Navigating the new Indian housing landscape

Tribal code

Ask Donna

What actually matters in this document.

Text

s Native populations grow rapidly, tribal leaders are challenged as never before to

provide their members decent housing. Expanding homeownership is a huge part

of the solution for reservations and Indian areas, but until recently lenders just didn’t

extend home loans in Indian Country. The Tribal Leaders Handbook on Homeownership

is the essential guide to understanding a process that has so much potential but is still

in its infancy. The handbook is your guide to the new mortgage programs (government

and private), the new kinds of lenders (loan funds, Native CDFIs), and the new energies

that are transforming Indian housing.

PUBLISHED BY FEDERAL RESERVE BANK OF MINNEAPOLIS | MINNEAPOLISFED.ORG

PRINTED BY FEDERAL RESERVE BANK OF SAN FRANCISCO

COVER AND BOOK DESIGN: LORI KORTE

ILLUSTRATIONS: MARLENA MYLES

WWW.MINNEAPOLISFED.ORG/INDIANCOUNTRY

ISBN-13: 978-0-692-14067-3

Edited by Patrice H. Kunesh

Forwards by the National Congress of American Indians,

the National American Indian Housing Council,

and Enterprise Community Partners

A publication of the

Center for Indian Country Development

of the Federal Reserve Bank of Minneapolis

and Enterprise Community Partners

Federal Reserve Bank of Minneapolis – Center for Indian Country Development

90 Hennepin Avenue

Minneapolis, MN 55112

www.minneapolisfed.org

This book may be reproduced in whole or in part provided that any reproduction is:

1. Used for noncommercial, personal, or educational purposes only (i.e., not for private gain), and

2. Appropriately credited.

ISBN-13: 978-0-692-14067-3

Printed in the United States of America

Editor: Patrice H. Kunesh

Cover design: Lori Korte and Marlena Myles

The views expressed herein do not necessarily reflect the views of the Federal Reserve Bank of Minneapolis

or the Federal Reserve System.

Introduction

Acknowledgments

Forwards

National Congress of American Indians

National American Indian Housing Council

Hawaiian Community Assets

Enterprise Community Partners

Preface

A Brief History of Indian Country Land

Chapter 1

How Tribal Leaders Can Support Homeownership

Case Study

Large Scale Tribal Subdivision Black Mesa View

San Felipe Pueblo, New Mexico

Chapter 2

Historical Housing Programs in Indian Country

Case Study

Alaska Native Homeownership

Bristol Bay Housing Authority, Dillingham, Alaska

Chapter 3

Partnering on Homeownership

Chapter 4

Assessing Tribal Members’ Needs

Case Study

Housing Needs Study Cheyenne River

Housing Authority, Eagle Butte, South Dakota

Chapter 5

Preparing Families for Homeownership

Case Study

Homebuyer Readiness Program—Salish and

Kootenai Housing Authority, Pablo, Montana

Chapter 6

Lending Processes to Optimize Homeownership

Case Study

Native Community Development Financial

Institutions Focusing on Homeownership

Lending in Indian Country

Chapter 7

Navigating Land Issues

Case Study

HEARTH ACT Implementation—Ho-Chunk Nation

Reality Division, Black River Falls, Wisconsin

Chapter 8

Homeownership Development:

Planning to Drive Change

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CO N T E N TS

Chapter 9

Home Design and Construction—

Making the Right Choices

Case Study

Green Design—Santo Domingo Tribal Housing

Authority, Santo Domingo Pueblo, New Mexico

102

Chapter 10

Making Homeownership Affordable

106

Case Study

Low-Income Housing Tax Credit—Santo Domingo

Tribal Housing Authority, Santo Domingo Pueblo,

New Mexico

110

Chapter 11

Manufactured Homes:

An Affordable Ownership Option

114

Afterword

The Path Ahead—A Shared Future

124

Appendices

Glossary of Common Acronyms and Lending Terms

126

Classification of Housing Types

130

Native American Mortgage Products

132

Mortgage Lenders Working in Indian Country

139

Model Housing Needs Assessments

141

The Bureau of Indian Affairs Inter-Agency

and Program Mortgage Package Routing Slip

158

The Bureau of Indian Affairs Inter-Agency

and Program Mortgage Package Business Process

160

Contributors

161

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Editor's Introduction

What would it take to build new communities, and remake old ones, so reservations

move more positively toward meeting housing needs and bolstering economic

development?

ndian Country connotes an enduring interconnection between land and people. It also is a

complex web of historical, legal, and social forces that make it unnecessarily difficult to use trust

lands to the benefit of their people. For several generations, housing stock on American Indian

reservations has been limited and deficient, adding to the already dire housing crisis throughout

Indian Country.

Today, the strong demand for homeownership in Indian Country is driving renewed efforts to

confront these barriers and unlock the potential of all reservation land. Tribal leaders across the

country are at the forefront of this effort.

