the unnecessarily slow and unduly
burdensome process for BIA/Tribal/HUD approval of submitted paperwork
and approval requirements for a home loan on trust lands (as just one
example., almost 2 years for the CEO of our economic development
corporation, a highly educated and sophisticated borrower). Without
going into too much detail, other obstacles include underfunded and
under-resourced Tribal departments, lack of an appropriate home
appraisal process, rigid HUD underwriting, impractical title status
report process, and an overall multi-layered bureaucratic process that
takes way too long without necessary accountability.
Question 2. How would you recommend that we address that obstacle?
Answer. The Community's housing crisis requires urgent, sustained
attention and action at the federal and tribal levels. In addition to
making federal housing funding (in today's dollars and at current
construction costs) available to our local entities, we need to enhance
tribal capacity to address the substandard housing and infrastructure
conditions in our Community by encouraging greater self-management of
Indian housing programs and by encouraging private sector financing to
complement limited federal funding and programs. Our Community, through
the Fort Belknap Tribal Housing Authority and Tribally-authorized
community entities, has created a local task force to assess, address,
and implement housing solutions across tribal departments and federal
agencies.
With respect to the tribal level, the tribal departments need a
central office to share residential housing information. An increase in
capacity, both training and human resources, will be necessary to
coordinate all relevant information including maps, land, title,
encumbrances, environmental reviews, cultural surveys, and access and
communication between all applicable information technology systems,
federal and tribal. In particular, access to TAAMS and the more
comprehensive data portal referred to by BIA Director LaCounte in his
testimony will be essential for the Tribal departments (and private
sector companies interesting in tribal housing) to facilitate access to
residential housing information that exists in the multiple information
systems.
Our suggestions for the federal level contain much more detail in
Councilman Mount's submitted written testimony (as well as a written
statement by Mr. Brockie, CEO of the Community's tribally owned
economic development entity) to the U.S. Senate Committee on Indian
Affairs. In sum, we are currently pursuing HEARTH Act approval by the
U.S. Department of the Interior for an alternative leasing program to
augment existing federal housing resources. However, we need immediate
deployment of federal agency resources to match our current task force
resources to eliminate the major obstacles to homeownership and
affordable housing in the following ways: digitization of land
documents at the local and regional level; tribal access to BIA
technology information systems that deal with land issues (e.g., new
BIA data portal and TAAMS); expedited and more efficient HUD Section
184 loan guarantee process; a more efficient process for BIA's delivery
of title status reports; and an overall expedited environmental review
process for tribal housing.
In our view, congressional oversight is necessary to hold federal
agencies accountable to help the tribal entities create and maintain a
more simplified, sequential process that clearly defines who is
responsible for what and when, with strict timelines and clear
guidelines in place. This is essential to enable potential homebuyers
on Indian reservations to have a fair and expedited opportunity to buy
a home or have affordable housing, just like a conventional home
mortgage or rental process off-reservation. An overall streamlined
process can enable tribes and tribally-authorized entities more control
and more accountability to the potential individual Indian homebuyers.
In our most recent survey of Fort Belknap employees, they said
housing is the number one priority to make their lives better. And we
know that access to stable, quality, accessible, affordable homes is
the cornerstone to help kids do better in school, to enable workers
find and keeps jobs, to begin to address homelessness and housing
poverty, and to create a pathway out of poverty that reduces the long-
terms costs to our Community for providing social services and criminal
justice. With an increase in resources at the federal and Tribal
levels, we firmly believe that we can be successful in making gains in
addressing affordable housing and homeownership issues.
Question 3. What role does rental housing play in addressing the
affordable housing crisis?
Answer. Other than much older low-income HUD rental units, rental
housing is almost non-existent on the Fort Belknap Indian Reservation.
Our community has persisted despite minimal rental options since 1995--
the last units built with HUD funding. Specifically, as to the Fort
Belknap Indian Community, a handful of low-income rental units were
originally built in 1970 and these original housing units were followed
by a few additional units annually until 1995. Even with the units
built, over time we have discovered that these older units suffer from
poor insulation, structural deficiencies, and significant mold
problems.
______
Response to Written Questions Submitted by Hon. Catherine Cortez Masto
to Hon. Andy Werk, Jr.
Question 1. How prevalent is manufactured housing in your
community? How do homeowners finance their manufactured home purchase?
Answer. Manufactured housing is relatively uncommon at Fort
Belknap. While affordable, it is often not a good fit for the harsh
winter weather conditions we experience on the Hi-Line, with freezing
temperatures the majority of the year and significant snow
accumulation. Additionally, the leasing challenges that drove the
Tribe's decision to implement its HEARTH Residential Leasing Act also
inhibit there being any place to put manufactured housing in the first
place. And for the single-digit number of residential leases processed
by the Fort Belknap BIA and Tribal Land, manufactured housing is just
as difficult to finance as stick-built homes. Our Tribal members
typically do not have access to conventional mortgages for manufactured
homes, just as with stick-built homes.
Question 2. What policy recommendations for the manufactured
housing market should we consider to lower the cost of mortgage for
homebuyers, especially Native Americans?
Answer. In our view, the recommendations are the same as between
manufactured housing and stick-built homes. We are encouraged by HUD's
Section 184 reforms, which we understand generally include reducing
paperwork burdens, increasing staff and eliminating unnecessary and
duplicative environmental reviews--all of which serve to decrease the
time burdens currently discouraging conventional mortgage lenders from
lending on reservations. More competition would lower costs.
