[Congressional Record Volume 141, Number 162 (Thursday, October 19, 1995)]
[Senate]
[Pages S15344-S15345]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself, Mr. Rockefeller, Mr. Inouye, Mr. 
        Wellstone, and Mr. Simon):
  S. 1342. A bill to amend title 38, United States Code, to authorize 
the Secretary of Veterans Affairs to make loans to refinance loans made 
to veterans under the Native American Veterans Direct Loan Program; to 
the Committee on Veterans' Affairs.


            the native american veterans direct loan program

 Mr. AKAKA. Mr. President, today I am introducing legislation 
to amend section 3762 of title 38, United States Code. Section 3762 was 
established under the Veterans Home Loan Program Amendments of 1992 and 
authorizes a 5-year pilot program to provide direct home loans to 
native American veterans who live on U.S. trust lands. I am pleased 
that Senators Rockefeller, Inouye, Wellstone, and Simon are cosponsors 
of this measure.

  My bill would allow the Department of Veterans Affairs [VA] to 
refinance direct loans made under this unique initiative, known as the 
Native American Direct Home Loan Program. Under my bill, credit 
standards for underwriting direct loans to Native American veterans 
would be the same as those for VA guaranteed loans. The underwriting 
would be performed by the VA and would allow qualified veterans to 
refinance existing loans.
  The Native American Direct Loan Program was established to ensure 
that veterans who reside on reservations or other trust lands would 
have the same access to VA loan benefits enjoyed by other veterans. 
Under the 5-year pilot program, VA is authorized to provide direct 
loans of up to $80,000 for most areas of the United States, although 
higher limits were established for certain high-cost regions.
  Until the program was adopted 3 years ago, Native American veterans 
who lived on trust lands were denied access to traditional VA 
guaranteed loans. The inability to take title to trust lands in the 
event of default, cultural misunderstandings, and the generally poor 
economic conditions that exist on reservations, dissuaded potential 
lenders from approving mortgages for housing on such lands.
  During the guaranty program's half-century of existence, not a single 
Native American veteran was able to utilize his or her home loan 
entitlement for housing on trust lands. In contrast, over 13 million 
other veterans received more than $350 billion in VA guaranties during 
that period. It was to redress this inequity that Congress enacted 
Public Law 102-547.
  Despite the complexities of creating a program that must address the 
needs of hundreds of different tribal entities, each with its own 
cultural, political, and legal systems, VA has successfully entered 
into agreements to provide direct VA loans to members of 30 tribes and 
Pacific Island groups, and negotiations are ongoing with approximately 
20 more tribes. To date, approximately 45 loans have been closed, 3 of 
them with American Indians, the balance with Hawaiian Natives and 
Pacific Islanders. In addition, the VA has a commitment to close 36 
more loans, including American Indians residing on allotted lands.
  Although the VA has made significant progress in implementing the 
program, a serious, unanticipated shortcoming has come to light. 
According to the VA, the Department has no statutory authority to offer 
refinancing to veterans receiving loans under the program. Thus, native 
Americans who receive loans under the program cannot take advantage of 
interest rate reductions to ease their financial burden. 

[[Page S 15345]]
This is in stark contrast to other veterans who use the regular 
guaranty program. In the period between October 1993 and August 1995, 
for example, the VA refinanced over 25,000 interest reduction loans 
with a face value of more than $2 billion.
  Mr. President, this situation runs contrary to the intent of Congress 
in enacting the Native American Direct Home Loan Program three years 
ago. In creating the program, Congress intended to ensure that, to the 
maximum extent possible, Native American veterans would have the same 
opportunity as other veterans to achieve the American dream of home 
ownership. Insofar as refinancing is an important element of other VA 
home loan programs, it is just and reasonable that veterans who receive 
benefits under the direct loan program be accorded an opportunity to 
refinance.
  Mr. President, the legislation I am offering today would correct this 
oversight by providing VA with specific refinancing authority under the 
direct loan program. My bill also includes a provision for a special 
fee that would cover all refinancing costs thus making the bill revenue 
neutral.
  Mr. President, I believe this legislation will significantly enhance 
VA's ability to provide native American veterans with equal access to 
services and benefits available to other veterans. It would reduce the 
costs of home ownership for those presently receiving benefits under 
the program, possibly reducing the risk of default and the costs 
associated with foreclosure. Perhaps most importantly, it would 
encourage eligible Native American to come forward to take advantage of 
the program's benefits.
  Thank you, Mr. President. I hope that the measure I am offering today 
will be supported by colleagues from both sides of the aisle.
                                 ______