This Handbook is one of those efforts. It came about at the request of the Tribal Leaders Working

Group of the National Native Homeownership Coalition, an initiative of the Center for Indian

Country Development at the Federal Reserve Bank of Minneapolis. We asked them to consider

these basic questions about economic development: What would it take to build new communities,

and remake old ones, so reservations move more decisively toward economic development that

benefits tribal members? What financial and governance strategies could most effectively overcome

barriers to these goals? They immediately identified the need for a comprehensive guide to the

homeownership process and the mortgage lending programs available in Indian Country.

Thankfully, a good model already existed in Designing and Operating Homeownership

Programs on Tribal Lands, a manual prepared by the New Mexico Tribal Homeownership

Coalition and published in 2016 by Enterprise Community Partners’ Native American Initiative.

This Handbook expands on the Enterprise blueprint. It provides a comprehensive overview of

the mortgage lending process, addresses challenges to homeownership on trust lands, and includes

“best practice” case studies that show how tribes overcame those obstacles through innovation and

perseverance to create homeownership in their communities.

Why homeownership? The short answer is people and opportunity.

• Growing housing needs of Native communities. Among the 5.2 million American Indians

and Alaska Natives, social and cultural connections to Indian Country remain strong. In this

rapidly growing population, a high percentage of tribal members (about 60 percent) lives on

or near reservations, and Native communities increasingly are looking to address their rising

housing needs.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Legend

Ç Federally Recognized Reservation

Ç Alaska Native Village Statistical Area

Ç Oklahoma Tribal Statistical Area

Ç Other Tribal Area

Source: Housing Assistance Council

• Strong and unmet demand for homeownership. According to the Census Bureau, in 2016, just 52.9

percent of all Natives were homeowners, down from 55.5 percent in 2000. In tribal areas, there is a

strong and as yet unmet demand for homeownership among Native households: 75 percent report

a strong desire to own their home. Concerns about chronic housing shortages, quality, and overcrowdedness suggest additional demand for new investments in private homes in Indian Country.

• Reservation economies. Expanding homeownership options on trust land can help improve

reservation economies and the well-being of tribal members. Building new homes and

preserving old ones employs a wide range of workers and provides opportunities to develop a

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

skilled workforce. These activities have a wide ripple effect as jobs are spread over other sectors

of the community, including manufacturing, retail, and business services.

• Governance and infrastructure. Creating homeownership in Indian Country involves

fundamental economic and governance issues such as access to capital, workforce capacity,

and spending power within the reservation.

• Unlocking the potential of reservation lands. The tasks before stakeholders working to

strengthen tribal economies through homeownership include:

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

° Grounding a system of housing finance and development in tribal housing programs to

address the community’s housing needs, including enabling Native households to purchase

or rent quality homes on their reservations, or to build their own.

° Assembling land parcels in ways that can support infrastructure investment to serve the

quality development of housing and other community amenities. This can be achieved

by targeting funding for land purchases and streamlining lease processes for housing

development, so tribal and trust lands can be accessed for housing more easily.

° Developing a system of infrastructure finance that can serve new and existing community

development and projects.

° Aligning education, workforce development, and reservation job sectors to grow the share

of Native workers filling reservation-based jobs, thus creating a market for higher-quality

housing choices.

° Attracting reservation investments and consumer spending in reservation enterprises.

Some good progress has been made in meeting Indian Country’s unmet demand. The HUD

Section 184 Indian Home Loan Guarantee Program has greatly expanded the supply of mortgage

credit to Native borrowers. Loans under this program have grown from less than 600 per year

before 2005, to over 4,000 loans in 2015 and an aggregate total of more than 6,000 as of 2017.

However, most of this growth bypassed trust lands, resulting in 93 percent of HUD 184 loans being

made on fee land in recent years.

Other federal programs support mortgage lending on trust lands, such as the USDA Rural

Housing Services 502 Direct Loan Program and the VA Native American Direct Loan Program. On

a smaller but vitally important scale, CDFIs (community development financial institutions) and

tribally owned financial institutions, including banks, credit unions, and internal mortgage offices,

provide loan products and mortgage services to Native borrowers.

Nevertheless, developing trust lands for homeownership remains a serious challenge and

involves a lengthy and often burdensome process that reduces the appeal of lending on tribal trust

land, even with the federal guarantee.

Who should use this handbook?

• All tribal leaders interested in creating homeownership programs, in leveraging government

and private mortgage programs and resources, and in developing partners to help maneuver

between lending and development processes for their Native communities.

• Banks and mortgage lenders interested in how homeownership on trust land is not only

possible but also can be a successful business opportunity.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Housing advocates, state and government agencies, and community builders interested in

working with Native communities across the country and supporting tribes in managing the

mortgage lending process.