Analogizing to football--where you have coaches, players and fans
broadly fielding and supporting the team, we do not perceive the need
for more coaches (mortgage lender education programs) or fans (those
people without a vested interest but often making opinions about tribes
or mortgage lenders despite a lack of experience in Indian Country), we
need more players--mortgage lenders for whom it makes business sense to
make loans to Native Americans living on reservations because they can
timely complete their underwriting and security requirements (most
particularly receiving BIA Title Status Reports) and be able to rely on
having predictably repaid, enforceable mortgages in Indian Country just
as they do off-reservation.
Question 3. The Federal Home Loan Bank also has an affordable
housing mission. What investments in Native American homeownership has
the Federal Home Loan Banks made? Is there a regional Bank that is a
leader in serving Native American homebuyers and reservation
communities?
Answer. Fort Belknap has no positive experience with these programs
or any leadership by regional banks. We are in a mortgage desert. We
are trying to solve that problem for ourselves, with our economic
development arm, Island Mountain Development Group, preparing a Tribal
mortgage code, investor education modules, and internal mortgage
offerings for Tribal members that Island Mountain could in turn bundle
and sell in the secondary market to the likes of Fannie and Freddie. We
are working to both provide internal solutions and increase Tribal
members' access to conventional mortgages by encouraging regulatory
reforms and developing Tribal infrastructure to support mortgage
lending.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. R. Hunter Kurtz
HUD Section 184 Loan Guarantee Program
Question 1. Congress established HUD's Section 184 Loan Guarantee
Program to help Tribal members obtain homes on Tribal trust lands.
However, according to multiple reports, only a small fraction of loans
guaranteed by the Section 184 Program in recent years have been for
home on trust lands. What steps is HUD taking to increase the
utilization of the Section 184 Program for homes on trust lands?
Answer. HUD is currently developing a proposed rule to modernize
and strengthen the Section 184 Loan Guarantee program. To help develop
this proposed rule, HUD conducted 18 consultation sessions with Indian
tribes across the country and solicited substantial feedback from all
participants. Ultimately, HUD believes the proposed rule changes will
increase utilization of Section 184 on trust lands.
In addition to the on-going rulemaking process, HUD continues to
collaborate with the Bureau of Indian Affairs (BIA) on improving the
BIA approval process for Section 184 loans on trust land. For instance,
as discussed during the hearing, HUD is working with the BIA to gain
access to the Trust Asset and Accounting Management System (TAAMS).
This will help provide HUD with visibility into loans that are pending
approval before the BIA and improve HUD's internal loan approval
process.
Between 2017 and 2019, the number of Section 184 loan guarantees on
trust land grew by 49 percent. HUD guaranteed a total of 179 loans on
trust land in 2017, 249 loans on trust land in 2018, and 267 loans on
trust land in 2019. HUD will work to continue this positive trend in
the future.
Question 2. How does HUD work with lenders and borrowers
participating in the Section 184 Program to ensure that borrowers
receive the best possible rate for their home loans and are not taken
advantage of by the lender?
Answer. HUD takes its oversight and monitoring responsibility for
the Section 184 loan program very seriously. Lenders interested in
participating as a Section 184 lender complete a detailed application
and are thoroughly vetted to ensure they have the necessary licensing,
experience, and expertise to provide quality service to Native American
borrowers. In addition, lenders attend training on mortgaging tribal
trust land loans as well as train any new loan originators. Existing
approved lenders are monitored to ensure adherence to their quality
control plan and compliance with the Section 184 loan processing
guidelines. We expect to address these issues in the proposed rule.
Manufactured Home Loans
Question 3. The Center for Indian Country Development examined
loans that were made to Tribal members for manufactured homes and found
that these loans are not only more prevalent among Native Americans
living on trust land, but also more costly than loans for conventional
stick-built homes. You testified that HUD is exercising oversight into
the current use of manufactured housing in Indian Country. What is the
scope of HUD's oversight in this regard?
Answer. Various HUD offices play a critical oversight role. The HUD
Office of Manufactured Housing Programs issues and enforces national
standards for the design, construction, installation, and performance
of manufactured homes, in order to ensure their safety, quality, and
affordability.
Additionally, under the Section 184 program, approved lenders are
also required to follow stringent requirements when it comes to issuing
loans for manufactured homes that HUD will guarantee under the program.
For example, manufactured homes must be built after June 15, 1976,
cannot be moved from their original foundation, must be de-titled, and
the lender must provide HUD with a certification and engineer's report
that the foundation complies with the HUD requirements and is of
sufficient size and strength to support the unit, and more. These
requirements ensure that a borrower is acquiring a home that is
structurally sound and properly placed on a foundation.
Question 4. Do these oversight efforts include looking into
predatory lending practices targeting Native borrowers seeking
financing for manufactured homes?
Answer. HUD is committed to ensuring that no family falls victim to
predatory lending practices, including Native American borrowers
seeking financing for manufactured homes. The Section 184 lender
approval process and program underwriting guidelines are both designed
to ensure that the program only guarantees loans made by reputable
lenders. Additionally, HUD monitors lenders to ensure that program
requirements are complied with and to guard against fraud and
misrepresentation. If HUD discovers that a lender has engaged in
predatory or other prohibited lending practices, HUD would collaborate
with the Consumer Financial Protection Bureau to ensure appropriate
action is taken.
______
Response to Written Questions Submitted by Hon. Catherine Cortez Masto
to Hon. R. Hunter Kurtz
Question 1. What policy recommendations for the manufactured
housing market should we consider to lower the cost of mortgage for
homebuyers, especially Native Americans?
Answer. There are two primary methods of financing manufactured
homes: the financing of manufactured homes as chattel (home only) and
the financing of manufactured homes titled as real estate (home and
land).
Loans secured as chattel generally carry higher interest rates due
to the higher risk of such collateral and the more limited secondary
market, regardless of where such homes are located.
