Smoke Signals 7
ram; Refinance Options Not Available Yet
FEBRUARY 1, 2003
is losing out on lower rates, lower payments, and
maybe more important, cash in hand, that is avail
able to most American homeowners.
Alternatives to the 184 program are all but im
possible to use for refinancing, as Tribal member
and Grand Meadows homeowner Perri McDaniel dis
covered. Outside of the program, banks are not ex
cited about refinancing manufactured homes
Tribal or otherwise at reasonable rates. The only
bank around that would even consider refinancing
her home wasn't doing any more in the manufac
tured home department, but if they were, they told
her, they would charge 11 percent interest to do it,
exorbitant compared with the 7.75 percent rate she
got through the 184 program in 1997 (See Preda
tory Lending sidebar).
When (presumably not 'if) the refinancing regu
lation goes through, McDaniel and others at Grand
Meadows will be able to refinance at a rate that is
now 6.2-6.5 percent, according to Harjo. Though
manufactured homes are more expensive to refi
nance in the open marketplace, and though differ
ent banks may have different positions on this kind
of loan, at Wells Fargo, refinancing of the manufac
tured homes at Grand Meadows will be set at the
same rate as "stick-built" houses, said Harjo.
The litany of promises about refinancing contin
ues. It leaves Indian homeowners here and across the
country at the mercy of an agency that, off the record,
says from the top office on down, that it wants the
refinance provision, but does not make it happen.
One Tribe's Fight Against Lenders Who Prey
By Kim Hayes
Native American Housing News
A thriving casino and perception of growing
Tribal wealth may be leading to an increase in
predatory lending to members of the Confeder
ated Tribes of Grand Ronde in Oregon.
Seeing a successful casino and assuming Tribal
members are becoming wealthy, predatory lend- ,
ers are seeing more potential victims, according
to Terri White, Executive Assistant of Grand
Ronde Tribal Housing Authority. Victims are
lured by an opportunity for quick cash and do not
understand the financial consequences that can
come later. Tribal members are particularly vul
nerable because they can lack experience dealing
with these types of matters.
"I see it among all age groups, and I see it quite
a bit among Elders," said White.
The money provided by predatory lenders goes
toward many things, including car repairs. Of
ten homes that were owned outright were refi
nanced up to 125 percent, which meant that if
the homeowner sold, they would get no money
out of the house. These lenders also tack on high
closing rates and high interest rates.
Disturbing Trends and Reactions
to Them
According to analysis by the Washington, D.C.
based National Community Reinvestment Cor
poration (NCRC), about a quarter of the conven
tional home mortgage loans made to Native
Americans nationwide during 1998-2000 came
from subprime and manufactured home lenders.
In 2000, Native Americans were 2.5 times more
likely than whites to receive such loans; this was
an increase from 2.1 times more likely in 1998.
Valerie Harjo, a member of Grand Ronde's
Housing Board and a loan officer with a local tra
ditional lender, has seen the problem grow over
the last few years. The Grand Ronde Housing
Authority asked her to look at some of the good
faith estimates given to members by a predatory
lender and she could see the flaws in the pro
posals. She saw excess points being charged for
loans and loans being given out for over 100 per
cent value of the home. Most often the trouble
occurs in refinancing a loan.
Another disturbing trend is that many
subprime lenders claim to be Native American
owned or of Native American descent. They use
that to get a foothold and gain the customer's
trust, said Harjo.
The housing authority is trying to counsel
Tribal members at risk of predatory lenders and
is encouraging homebuyer education on the con
sequences of taking these irresistible offers.
"They need to be taught to shop around and
find the lender that works best with their finan
cial needs and credit history," said White. "We
will take all the time in the world to work with
someone to try to get them away from a preda
tory loan." The Tribe runs a housing grant pro
gram for buyers, but "unless they are a part of
one of our grant programs we can't necessarily
make them take homebuyer education."
White believes that legislative action needs to
be taken to control predatory lending. "We could
run all the articles in the world in our Tribal
newspaper, but how many people are going to read
it? There needs to be some control over predatory
lending so that such lenders can't call Tribal mem
bers over the phone and sign them up."