Providing quality, safe, and affordable housing is an integral component of reservation economic

development and community well-being. It supports a healthy, educated, trained workforce. Most

importantly, it strengthens Native peoples’ ties to their history, to their land, and to their language

and culture. We hope this Handbook will be a catalyst to create opportunities for housing choice

and progress across Indian Country.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Acknowledgments

he Tribal Leaders Handbook on Homeownership is a remarkable resource, made with

many hands and hearts in Indian Country. It reflects extensive work and research from

several contributors: the Center for Indian Country Development at the Federal Reserve Bank

of Minneapolis and members of its National Native Homeownership Coalition, Enterprise

Community Partners, NeighborWorks America-Rocky Mountain Western Region, and

NeighborWorks Alaska. HUD and USDA Rural Development assisted with the data on their 184

and 502 programs, a significant contribution to providing affordable housing options to many

Native communities. The Public Affairs department at the Federal Reserve Bank of Minneapolis

was instrumental in creating the design and layout of the Handbook. We would not have this book

but for the printing and publication shop at the Federal Reserve Bank of San Francisco.

Many individuals deserve thanks for their work in the Coalition and on the Handbook. My

thanks go to the chapter authors, case study contributors, and Coalition leads (Jason Adams, Steve

Barbier, Tawney Brunsch, Matthew Carriaga, Joanna Donohoe, Fred Fisher, Russ Kaney Leslie

Newman, Jim Nordland, Craig Nolte, Nikki Pieratos, Dick Todd, Sharon Vogel, and Denise Zuni)

for participating in this project and for their willingness to help explore and navigate the complex

maze of mortgage lending in Indian Country. The artistic vision of Marlena Myles, and Lori Korte

has made the Handbook more visually appealing and inviting. Journalist Mark Fogarty provided

keen review and editing of our manuscripts.

About the Center for Indian Country Development

The Center for Indian Country Development at the Federal Reserve Bank of Minneapolis was

established in 2015 to help self-governing communities of American Indians across the country

attain their economic goals. The Center’s work focuses on engagement in four main areas (land,

education, housing and homeownership, and business and entrepreneurship), buttressed by

research around economic development issues of vital importance to Native communities.

About the National Native Homeownership Coalition

The Center for Indian Country Development established the National Native Homeownership

Coalition (NNHC) in 2016 to bring together housing systems leaders to help resolve the multidimensional challenges to homeownership on trust lands.

The NNHC’s goals are to:

• Enhance access to mortgage credit.

• Maximize housing choice.

• Streamline the lending process.

• Provide data and research on mortgage lending.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Through collaboration and partnerships with its more than 200 members, the NNHC is

addressing a broad spectrum of issues with the goal of improving the mortgage lending systems on

trust land and creating more housing options for Native families.

About Enterprise Community Partners

Enterprise’s mission is to create opportunity for low- and moderate-income people through

affordable housing in diverse, thriving communities. Within Enterprise are entities that lend funds,

finance development, and manage and build affordable housing. Enterprise improves communities

and people’s lives by making well-designed homes affordable. By bringing together nationwide

know-how, partners, policy leadership, and investment, Enterprise multiplies the impact of local

affordable housing development.

On a personal note, I am sincerely grateful to the many Native nations and Native peoples who

work ardently and tirelessly to bring safe and affordable housing to their communities. They are

creating a place to come home to and preserving an enduring culture. —PHK

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Forwards

The National Congress of American Indians

he ability of a tribal nation to fully exercise its sovereignty in order to achieve social, cultural,

and economic prosperity depends to a large degree on the ability of the individuals and

families who make up that nation to achieve self-sufficiency. Homeownership represents a vital

pathway in that pursuit, yet across Indian Country it is underutilized, poorly resourced, and not

fully understood.

With this Handbook, the Center for Indian Country Development enhances tribal nations’

understanding of the opportunities for homeownership by their people – and empowers them

to seed those opportunities. Presenting cutting-edge data, tribal best practices, leading models,

and useful tools, the handbook presents tribal leaders and key decision makers with a suite of

relevant resources they can use to forge comprehensive, tribal approaches capable of meeting the

homeownership needs of their people not just today, but for years to come. It also articulates the

central roles that lenders and community development and housing advocacy organizations can

and should play in this formative process, and the critical need for tribal nations to fully engage

these partners every step of the way.

With Native people being one of the fastest-growing populations in the country, removing the

many barriers that keep them from owning a home grows more urgent by the day. Given this

reality, it is incumbent upon tribal leaders and key decision makers to plan and act now to remove

those barriers. When they succeed in doing so, they not only support the building of personal and

familial wealth, they strengthen culture, community, and economy by enabling more tribal citizens

to participate by working and living at home in tribal communities. This Handbook shortens the

learning curve for tribal nations about what works and what doesn’t, and it provides them proven

blueprints for strategic action.