One way to help lower borrowing costs is to promote real property
loans, and the ownership of fee simple land and leasehold mortgages on
trust land. Another way to address this issue is to expand a secondary
market for these kinds of chattel loans. HUD, however, has not explored
the latter proposal.
Question 2. Could you elaborate on why many Native American
families are unable to access HUD's Section 184 loan guarantee?
Answer. The Section 184 program remains the primary source of
mortgage financing for Native American families. Annually, HUD
guarantees thousands of loans to expand sustainable homeownership in
Indian Country. However, major barriers remain--particularly when it
comes to lending on trust land. In its 2017 Native American Housing
Needs Study, HUD conducted a comprehensive analysis of mortgage lending
on tribal land. The study found that there were various major barriers
to lending on trust land, including the following:
1. The trust status of the land means the land cannot be
alienated or easily be used as collateral.
2. Bureau of Indian Affairs (BIA) processing can be expensive,
complex, and time-consuming.
3. Tribes must issue leases to tribal members who want to
become borrowers so that they can mortgage their leasehold
interests.
4. BIA and lenders must take various steps to allow NEPA
reviews to be completed, which can take time.
5. Typical challenges of lending in very remote areas (e.g.
weak private housing markets).
Additionally, for Section 184 lending to occur on trust land, a
Tribe must also have the necessary legal ordinances. This includes an
acceptable lease, foreclosure and eviction procedures, and priority of
lien.
Tribes that are successfully utilizing Section 184 have developed
in-house experts that: provide homebuyer education and credit
counseling; are adept at navigating the lease and mortgage recording
process; and have developed relationships with lenders to ensure that
obstacles are addressed immediately so that the loan closes without
delay. HUD is documenting these best practices through a series of
national webinars that are posted on its webpage.
Question 3. Why are Native American and Alaska Native--reservation
loans notably less likely to be FHA insured, VA-guaranteed, or Rural
Housing Service-guaranteed than other loans?
Answer. HUD works with its partner agencies to ensure that
borrowers access the loan product that is most beneficial to them. HUD
also engages in interagency collaborative efforts designed to address
barriers to mortgaging tribal trust land, streamline lease and title
status report recording processes, educate lenders, and address
duplicative environmental issues. HUD remains committed to these
partnerships to ensure that Native families have a choice in the
mortgage products that work best for them.
Prior to the inception of the Section 184 program, FHA insured
mortgages on trust land under the Section 248 program. Since the
authorization of the Section 184 program in the early 1990s, the
Section 184 program has served as the primary source of mortgage loans
in Indian Country and has generally been regarded as a more effective
program than the predecessor Section 248 program, which is now largely
inactive. This is because the Section 184 program is more tailored to
meet the unique needs of Native American homebuyers. Under the Section
184 program, and unlike the Section 248 program, Indian tribes and
Native American families have a dedicated Office of Loan Guarantee
within the Office of Native American Programs to provide training and
technical assistance, assist Tribes with developing required legal
ordinances, and process loan guarantees to allow families to achieve
homeownership.
HUD defers to the U.S. Department of Veterans Affairs (VA) and the
U.S. Department of Agriculture (USDA) on questions related to the
volume of guaranteed loans under their programs. HUD regards these
agencies as major partners in the work of expanding homeownership in
Indian Country. In furtherance of this common goal, HUD has
collaborated with VA and USDA on various interagency initiatives,
including the development of a model residential lease of tribal land
that is acceptable to all agencies under their respective direct and
guaranteed loan programs.
Question 4. How has HUD moved to ensure against losses in cases
involving fraud, misrepresentation and other predatory practices in
Native communities?
Answer. HUD's planned proposed rulemaking to update the Section 184
regulations would significantly strengthen the program by adding
additional accountability and protecting borrowers and taxpayer
dollars.
The regulatory changes we expect to be making will make the program
more sustainable for years to come. However, it is important to note
the program today is healthy and is on a good trajectory.
Question 5. How has HUD sought the advice and consultation of
Native communities in its efforts to both broaden access to home
mortgage credit and curb predatory lending practices?
Answer. HUD reaffirms its government-to-government relationship
with Tribal governments and regularly engages in tribal consultation to
ensure HUD policies and programs reflect the views of, and address the
needs of, Tribal communities.
For instance, HUD engaged in extensive tribal consultation when
developing the Section 184 draft proposed rule. Beginning in February
2018, HUD held 15 inperson regional and national sessions and three
national teleconference consultation sessions. HUD began consulting
with Tribes before the Department began drafting the regulation. Tribes
were also given a copy of the proposed regulations to review and
comment on before HUD began the process of readying the draft
regulations for Departmental clearance and public comment.
During these consultation sessions, some Tribes expressed to the
Department the need to expand access to lenders--specifically, many
lenders do not have a local presence in remote Tribal communities, and
Tribes indicated that this makes it more difficult for tribal members
to obtain a mortgage loan. HUD took this feedback into consideration
when developing the draft proposed rule. HUD will continue to solicit
tribal feedback as this rulemaking process proceeds and looks forward
to that input as it works to improve this vital program for Indian
Country.
Question 6. Fannie Mae and Freddie Mac have a duty-to-serve
manufactured homebuyers and rural communities. What involvement have
Fannie Mae and Freddie Mac had on providing affordable financing for
Native American communities?
Answer. HUD defers to Fannie Mae and Freddie Mac on questions
relating to their work in Indian Country.
Question 7. The Federal Home Loan Bank also has an affordable
housing mission. What investments in Native American homeownership has
the Federal Home Loan Bank made? Is there a regional Bank that is a
leader in serving Native homebuyers and reservation communities?