A Tribal Member's Story (1)
One Grand Ronde member found herself having
to declare bankruptcy after falling victim to a preda
tory lender. Jeanne Larsen was first called by a
lender several years ago to talk about refinancing
her home. She ended up owing a much larger
monthly house payment than she previously had.
Additionally, the lender did not include mortgage
insurance on the loan as he had promised. That
insurance would have covered Larsen's payments
in case of her becoming unable to work.
When Larsen did quit work as a secretary for the
Tribe because of health problems and surgery, she
was unable to make her house payments. Since
the mortgage insurance was not in place, the pay
ments were not covered. Larsen ended up having
to declare bankruptcy and feared losing her home.
The Tribe is now helping her get back on her feet
by putting a lien on her house. "Thank goodness
my Tribe was there to support me," she said.
Larsen believes that further education about
predatory lenders is needed for Tribal members.
"When people don't know what is going on, preda
tory lenders seem like they are doing something
good for you. Then you go along and you are in
worse shape then you were before."
Larsen is still contacted by predatory lenders, but
now avoids them. She hopes to be able to keep up
her payments on her home and eventually refinance
the house through the Tribe's housing board. She
now works as a patient relations representative for
the Tribe and visits with Tribal Elders.
Not-So-Golden Years
Although Tribal members of all ages are contacted
by predatory lenders, Elders are particularly
abused. Elders are often introduced to predatory lend
ers by family members, said White. Elders then
take out loans to pass on the money to their family
members in need.
Once in trouble, Elders also have a harder time
getting out. Victims in other age groups have the
advantage of being able to work and earn extra in
come. But Elders are usually on a fixed income
and have higher expenses, because of their age, liv
ing accommodations, and medical needs.
"Younger people are getting into fixes, but they
have capabilities of finding a way out of it. Elders
are kind of stuck there," said White. She has seen
many cases of Elders having to declare bankruptcy
to keep their homes. That stress can lead to health
problems, said White. "The golden years should be
a reward for working all of your life. Instead it
becomes a situation where you can lose the home
you have had for 35 years."
A Tribal Member's Story (2)
Arthelia Clark lived in a house built by her fa
ther and her husband, a half-mile from where she
was born. In 1988, son John Clark saw her almost
lose her home due to a balloon payment imposed by
a predatory lender. Arthelia was 61 at the time
and was completely blind. A telephone solicitor called
her and offered her a loan that provided up front
Valerie Harjo
cash. The lender then came out to Arthelia's
home and had her sign the loan papers, despite
the fact that she was blind and unable to read the
documents.
When she fell behind and was unable to make
the balloon payment, she went to her son for help.
John contacted the Bureau of Indian Affairs and
was able to refinance her loan and keep her from
losing the home.
"Older people on a fixed income are desperate
for money when somebody selects them on the
telephone and offers them something too good to
be true," John comments. "She just needed money
and she bit on what they offered and it tied up her
house for many years.
After years of failing health, Arthelia passed
away in 1999.
"She was a super mom," said John. "I miss her
a lot."
Reaching Out to Help
Seeing cases like Clark's and Larsen's has
moved the housing authority to act proactively as
well as reactively. "The HA's policy traditionally
has been not to get too involved in the choice of
lenders," said Harjo. "However, now that some
members are getting taken advantage of, the hous
ing authority is getting involved."
The housing authority wants to continue reach
ing out to more people through homebuyer educa
tion and hopes to explore other ways to fight preda
tory lending in the future, said White.
The National Fight Against Predatory
Lenders On behalf of Tribes throughout
Indian Country:
NAIHC has initiated a partnership with
NCRC to provide Tribes with model predatory
lending legislation to protect them against
predatory practices. For a copy, contact Jane
DeMarines at NAIHC, 202-789-1754.
The NAIHCNCRC partnership provides ac
cess to a loan fund, The Consumer Rescue Fund,
which helps Tribal members refinance bad
predatory loans. Contact NCRC at 202-628-8866
for more information on the fund.
NAIHC and NCRC mailed the model preda
tory lending bill for Tribes to pass on their res
ervations in September, as well as information
from the Consumer Rescue Fund. B