—Jacqueline Pata, Executive Director, National Congress of American Indians

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

National American Indian Housing Council

For many generations, traditional Native communities worked together to ensure that each family

had a safe home of their own. Today, quality, affordable housing opportunities are far too scarce

in Indian Country. A 2017 report by the Department of Housing and Urban Development found

that 68,000 new units are needed to alleviate issues of overcrowded and substandard homes in

tribal communities, and may well underestimate the true need. Inadequate housing contributes

to a number of the problems facing our communities. Lack of housing options also impacts the

health and safety of our Native communities, particularly for the young and elderly. Creating new

homeownership opportunities will be a vital component as we work to address this housing crisis in

Indian Country.

The Tribal Leaders Handbook on Homeownership is designed to take a community wide approach

to address homeownership in the present day. Rather than thinking of homeownership as a single

mortgage transaction or single construction job, communities are learning that a comprehensive

approach to community development can solve not only our housing shortage, but also do so in a

way that revives and sustains tribal economies.

This comprehensive approach means everyone must work together – from the individual

learning the importance of building good credit, to the tribal housing counselor guiding the

way through the maze of homeownership programs and mortgage options, to the tribal leader

who knows that developing the legal and physical infrastructure in their community creates

greater homeownership and economic development opportunities. These new homeownership

opportunities create jobs, improve education and health outcomes of the community, and help

recruit professionals to move to the communities. All of this can drive further development and

sustained economic progress across Indian Country.

Nonetheless, addressing the dire housing needs in Indian Country – really tackling the systemic

challenges to developing trust lands and offering better lending options – will require more. The

United States Congress, federal agencies, and our partners in the housing and banking industries all

have an essential part to play to create real housing opportunities for our Nation’s first nations.

I appreciate the work of the National Native Homeownership Coalition, the Center for Indian

Country Development, and the Federal Reserve Bank of Minneapolis in developing this Handbook.

Its comprehensive approach will serve our tribal communities well as we strive to provide greater

housing and homeownership opportunities for Native peoples across the country.

— Tony Walters, Executive Director, National American Indian Housing Council

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Hawaiian Community Assets

Homeownership in native communities is about more than personal wealth. It is about

perpetuation of culture, preparing future generations, and building collective wealth. The Tribal

Leaders Handbook on Homeownership is a groundbreaking publication that provides tribal housing

authorities with tools for understanding land and finance requirements for homeownership and

creating sustainable housing programs – all rooted in a native way of thinking that promotes

collective wealth over personal wealth and gain.

— Jeff Gilbreath, Executive Director, Hawaiian Community Assets

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Enterprise Community Partners

Enterprise Community Partners has an ambitious vision: that one day, every person will have an

affordable home in a vibrant community, filled with promise and the opportunity for a good life.

Since 1982, our work in communities has been grounded by the belief that safe, affordable housing

is critical to helping low-income people move out of poverty. We strive to connect housing to

communities of opportunity, where residents have access to a good education, an affordable place to

live, a job, and quality health care.

The need for this comprehensive approach to housing and community development is evident

on reservations and pueblos across the country. Native Americans living on tribal lands face

extreme hardships, and as a result, tens of thousands of Native American families are housing

insecure—burdened by high housing costs, doubled-up in poor quality homes, or struggling

with homelessness. Added to that, much of the existing housing is located away from centers

of employment, education, and cultural activities, further compounding the challenges Native

Americans face.

For more than 20 years, Enterprise has worked with tribal governments to develop culturally

appropriate affordable housing options for Native Americans. During that time, we have invested

more than $100 million in tribal housing programs through grants, loans, tax credit investments,

technical assistance and training. We have also established critical partnerships, including with the

Center for Indian Country Development at the Federal Reserve Bank in Minneapolis. CICD’s work

has brought a strong focus to improving homeownership and asset building strategies for Native

Americans, and is founded on our shared belief that homeownership provides financial security

and a pathway out of poverty that can extend for generations.

This manual, and our partnership with CICD, is an effort to support the work of Tribal

leadership as they develop, launch and administer homeownership programs. It provides broad

guidance on how to get started, and case studies of programs that have worked across the country.

It is intended to be accompanied by individualized technical assistance that will help you navigate

the resources and challenges ahead.

As you read through this guide and access the materials on-line, we are hopeful that it will

stimulate your creativity and inspire your own homeownership program. If it does, we look

forward to partnering with you to bring that program to life.

—Terri Ludwig, Chief Executive Officer, Enterprise Community Partners

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Preface

A Brief History of Indian Country Land

ow did Indian land get the complicated status it has today? This historical overview lays out

the origins of the land tenure system in Indian Country – providing a basic primer on both

the history and the law behind the property ownership patterns throughout Indian Country.

Original Tribal Property Rights to Colonization

Prior to European contact, Native peoples abided by their own systems for recognizing and

enforcing property rights to their territory and resources. These rights, including individual

property rights, were regulated by each tribe’s customs and norms.