Answer. HUD defers to the Federal Home Loan Bank system on
questions relating to work in Indian Country. However, the Department
recognizes that funding from the Federal Home Loan Banks are often
leveraged with HUD's Title VI Loan Guarantee program and other
financing for affordable housing development in Tribal communities.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. R. Hunter Kurtz
Community Development Financial Institutions
When the Community Development Financial Institutions (CDFI) Fund
was created, CDFI's had limited access to private capital. Over the
past two decades, the CDFI Industry has matured and extends credit and
provide financial services to underserved communities. Despite this
record of success, the President's Budget proposes to eliminate funding
for Community Development Financial Institutions (CDFI) Fund
discretionary grant and direct loan programs.
Nearly $8.7 million has been awarded to Washington state Native
awardees. CDFI investments have also generated $12 in private capital
for every dollar in CDFI grants. CDFI's are an important resource to
provide economic development in underserved communities and provides
assistance that is leveraged 12 times over.
Question 1. What programs does HUD or the Bureau of Indian Affairs
have that provide the same or greater level of support for economic
development in these communities?
Answer. HUD's Office of Native American Programs (ONAP) administers
multiple programs that help foster economic development in Tribal
communities.
Under the Indian Housing Block Grant (IHBG) program, ONAP provides
approximately $650 million annually in formula grants to Indian tribes
and Tribally Designated Housing Entities (TDHEs) to support affordable
housing primarily for low-income families. Tribes and TDHEs rely on
this critical source of funding to construct new housing units,
maintain their existing housing stock, rehabilitate homes to extend
their useful life, provide rental assistance to Tribal members, support
the elderly and disabled, prevent homelessness amongst Veterans, and
support self-sufficiency initiatives targeting youths. Tribes determine
their housing priorities based on their local needs, and then direct
the use of these funds to meet those needs consistent with principles
of self-determination and self-governance.
Whether a Tribe or TDHE is using its annual funding to construct
new housing units, rehabilitate and maintain existing housing units, or
develop on-site utilities and housing-related infrastructure, these
funds serve as a catalyst both for current and future economic
development in Tribal communities. Tribes often employ Tribal members
to help do the construction and rehabilitation work funded under the
IHBG program. Some Tribes have developed strong force account crews
that not only work to meet the needs of their community, but also have
partnered with other Tribes to serve as contractors to help construct
new homes and provide critical training to their host Tribe's
workforce. This model ensures that these important IHBG dollars are
recycled back into local tribal economies many times over. Beyond
directly supporting the employment of Tribal members working on
construction and other housing-related projects, these funds also
support countless ancillary businesses that provide materials and
services needed to carry out the affordable housing projects.
HUD's Title VI Loan Guarantee program is also an important catalyst
of economic development in Indian Country. Under the program, a Tribe
or TDHE can pledge a portion of its IHBG formula funding as collateral
to secure private financing to carry out affordable housing and
housing-related community development projects. Like the IHBG program,
the Title VI Loan Guarantee program leverages both federal and non-
federal sources of funding to help finance and carry out large-scale
projects in Tribal communities. Since its inception, the program has
been used to guarantee approximately $250 million of private capital to
fund affordable housing and community development projects.
Finally, under the Indian Community Development Block Grant
(ICDBG), ONAP provides over $60 million annually for competitive grants
to Indian tribes to carry out a wide range of economic development,
community development, and housing activities. Tribes have used these
funds to help develop infrastructure (e.g. water and sewer projects,
broadband, roads, and other utilities) in their communities to support
economic development. Tribes have also used this funding to build
public facilities, support small local businesses, provide public
services, and rehabilitate homes for low- and moderate-income Tribal
members. Like the IHBG program, when carrying out these activities, it
is common for Tribes to use these funds to employ force account crews
made up of local Tribal members and young people learning a trade or
skill.
HUD recognizes that CDFIs have played an important role in bringing
new capital to tribal and underserved populations. Currently, there are
a total of 11 CDFIs, including six Native CDFIs, that have been
approved as lenders under the Section 184 Indian Home Loan Guarantee
program and that have extended mortgage credit to Native American
borrowers. Some of these CDFIs offer Section 184 guaranteed loans in
multiple states. HUD will also continue to work on ways to encourage
CDFIs to participate in its programs and looks forward to collaborating
with its partners at the CDFI Fund, Native CDFI groups, and others.
Indian Housing Block Grants
There are several federal programs that provide housing assistance
to Native Americans, including the Indian Housing Block Grant program.
These block grants can be leveraged to develop affordable rental
housing and promote homeownership for low-income Native American
households. Indian Housing Block Grants can also be combined with other
funding sources like LIHTC to increase the supply of affordable
housing.
Tribes in Washington state and across the country desperately need
more affordable housing. For example, the Spokane and Nooksack
reservation in my state have vacancy rates of zero percent.
Unfortunately, the President's Budget for Fiscal Year 2020 cuts
funding by $44 million (6.5 percent cut) for Indian Housing Block
Grants.
The Senate Appropriations Subcommittee on Transportation, Housing
and Urban Development and Related Agencies provide a $220 million
increase for Indian housing, including an increase of $48 million for
formula grants, $100 million for competitive grants, and $65 million
for Indian Community Development Block grants.
Question 2. How would the Administration's budget proposals impact
Tribes' capacity to develop affordable housing and promote
homeownership?
Answer. Under the President's budget request, Indian Housing Block
Grants (IHBG) would be funded at $600 million in Fiscal Year 2020. At
this level, HUD can run the IHBG allocation formula and allocate
funding to all Indian tribes and TDHEs while avoiding anomalous
allocations. The program has been at level funding since its inception.
HUD published a Notice of Funding Availability in 2019 and competed
approximately $200 million in additional IHBG competitive funding.
