Smoke signals., February 01, 2003, Page 6, Image 6

6 FEBRUARY 1, 2003
Smoke Signals
A Glitch Mars An Indian Home Ownership
Refinance continued from page 1
While some homeowners are frustrated at their
inability to refinance the original loans made under
the program, before Section 184 came along, it was
not possible to finance a house at all in Indian Coun
try. Lien restrictions on Tribal Trust land, enforced
to keep the land in Tribal hands, have had their
limitations.
Until the Section 184 provisions came along, lend
ers universally declined to offer mortgages on Tribal
Trust land. (Trailer park land is another example
where the land under a home is often not owned by
the homeowner, and when trailer park homeowners
obtain mortgage loans, the loans often come at pro
hibitive rates. The category is known as 'preda
tory' lending See Predatory Lending Sidebar page
7).
"The feds stepped in because they realized that
Native Americans could not enjoy the benefits of
home ownership," said Linda Layden, Director of
the Tribal Housing Authority for the Confederated
Tribes of Grand Ronde (CTGR).
The step came in the name of Nebraska Congress
man Douglas Bereuter, who introduced the Hous
ing and Community Development Act of 1992. Sec
tion 184 of this law addressed the problem by allow
ing HUD to guarantee loans on Tribal Trust (and
other Indian) lands.' It took until 1995 before Con
gress finally provided $1 million for the purpose,
which enabled HUD to guarantee $12 million worth
of mortgage loans. The first loan was made that
year to a Tribal member in Idaho. In Grand Ronde,
the first Section 184 loan came in 1997, when the
Grand Meadows subdivision opened.
The question comes up, however: why not include
a refinancing provision from the beginning?
THE BLAME GAME
The plan's architects overestimated demand for
the program, and worried that putting aside dollars
for refinancing (which nobody needed at that point)
might take dollars away from those wanting a first
shot at housing, according to a knowledgeable HUD
source who asked not to be identified.
Everything was fine until the technology bubble
popped at the end of the decade and the economy
stumbled. Although there still was no immediate
need for refinancing, by the middle of 2000, the le
gal framework for refinancing was enacted, and by
the middle of 2001, HUD reportedly had the process
prepared for implementation, but officials speaking
only on background said that Tribes blocked the ef
fort.
If the feds blame the Tribes, housing officials for
the Tribes say that HUD has had the power all
along to implement the process that will allow refi
nancing of 184 loans, but has declined to do it. Ac
cording to Russell Sossamon, Chairman of the Na
tional American Indian Housing Council (NAIHC)
and Executive Director of the Choctow Housing Au
thority in Oklahoma, "I don't know of anyone (in
Indian Country)," he said, opposed to the refinanc
ing provision.
A range of Indian and non-Indian sources said
that the refinancing issue got tied up with Negoti
ated Rule Making (not yet mandatory on this issue)
and Consultation (mandatory) processes demanded
by the Tribes, and got lost in there.
Communications between Tribes and federal
Housing officials have often been testy. "A lot of
Tribes," said Kristy McCarthy, Executive Director
of the Council for Indian Housing Development
(CIHD), "don't want HUD to cherry pick and de
cide (which issues to negotiate and which to act on
unilaterally). The position of the Tribes is that HUD
hasn't been consulting with them on anything," said
McCarthy.
Nevertheless, HUD would have the Indian com
munity believe that the agency is "strongly in fa
vor" of issuing refinancing regulations, and an email
from HUD public relations spokeswoman Donna
White in early December promised, "The Depart
ment will soon release information to lenders, Tribes
and homebuyers announcing that mortgagors may
refinance existing mortgages on Tribal Trust lands
and in Indian areas using the HUD Section 184
loan program."
In January, a HUD official told a gathering of
the Northwest Indian Housing Association
(NWIHA), however, that the new rules, which re
portedly will emerge in a "Public Indian Housing
Notice," were still being reviewed by HUD lawyers.
Internal breakdowns - because the department
was without a permanent Assistant Secretary for
Indian Housing for 18 months have left the refi
nancing provision for dead so many times, accord
ing to the HUD official, that office staffers have
taken to calling it 'Lazarus.'
"We were hoping it would be a Christmas present,"
the HUD official said. "Now, we're hoping it will be
a Valentine's card."
WHO BENEFITS FROM 184 LOANS?
113 Tribes have adopted mortgage ordinances that
permit them to use the Section 184 loan guarantee,
according to Donna Fairbanks, a Technical Assis
tant Specialist with NAIHC. Of those, 75 Tribes
have actually used the program. Within those 75
Tribes, about 1,200 individuals or families across
the country have been granted Section 184 loans
since the program was funded in 1995, according to
a HUD webpage. About one hundred 184 loans
have been made in the four northwestern states,
and 34 have been granted in Oregon, nearly all at
Grand Meadows.
Demand for the program has been far smaller than
expected, according to Chester Carl, former Chair
man of NAIHC and CEO of the Navajo Housing Au
thority in Arizona, Utah and New Mexico, because
"if you look at the requirements that HUD is impos
ing on Tribal members... it's not conducive to the
actual environment of the Tribal communities. . .In
addition, the number of (mortgage) institutions par
ticipating is very minimal. . .What Congress intended
was to allow HUD to provide assistance to families,
but unfortunately, that's not happening."
Nationally, 30,000 Native Americans are on the
waiting list for rental housing in Tribal areas, ac
cording to the Tribal Law and Policy Institute.
200,000 housing units are required immediately in
Indian Country to provide those in need with ad
equate housing, according to NAIHC.
If way too few Indians are being served by all In
dian housing programs, nevertheless, success among
those participating in the Section 184 program has
been high. Of the 1,200 guaranteed loans, only 12
now have defaulted, and none in the Grand Mead
ows development. Today's success shows signs of
weakening, however, as the economy continues to
sputter.
Still, based on current refinancing rates and the
original mortgage rates paid by these homeowners,
Harjo estimates that perhaps 20 homeowners in
Grand Meadows could benefit by refinancing. At
least, Harjo said, they could benefit if they planned
to stay put for ten years or more. With approxi
mately $2,000 in closing costs required for a refi
nance in this area, it takes some time to recoup that
new investment in the property.
HERE IN GRAND RONDE
For some homeowners in Grand Meadows, who
purchased a home under Section 184 at Grand Mead
ows, this program has meant the possibility of home
ownership where it was not previously possible. But
with interest rates now at 31-year lows, the family