When Europeans arrived in North America, they encountered a vast array of tribal nations with

well-established property systems. European legal doctrine asserted a form of dual sovereignty in

the Americas. On the one hand, European states asserted the right to exclude all outside powers

(e.g., other European nations and nationals) from territories they claimed or acquired from other

European powers. On the other hand, within these areas, Europeans recognized tribal ownership

and self-governance over their own lands, so that those lands could only be acquired by Europeans

through purchase from tribes or the concept of “just war.”

The term Indian Country was first used in the Royal Proclamation of 1763, following Great

Britain's acquisition of French territory in North America. Drawing a line referred to as the

“Proclamation Line” along the spine of the Appalachian Mountains, the Proclamation formally

reserved land west of the Appalachian Mountains as Indian Country, and forbade non-Indian

settlement in this territory. After the formation of the U.S., the line quickly moved westward, and

the term then became more closely aligned with the Indian reservations created by treaties, statutes,

and executive orders.

The U.S., Treaties, Laws, and the Supreme Court

The early treaties between European nations and tribes reflected a nation-to-nation relationship, where

trade and commerce, and agreements of protection were formalized in treaties. In these dealings, tribes

were recognized as sovereigns, having the authority to cede, transfer, or convey their lands.

After the American Revolution, while the U.S. assumed Britain’s ownership rights of lands

previously purchased or acquired, the U.S. did not acquire title or rights of ownership to all

lands within its broader boundaries. The new national government continued to recognize tribal

ownership and self-governance over unceded lands and that those lands could only be acquired

through purchase.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Conflicts over the validity of title and ownership of lands acquired from tribes quickly escalated

to the new U.S. Supreme Court. In 1823, the Court decided Johnson v. M’Intosh, a historic decision

that forever altered the property rights of all tribes, as well as the relationship between them and the

new government.

The case involved a conflict between two non-Indian parties who claimed ownership of the same

large tract of land, one obtained directly from tribes and the other through a federal land patent. In

simple terms, the Supreme Court recognized the superior power of the federal government to acquire

lands from Indians. The legal significance of the decision, however, was profound. Tribes no longer held

absolute title and authority over their lands – they had a mere beneficial right of occupancy.

How had the federal government acquired the underlying legal title in Indian lands? The

Court’s decision rested on international principles of European “discovery” and conquest, which

“extinguished” absolute Indian title in the land. It also was based, in part, on racial stereotypes

and economic biases that Indians did not use their lands efficiently enough to be considered full

property owners. The decision created the first explicit limitations on Indian sovereignty in the

law of the land. Although limiting sovereignty, the Court also attempted to protect tribes’ rights

to occupy their lands. Indeed, a few years later, the Supreme Court reinforced these protections in

Worcester v. Georgia, finding that state laws did not apply on tribal lands.

These early Supreme Court decisions not only recalibrated federal-tribal relationships, they

also sanctioned rapid westward expansion through large-scale acquisition of Indian lands and the

creation of the reservation system. The continued demand for more Indian lands for settlement led

to a chaotic era of dispossession, forced removal, and relocation to a new or modified land base. It

culminated in the General Allotment Act of 1887, another significant shift in federal Indian policy

aimed at, once again, diminishing tribal landholdings and disrupting tribal governance. The effects

of the reservation system and allotment policies still cast a shadow over reservation economies.

The General Allotment Act to the Indian Reorganization Act

Until the 1887 General Allotment Act (also known as the Dawes Act after the bill’s sponsor, Sen.

Henry Dawes), land on Indian reservations was held in common by all members of an Indian

nation. Many believed that Indian people should take up agriculture, break away from their tightly

knit families, and adopt the “civilized” lifestyle of white settlers. Many also believed that Indian

nations occupied too much land, and they were eager to see those lands opened up for settlement,

railroads, mining, or forestry.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

The objectives of the General Allotment Act were straightforward: Abolish tribal and communal

land rights of Indians, stimulate their assimilation into mainstream American society, and transfer

vast areas of their land to white settlers. Individual ownership of land and subsistence farming were

seen as an essential first step to both civilization and independence. To this end, reservation lands

were divided into parcels, typically of 160 acres, and each tribal member was designated as owner

of a parcel or “allotment.” Individual Indian allotments were to be held in trust for a period of years,

often 25 years, after which the land was to be transferred to fee simple ownership. Once in fee

status, Indian land could be sold or mortgaged.

Lands that were not allotted were declared “surplus to Indian needs.” Tribes were forced to cede

those lands to the federal government for a nominal payment, after which the government opened

much of them to non-Indian homesteaders, sold it to railroads, or converted it to public lands. The

“Oklahoma Land Rush,” for example, was the direct result of the Dawes Act.

Between 1888 and 1934, about 90 million acres of land were transferred from Indian reservations

to non-Indian and out-of-Indian management, leaving about 56 million acres and resulting in

a reduction of about 60 percent of an already diminished land base. Centuries of tribal land

ownership and social structure quickly unraveled. Most new allottees were unfamiliar with land

ownership. Many received allotments that were too small or unsuitable for profitable farming or

became the target of speculators, and they eventually lost their lands. For what remained of tribally

held lands, the federal government delegated its authority over the management of the land and its

assets to the BIA in the U.S. Department of the Interior.