Tribes and TDHEs proposing to carry out construction, rehabilitation,
and infrastructure projects will receive priority. HUD expects to
announce awards soon. These grants will help address the severe
shortage of affordable housing and severe overcrowding by facilitating
housing construction and rehabilitation across Indian Country.
Moreover, both the Senate and House Fiscal Year 2020 appropriations
bills propose a third $100 million pot of IHBG competitive funding,
meaning HUD expects to administer another IHBG competition shortly
after the Fiscal Year 2020 Appropriations Act is enacted.
In addition to these resources, HUD works to promote the Title VI
Loan Guarantee program--partly because the program leverages non-
federal funds and, in turn, allows limited taxpayer dollars to go much
further. HUD also provides technical assistance to Indian tribes and
TDHEs and shares best practices to help them build capacity to find
creative ways to finance complex projects and promote homeownership.
These resources will all help Indian tribes and TDHEs as they work
to meet the needs of their communities.
Question 3. How would you improve this block grant program?
Answer. According to a 2010 study conducted by the Government
Accountability Office, Indian tribes generally view the IHBG program as
effective. Congress has enacted statutory amendments to the Native
American Housing Assistance and Self-Determination Act of 1996
(NAHASDA) multiple times over the years. Additionally, HUD has engaged
in four separate rounds of negotiated rulemaking to improve and
strengthen program requirements and the allocation formula used to
distribute funding to all Indian tribes and TDHEs across the country.
Nevertheless, HUD recognizes there are statutory and regulatory
barriers that remain and should be addressed by Congress, HUD, and its
federal partners.
The Department supports the reauthorization of NAHASDA. As Congress
considers the reauthorization of the Act, which expired in 2013, HUD
supports statutory changes that make Indian tribes and TDHEs eligible
for Housing Counseling grants, strengthen HUD's oversight authority to
ensure Tribes and TDHEs spend their annual block grants in a timely
manner, and expand HUD's authority to address the unlawful expenditure
of grant funds effectively. Additionally, HUD supports changes to the
Section 184 program's authorizing statute. Specifically, changes that
would authorize HUD to require lenders to indemnify the Department for
losses caused by Section 184 loans involving fraud or misrepresentation
by the lender. The Department also supports changes to allow the
termination of lenders that are bad actors and that engage in fraud and
misrepresentation under the Section 184 program. HUD looks forward to
working with the Senate Committee on Indian Affairs on any legislation
designed to improve the IHBG program.
Question 4. If enacted, how will these additional resources help
address the affordable housing crisis for Native Americans?
Answer. The IHBG formula is dispersed to Indian tribes and TDHEs
using an allocation formula that provides funds based on need as well
as funding to operate and maintain Formula Current Assisted Stock
previously developed under the U.S. Housing Act of 1937. Any additional
IHBG funding would be disbursed to Indian tribes and TDHEs as part of
their annual formula grants. A Tribe would then determine how best to
utilize the additional funds, which can support construction of new
housing, rehabilitation of housing, downpayment assistance,
infrastructure, rental assistance, and housing services.
If enacted, the IHBG competitive funding would likely be used
primarily to fund construction, rehabilitation, and infrastructure
projects to support additional housing in tribal communities. As a
result of the first round of IHBG competitive grants, HUD anticipates
that approximately 1,200 new units will be built across Indian Country.
During this first ever round of the competition, HUD received over 190
applications from Indian tribes and TDHEs. As discussed above, HUD
anticipates additional IHBG Competitive funding to be enacted in FY2020
and will administer a competition that will fund strong projects and
result in the construction of additional new housing units in tribal
communities.
If enacted, the ICDBG funding would be awarded competitively and
fund a wide variety of community development, economic development, and
housing projects. Eligible uses of these funds include acquisition of
property, rehabilitation of housing, installation of safe drinking
water and wastewater disposal systems, construction of Head Start and
other childcare facilities and of health clinics, removal of lead-based
paint and mold, and improvement of public services and facilities. $4
million would be set aside to address imminent threats to health and
safety.
______
Response to Written Questions Submitted by Senators Cantwell, Cortez
Masto, and Udall to Hon. Max Zuni
housing supply
Question 1. What Is the biggest obstacle to homeownership and
affordable housing?
Lack of Financial Institutions
There are no banks on the lsleta Pueblo Reservation. There are also
no credit unions (Policy Map, 2019). This means there are no
opportunities to bank for lsleta Pueblo members on Pueblo land. Tribal
members must travel off the Reservation to reach a bank. When Tribal
members do travel offReservation. For our consumer loans, our borrowers
often have low credit scores. TLS tracks this data. In FY15, 16, 17,
and 18 respectively, the average credit score for a consumer loan
client was 536, 547, 569, and 584. If FY19, the average credit score of
our consumer loan borrowers has been 531. These Tribal members are not
afforded the opportunity to step onto the first rung of the ladder by
off-Reservation banks due to low credit scores stemming from lack of
access to capital. We are the only financial institution that exists
for the sole purpose of serving Pueblo members and in its short
history, Tiwa has closed more home loans than Section 184, VA, and USDA
loans combined. helping them to realize their asset-building goals.
Importantly, we are based on ls1eta Pueblo lands.
Housing
On lsleta Pueblo Reservation, the vacancy rate (the percentage of
houses available for rent or purchase) is 0 percent. This is a result
of the extreme lack of housing available on lsleta Pueblo lands. This
lack of supply means there are zero homes available for Pueblo members
unless homes are newly built. Since FY15, 50 percent of our home loans
have been new construction loans. In other words, we provide the
financing for the construction of the home, and for the purchase of the
home. We create housing where there is none.
Lack of Housing
Secondary data shows a tack of housing available for lsleta Pueblo
families. This homeowner vacancy rate--which quantifies the percentage
of homeowner inventory ready for sale--accurately demonstrates the lack
of housing available. This rate is 0 percent for lsleta Pueblo. Since
FY12, 75 percent of our home loans (40 loans) have been new
construction loans. This means we have created 40 new homes for Tribal
members to move into. We fund the construction of new homes to create
homes for Tribal members to move into.
Lack of Access to Education
A final indicator of economic distress is the lack of education
provided to Pueblo members. Educational attainment rates reflect this
reality. ln the United States, 39.9 percent of the population over 25
has high school as their highest level of education. In New Mexico the
same statistic is 41.4 percent. On the lsleta Pueblo Reservation, the
rate is 53.1 percent (ACS, 2017 5-Year Estimates). The percentage of
the population with a bachelor's degree or higher is 30.9 percent for
the U.S., 26.9 percent for NM, and 8.8 percent for lsleta Reservation.
There is a general educational attainment discrepancy for those on-
Reservation compared to those off-Reservation.
A. Tiwa borrowers. many who are low income. are unable to receive
federal funds to rehabilitate homes on flood plains.
A large part of lsleta's residential areas are in flood
plains.
HUD Indian Housing Block Grant (IHBG) and Indian Community
Development Block Grant (ICDBG) funds may be used as down
payment assistance. Low income families are eligible for IHBG
and ICDBG funding.
The Federal Flood Disaster Protection Act of 1973 \1\ (the
``Act'') prohibits the use of federal funds, including IHBG and
ICDBG, on floodplains unless a community or tribe participates
in the National Flood Insurance Program (NFIP) and purchases
flood insurance.
\1\ 42 U.S.C. 41Q6(a).
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Flood insurance is expensive. The inability of low income
borrowers to use federal funds as down payment assistance for
the rehabilitation of homes on floodplains, many which are in
substandard and dilapidated condition, makes it prohibitive to
qualify for a loan.
Further, flood mapping in lsleta was done without detailed
studies to determine Base Flood Elevations (BFEs), which are
necessary to obtain certified elevations for insurance.
Obtaining flood insurance will require a borrower to engage a
surveyor to conduct detailed studies to determine BFEs.
A community (including a tribe) that participates in the
NFIP is required to adopt flood standards on floodplains as
established by the NFIP and enforce these standards. Adopting
an approved NFIP flood ordinance is a burdensome and costly
process that requires a tribe to hire a certified flood plain
manager, develop and enforce flood standards, require certified
elevations when building or rehabilitating on floodplains, and
maintain tribal records on all new home construction and
rehabilitation.
Few tribes participate in the NFIP likely due to the
administrative, technical, and financial burdens imposed by the
NFIP.
States are exempt from the Act's requirement that a
community join the NFIP before using federal funds on
floodplains. The state exemption applies to federal affordable
housing funds provided to states, including HOME funds and CDBG
funds
A provision in the Native American Housing Assistance and
Self-Determination Act of 1996 (NAHASDA) Reauthorization Bill
giving tribes the same exemption already enjoyed by states,
would allow tribes to use IHBG and other federal affordable
housing funds on floodplains utilizing a tribe's mitigation
plan, without requiring a tribe to join the NFIP. This would
allow tribes and their Tribally Designated Housing Entities to
provide down payment assistance funds to low income borrowers
for home construction or rehabilitation.
We ask for your support of the NAHASDA Reauthorization bill
and an exempt proviison for tribes in the bill.
B. Federal land laws and policies applicable to tribal trust lands.
Federal land laws applicable to trust lands, found at 25 USC
81 and the BIA leasing regulations (25 CFR 162) require BIA
approval of residential leases and mortgages. The BIA lease and
mortgage approval and recording process is lengthy and
cumbersome. Tiwa has waited 12 months for a Title Status Report
(TSR), 12 months for BIA approval of a lease or mortgage, and
24 plus months before receiving the recorded lease and mortgage
from BIA.
The time it takes to close a loan on Indian trust lands
deters many lenders.
While HEARTH shortens the timelines by allowing tribes to
enact leasing laws and approve specific types of land leases,
including residential leases, without further approval by BIA,
it's an expensive law for tribes to implement due to a tribe
taking on BIA's role of reviewing and enforcing leases and
mortgages, preparing surveys, and conducting environmental
reviews.
lsleta enacted its leasing law in 2018. BIA approved the law
in April 2019.
lsleta is in the process of planning the implementation of
this law, which will require identifying funding to hire a
leasing officer and contract with surveyors and environmental
review firms to conduct environmental reviews.
Once implemented, Tiwa anticipates that the time for closing
on leasehold mortgages will be cut by more than half. The
ability to bypass the lengthy BIA review and approval process
will allow Tiwa and other lenders to close on mortgages within
weeks versus months.
HEARTH doesn't address the TSR process which must still be
conducted by BIA. While some tribes have taken on recording as
a function, it is an expensive endeavor and one which requires
an expensive database compatible with the BIA titling system.
While we have discussed the ability of the BIA titling
system to become privatized, we realize that this is a
discussion that must involve BIA.
We ask for your support In helping tribes find a solution to
this issue.
Question 2. How would you recommend that we address that obstacle?
Answer. Funding Available to Tiwa:
Tiwa receives financial support from the NACA Program, the
Pueblo of lsleta, and loans from other non-profits. The NACA
Funds are vital to Tiwa's economic development initiatives, but
insufficient for all Native CDFls competing for the funds. As
of 2018, there were 73 certified Native CDFIs, with many other
working towards becoming certified. Thirty-Eight Native CDFIs,
including Tiwa, benefited from the $15.3 million in grants in
FY 2018.