During the Great Depression, the federal government repudiated the allotment program in the

Indian Reorganization Act of 1934. This “New Deal” legislation for American Indians renewed their

rights to organize and form their own governments. It also stayed the trust period of allotted lands,

but by then, the allotment process had drastically altered the land tenure status and configuration of

Indian reservations.

What remained was a checkerboard pattern of Indian and non-Indian lands interspersed

throughout the reservation, making it difficult to decipher jurisdiction over a particular plot of

land. Moreover, the federal government impeded or made little provision for estate planning of

allotted lands. Consequently, with each generation, the number of co-owners of a parcel increases

while each heir’s interest decreases, resulting in a highly fractionated ownership of many parcels

that now makes it nearly impossible to govern or efficiently manage the use of these lands since a

majority of owners must agree on it.

Indian Country Defined

In 1948, Congress defined the term Indian Country to help clarify the territory over which tribes

exercised their jurisdiction. Codified at 18 U.S.C. § 1151, Indian country includes:

• “All land within the limits of any Indian reservation under the jurisdiction of the United

States Government, notwithstanding the issuance of any patent, and, including rights-of-way

running through the reservation;

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• All dependent Indian communities within the borders of the United States whether within the

original or subsequently acquired territory thereof, and whether within or without the limits

of a state; and

• All Indian allotments, the Indian titles to which have not been extinguished, including rightsof-way running through the same.”

Consistent with this statutory definition, as well as federal case law, lands held in trust for Indian

tribes outside formal reservations also are considered Indian Country, such as in Oklahoma.

Furthermore, even outside the formal contours of Indian Country, tribes in Alaska, for example,

have considerable jurisdiction and authority to manage internal tribal affairs and protect tribal

members.

Understanding this complex land tenure system in Indian Country is essential to successful

economic and community development activity, much depends on the status of the land. Today,

about 60 million acres of Indian land are held in trust by the federal government and managed

by the BIA on behalf of the Secretary of the Interior for the use and benefit of the 573 federally

recognized tribes. Social and cultural connections to the land remain strong for the 5.2 million

American Indian and Alaska Native peoples. A high percentage of this rapidly growing population

(about 60 percent) lives on or near reservations, and Native Communities are looking for

opportunities to unlock the economic potential of their lands.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

The tribal chairman told me,

“Let’s build some houses.” But

he wanted me to leverage our

Indian Housing Block Grant so we

could build more homes for tribal

members at every income level.

—VICTOR VELASQUEZ, Executive Director,

White Mountain Apache Housing Authority

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

C H A P T E R

How Tribal Leaders Can Support

Homeownership

C H A PT E R 1

ribal leaders strive to ensure healthy, safe, and productive lives for the

next seven generations. They aim to preserve their community’s way

of life through their culture, language, and traditions. Above all, they seek

to create opportunities for tribal members to live their lives to their fullest

potential. Promoting homeownership in tribal communities can help

tribal leaders to fulfill each of these objectives.

What can tribal leaders do to support homeownership?

The most important step that elected and appointed tribal leaders can

take in promoting homeownership opportunities is to understand

how homeownership impacts the social and economic health of the

community. They also can ensure they have the appropriate legal

infrastructure and land management systems in place to provide certainty

for lenders, homebuyers, and other stakeholders involved in the home

buying and mortgage processes. Finally, they can create an environment

that fosters vibrant mortgage and residential construction markets within

their communities.

Following are three strategies to support homeownership in Native

communities:

STRATEGY 1

Understand how homeownership impacts the social and economic health

of a tribal community.

• Homeownership provides secure shelter. The serious lack of

housing stock on reservations, seen in data on residential crowding,

underscores the need for a mechanism that allows families who can

afford to use mortgage financing to build, purchase, or rehabilitate

a home that provides a roof over their heads and a place to live in

a location near their extended families, jobs, businesses, farms,

ranches, or educational opportunities.

• Homeownership strengthens tribal sovereignty. When tribal

governments create the legal infrastructure necessary to govern

the residential construction and mortgage markets within their

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

jurisdiction, they are exercising their right to self-governance and creating a legal framework

designed to support the tribal government’s vision for the future of their community, rather

than deferring to federal or state laws and regulations.

• Homeownership stimulates tribal economies. Providing opportunities for tribal citizens to

live and work on reservation stimulates the local economy. Rather than commuting from

border towns, tribal workers can relocate back home, keeping their dollars circulating within

the community. Increasing homeownership expands workforce development, employment,

and small business growth in the residential construction industry. It also boosts the

demand for housing-related goods and services, such as appliances, furnishings, and home

improvements. In addition, homeowners can accumulate equity in their homes as they pay

down their mortgages, which is the primary way most families build personal financial wealth

and one of the most common sources of small business start-up capital.

• Homeownership promotes family stability and self-sufficiency. Because many tribal

communities face severe housing shortages, second- and third-generation families are forced

to share homes with their extended families, even if they can afford to support their own

household. Increasing homeownership opportunities could provide relief from overcrowded

housing situations along with more family stability. Obtaining and managing mortgage

financing also provides opportunities for families to enhance their financial capability, money

management skills, and self-sufficiency through personal finance and homebuyer education.

Lastly, one of the most attractive benefits of homeownership for many Native families is the

opportunity to invest in an asset that can be passed down to future generations.

• Homeownership leverages scarce housing resources. Notwithstanding the federal

government’s trust responsibility to provide safe and healthy housing for tribal citizens, many

tribal leaders struggle with inadequate resources to meet the needs in their communities.

Providing homeownership for tribal citizens who can afford it allows tribes to supplement

and leverage their Indian Housing Block Grant funds provided through the U.S. Department

of Housing and Urban Development (HUD). Homeownership allows tribal leaders to offer

housing options for working families of all income levels and helps to address shortages by

opening low-income rental units to families who really need them.

STRATEGY 2

Prioritize the governmental functions that provide certainty for lenders, homebuyers, and other

stakeholders involved in the homebuying and mortgage processes.

Tribal governments that exercise their sovereignty and prioritize the governmental functions

necessary to support a mortgage market and a residential construction industry can increase

access to homeownership in the communities. Tribally designated housing entities (TDHEs) or

housing departments have an important role to play in promoting homeownership, but certain

governmental functions cannot be delegated and require leadership and action from elected or

appointed tribal leaders.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Enact legal infrastructure. Mortgage transactions are generally governed by a combination

of state and federal law. As sovereign nations, tribal governments may need to enact their

own codes to govern the residential construction and mortgage processes on tribal land.

This may include mortgage, foreclosure, and residential building codes. These laws must

be institutionalized and should not change when a new administration comes into office.

Mortgage agency Fannie Mae has a model “memorandum of understanding” that may give

tribal leaders information on this.

• Identify a clear path for civil claims involving mortgage foreclosure and eviction. In addition

to enacting laws governing the mortgage process, it is critical for tribal governments to have

court systems in place, free from political interference, that provide a mechanism for laws to

be enforced and a venue for all parties to seek legal remedies. Lenders may be reluctant to do

business in a jurisdiction where they are not familiar with the tribal laws or court system. By

providing a clear, transparent, and predictable process for civil claims, tribal leaders can help

to address these concerns without sacrificing their sovereignty.

• Negotiate with federal and state agencies, private lenders, and investors to access government

and conventional loan programs. To provide the authority for certain lenders to do business

or use certain federal programs in a tribal jurisdiction, tribal governments may need to enter

into agreements with those lenders or the relevant federal agencies. To make the full range

of public and private mortgage loan products available to their citizens, tribal leaders should

seek to enter into those agreements and negotiate terms that recognize the tribe’s sovereignty,

consider the interests of the borrowers, and address the requirements and concerns of the

lenders.

• Define the tribe’s role in the event of a mortgage delinquency, default, foreclosure, and/or

eviction. Many first-time homebuyers are faced with the challenge of staying current on

their mortgage loan payments. Borrowers who are behind on their payments are considered

delinquent. In most cases, providing counseling and other interventions early during a

delinquency can help to keep borrowers on track. After a certain amount of time, however,

lenders may determine that a borrower is in default, which means they have failed to make

loan payments according to the terms of their mortgage agreement. Being in default could

cause the lender to terminate the agreement and could lead to foreclosure and eviction from

the home.

On trust land, addressing delinquencies, defaults, foreclosures, and evictions can become a

lengthy, complicated, and costly process for lenders and borrowers. Some tribes are taking an

active role in helping to minimize delinquencies and prevent defaults and foreclosures in their

communities. When foreclosures do happen, these tribes may choose to assist with property

disposition to ensure that the transaction is resolved consistent with tribal law and in the best

interest of the community. For example, a tribe or its housing department may help to find another

tribal family who meets the loan qualification requirements to move into the house and take

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

over the mortgage payments, so that the lender need not open a trust land home to nonmember

ownership. If another qualified borrower is not identified, the tribe may decide to purchase the

home to add to its own housing inventory rather than allow the home to remain vacant and face the

possibility of becoming vandalized and the site of criminal activity.

• Develop a land management program that supports the mortgage process. Access to

homeownership in Native communities can be impacted by a tribal government’s approach

to land management. Tribal leaders who have undertaken comprehensive land-use planning

that involves geographic information systems (GIS) mapping; residential, agricultural, and

commercial zoning; transportation planning; and the installation of physical infrastructure

such as water, sewer, and other utilities have made it easier for individual homebuyers

and other builders to construct new homeownership units. In addition, mortgage-based

homeownership has become even more accessible where tribal land departments have

implemented a streamlined leasing process that allows tribal citizens to obtain a lease and

use that leasehold interest as collateral for their mortgage loan in an expeditious manner that

recognizes the time sensitivity and collateral requirements of lending transactions.