It recently borrowed money from Oweesta, another Native
CDFI, Investors, Tamalpais Trust, and Kalliopeia Foundation.
Capital also comes from the revenue from the loan
portfolios.
Selling our loans on the secondary market to Fannie Mae
would be an option to help Tiwa increase additional Capital,
this is impossible because of FEMA, we need your help to find a
solution to this.
Tiwa's primary challenge is lack of funding to meet the
lending needs of its community, and consistently seeks funds.
Increased funding for the NACA Program is vital to economic
growth on Indian reservations.
We ask for your support of the NAHASDA Reauthorization bill
and an exempt proviison for tribes in the bill.
Question 3. What role does rental housing play in addressing the
affordable housing?
Answer. On lsleta Pueblo Reservation, the vacancy rate (the
percentage of houses available for rent or purchase) is 0 percent. This
is a result of the extreme lack of housing available on lsleta Pueblo
lands. This lack of supply means there are zero homes available for
Pueblo members unless homes are newly built. Since FY15, 50 percent of
our home loans have been new construction loans. In other words, we
provide the financing for the construction of the home, and for the
purchase of the home. We create housing where there is none.
approval of tribal leasing regulations
Question 4. Please describe the Pueblo's experience implementing
the Act and any challenges to implementation that you suggest could be
addressed by either the Department of the Interior or Congress.
Answer.
Environmental Review Procedures have been a challenge.
lsleta is in the process of planning the implementation of this
law, which will require identifying funding to hire a leasing
officer and contract with surveyors and environmental review
firms to conduct environmental reviews.
Once implemented, Tiwa anticipates that the time for closing
on leasehold mortgages will be cut by more than half. The
ability to bypass the lengthy BIA review and approval process
will allow Tiwa and other lenders to close on mortgages within
weeks versus months.
HEARTH doesn't address the Title Status Reports and
Environmental Review process which must still be conducted by
BIA. While some tribes have taken on recording as a function,
it is an expensive endeavor and one which requires an expensive
database compatible with the BIA titling system and hiring
firms are costly to conduct Environmental reviews under CFR
Part 58 (HUD regulations.).
While we have discussed the ability of the BIA titling
system to become privatized, we realize that this is a
discussion that must involve BIA.
native cdfis.
Question 5. As a Native Community Development Financial
Institution, please describe how Tiwa addresses lending risk factors,
such as poor or no credit history, that traditional mortgage lenders In
Indian Country are typically unable to accommodate.
Answer. Native CDFls are unique lenders:
Tiwa, like other Native CDFls, is unique in the following features:
All its lending products have flexible underwriting
criteria. Applicants are not required to have credit history.
Home loans, have a maximum loan to value ratio of 100
percent.
Mortgage loans do not require a down payment.
Home loans have low interest rates equal to the 30-year
Treasury bond rate (2.12 percent as of October 3, 2019) plus
1.375.
Closing costs and origination fees can be financed in the
loan amount.
Tiwa provides homeownership and financial education and
small business workshops, changing the lives of future
generations and the economic picture in lsleta. Here is a story
of one such family:
Carrie (not her real name), a member of the lsleta Pueblo,
improved her credit score by 87 points in less than two years
with the help ofTiwa. As a teen parent, Carrie didn't realize
the impact that her credit score could have on her life and her
ability to access credit. Now, as a mother of five children and
the only working member of her household, she sought a loan
from Tiwa for extra help during the holidays and was provided
with the credit counseling and education that would allow her
to create a positive payment history and rebuild her credit.
Not only did Carrie learn how to take action to positively
impact her score, she has started educating her children on the
importance of credit scores. Without the loan and counseling
from Tiwa, Carrie says she wouldn't be where she is today.
Tiwa requires all borrowers to either take a financial
education class or one-on-one counseling provided by Tiwa.
These classes are held annually and twice a day for 1 + hours.
The classes consist of 4 weeks of Budegting, Savings, Relating
with money with your spouse or accountable partner,and dumping
debt. Fifth week on reviewing your credit report and
collections. Six week of Mortgages, Foreclosures, review of
Debt to income and Loan to value ratios. Seven and Eighth week
of reviewing 401Ks, Roth IRA's and Mutual funds. Nineth, Tenth,
and Eleven week is review on being a smart consumer.
Tiwa collaborates with the lsleta Pueblo Housing Authority
and Pueblo of lsleta departments, such as the Social Services
Department, the Library, the Elderly Center, and the
Scholarship Office, to market its financial products and
development services.
Tiwa markets its products and services in the lsleta Pueblo
newsletter and posts its publications at public places in
lsleta.
Tiwa has a website, www.tiwalending.org. where it posts its
products and upcoming homeownership financial education
workshops.
Tiwa works closely with its borrowers to ensure they remain
successful borrowers. For example, Tiwa contacts delinquent
borrowers by telephone to find out their situation and work
with them to resolve the delinquency while the delinquency is
still manageable. In a pre-foreclosure situation, Tiwa worked
closely with the family and the Pueblo of lsleta to identify a
family member who could assume the loan. Most recently, Tiwa is
working with the family of a deceased borrower to identify a
qualified family member who can assume the loan.
Question 6. What amount of NACA Program funding per fiscal year
would Tiwa consider sufficient to meet Its needs.
Tiwa's primary challenge is lack of funding to meet the lending
needs of its community. and consistently seeks funds. Tiwa would like
to receive at least $1,000,000.00 from the FA NACA program, this would
allow Tiwa to provide at least 8 more homes to existing and new
homeowners. Since 2009 historically Tiwa Lending Services has closed
$7,091,717 with an average loan amount of $118,195.28. Tiwa has a
waiting list currently and can not keep up with the demand for funds.
nwa can't advertise funds due to the money being committed before they
have the funds. Tiwa is working with USDA rural, RCAC, and 184 lenders
to help with the Capital. Tiwa is now looking into building a
partnership with the Federal Reserve Bank. The barriers still are there
especially with FEMA and BIA.
Question 7. How prevalent Is manufactured housing in your
community? How do homeowners finance their manufactured home purchase?
Answer. Refer to answer under question numbered 5.
Question 8. What policy recommendations for the manufactured
housing market should we consider to lower the cost of mortgage for
homebuyers, especially Native Americans?
Answer. Lower the down payment for all borrowers. Loan to Value
needs to be addressed. No other recommendations at this time.
Question 9.. The Federal Home Loan Bank also has an affordable
housing mission. What investments In Native American homeownership has
the Federal Home Loan Bank made? Is there a regional Bank that is a
leader in serving Native American homebuyers and reservation
communities?
Answer. Tiwa Lending Services is exploring these partnerships.
Thank you.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Darryl Lacounte
Approval of Tribal Leasing Regulations
Question 1. Congress passed the Helping Expedite and Advance Tribal
Homeownership (HEARTH) Act of 2012 to enhance Tribes' self-governance
over Tribal lands and promote the efficient leasing of those lands for
housing and business purposes. To exercise the enhanced authority
provided by the HEARTH Act, Tribes must first adopt leasing regulations
and submit them for approval to the BIA. According to the BIA's
website, 45 Tribal leasing regulations have been approved by the BIA's
Office of Trust Services since 2013. We understand that only three of
the 45 regulations were approved in 2019, and that 26 applications are
still awaiting action. What steps are the BIA taking to address this
backlog?
Answer. BIA is directing additional resources to the program and
working to centralize the leasing regulation review process. First, the
BIA is working to fill the HEARTH Act coordinator position vacancy.
Once the vacancy is filled, the leasing regulation review process will
be streamlined from BIA field offices to the central office
responsibility to address pending reviews and move them forward for a
decision.
Expediting Title Status Reports
Question 2. You indicated in your hearing testimony that the BIA is
currently developing the Enterprise Land and Resource Data Warehouse to
integrate its various business subsystems, including the Trust Asset
and Account Management System (TAAMS), into one platform.
How do you expect this change to streamline the BIA's process of
issuing Title Status Reports (TSR)? Will it address the reported delays
in issuance?
Answer. The BIA Enterprise Land and Resource Data Warehouse will
allow lenders to check on the status of their mortgage applications and
to contact the BIA, improving communication. The TSRs are one of the
items required in the mortgage application process. The portal will
provide transparency in the issuance process by showing when a TSR
request is made and when the certified TSR is received from Land Titles
and Records Office.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Darryl Lacounte
Community Development Financial Institutions
Question 1. When the Community Development Financial Institutions
(CDFI) Fund was created, CDFis had limited access to private capital.
Over the past two decades, the CDFI industry has matured and extends
credit and provide financial services to underserved communities.
Despite this record of success, the President's Budget proposes to
eliminate funding for Community Development Financial Institutions
(CDFI) Fund discretionary grant and direct loan programs.
Nearly $8.7 million has been awarded to Washington state Native
awardees. CDFI investments have also generated $12 in private capital
for every dollar in CDFI grants. CDFis are an important resource to
provide economic development in underserved communities and provides
assistance that is leveraged 12 times over.
What programs does HUD or the Bureau of Indian Affairs have that
provide the same or greater level of support for economic development
in these communities?
Answer. In 2018, Assistant Secretary--Indian Affairs Tara Sweeney
hosted the first ever Indian Affairs-Native CDFI Network roundtable at
the Department of the Interior. The Department continues to collaborate
with the Native CDFI Network on innovative ways to provide capital
access for Native CDFis and to attract the right types of investments
into Indian Country.
Additionally, the Office of the Assistant Secretary--Indian Affairs
provides technical assistance and funding that supports economic
development for American Indian tribes, communities, and individuals.
The Office of Indian Energy and Economic Development (IEED) provides
funding opportunities including:
The Native American Business Development Institute (NABDI)
grant program, within the IEED Division of Economic
Development--NABDI is designed to help Tribes retain qualified,
impartial, third party consultants to conduct feasibility
studies on economic development proposals, ideas, and
technologies.
The Tribal Energy Development Capacity (TEDC) grant program,
within the IEED Division of Energy and Mineral Development
(DEMD)--TEDC helps Tribes assess, develop, and secure the
organizational and technical capacity needed to manage energy
resources on Indian land and properly account for resulting
energy production and revenues.
The Energy and Mineral Development Program (EMDP) within the
IEED DEMD--The EMDP provides funding for the assessment and
marketing of tribal energy and mineral resources.
______
Response to Written Questions Submitted by Hon. Catherine Cortez Masto
to Darryl Lacounte
Question 1. Does the BIA get involved in financing manufactured
housing? How do homeowners finance their manufactured home purchase?
Answer. The BIA reviews all mortgage applications for compliance
with statutes, policies, and regulations.
Question 2. What policy recommendations for the manufactured
housing market should we consider to lower the cost of mortgage for
home buyers, especially Native Americans?
Answer. Whether the cost of a mortgage may be lowered is within the
lender's discretion.
Question 3. The Federal Home Loan Bank also has an affordable
housing mission. What investments in Native American homeownership has
the Federal Home Loan Banks made? Is there a regional Bank that is a
leader in serving Native American homebuyers and reservation
communities?
Answer. We are not aware of a regional bank that is considered a
leader in serving Native American homebuyers. However, nationwide
lenders most utilized for Native American home buyers include 1st
Tribal Lending and Bank2, particularly for HUD Section 184 home loans.