In communities where the Bureau of Indian Affairs (BIA) adds another layer of complexity in

the leasing and land title clearance processes, some tribes have adopted their own residential leasing

process pursuant to the authority provided under the HEARTH Act, or compacted or contracted

the Land Title and Records Office (LTRO) function from the BIA.

STRATEGY 3:

Create an environment that fosters vibrant mortgage and residential construction markets within

their communities.

Tribal leaders can actively engage in bringing resources and partnerships to their communities

to expand homeownership for tribal citizens. As one of the largest investors in their community,

a tribal government can leverage its influence with local lenders and other partners to benefit

prospective mortgage financing opportunities. Mortgage markets can be fostered in many other

ways as well.

• Set the tone. Tribal leaders can certainly set the tone for promoting and supporting

homeownership as an important component of the tribe’s housing plan. Creating certain

expectations in the community may help to set this tone and may include:

° Requiring residents to pay full rental amounts, according to income guidelines;

° Encouraging residents to attend financial and homebuyer education courses, especially

those whose income puts them near the rent ceiling;

° Enforcing the timely payment of all tenants accounts receivables (TARs); and

° Promoting the message that homeownership is possible for anyone committed to the

process, even if no one in their family has ever been a homeowner.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Identify a lead entity. Although the homeownership process may involve many tribal

departments, tribal leaders should identify one entity to spearhead the effort. That entity

could be the TDHE, another tribal department, or a local nonprofit. This entity can help to

identify and navigate the leasing and mortgage processes and leverage resources to support

homebuyers.

• Allocate financial resources. As resources are available, tribal leaders can allocate funds to

support homeownership by funding down payment and closing costs assistance, gap financing

or subsidies for residential construction, or homebuyer education programs, among other

related needs.

• Provide opportunities for tribal citizens to expand their financial capability and homebuyer

readiness. In some communities, tribal leaders offer tribal employees the option to attend

financial education courses “on the clock” as an employee benefit. Tribal leaders also have

embedded financial education opportunities into other tribal services such as Head Start,

social services, temporary assistance for needy families (TANF), youth programs, summer

internships, or K-12 schools.

• Develop relationships with lenders. Tribal leaders can leverage existing relationships with

financial intuitions with which the tribe already does business. A lender that holds a tribe’s

bank deposits might be more open to a considering how to expand that banking relationship

to include support for a mortgage program for tribal citizens. In some cases, tribes may

consider creating a new Native community

development financial institution (CDFI) that

would help to increase access to mortgage

financing. Or they may choose to invest capital

in an existing Native CDFI serving their

community.

TRIBAL

LAW

• Recruit insurance providers and other private

sector providers. Tribal leaders can support

the mortgage process by building relationships

with insurance providers, appraisers, inspectors,

and contractors who understand the process

of working on trust land. By coordinating their

engagement in the community, homebuyers

may benefit from cost savings through lower

transportation costs.

• Encourage tribal citizens to become residential

construction professionals. To address the

shortage of housing stock on the reservation,

some tribal leaders have supported training for

More than 60% of tribes have court systems

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

tribal citizens and employees to become certified as residential construction professionals such

as inspectors and appraisers. These efforts could be coordinated with tribal colleges, TDHEs,

nonprofits, workforce development programs, and tribal employment rights offices (TEROs).

• Make the most of the link between homeownership and economic development. Tribal

leaders could explore ways that tribal enterprises and tribal citizen-owned businesses in the

residential construction field could support the development of housing stock and promote

both the economic development and homeownership goals of the community. In addition, as

new tribal enterprises require labor, tribal leaders could simultaneously consider developing

homeownership opportunities for those new employees.

By examining the economic and social impacts of homeownership, prioritizing key government

functions, and creating an environment that fosters a vibrant mortgage and residential construction

market, tribal leaders can plan an active and meaningful role in promoting homeownership

opportunities in their communities. This handbook provides guidance and resources to support

those efforts.

Tribal governments exercise their right to self-govern by establishing the legal infrastructure

necessary to govern the residential construction and mortgage markets within their jurisdiction.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

Large-Scale Tribal Subdivision Black Mesa View

San Felipe Pueblo, New Mexico

ORGANIZATION

San Felipe Pueblo, New Mexico

CASE STUDY TOPIC & FOCUS

Large-Scale Tribal Subdivision

Black Mesa View Project

SERVICE AREA

Sandoval County, New Mexico

NUMBER OF TRIBAL CITIZENS

ENROLLMENT 3,377

few years ago, a visit to San Felipe Pueblo, north of

Albuquerque in the New Mexico desert, would have

shown only a few plans to build houses. Plans often do

not translate into actual houses. A visit to the pueblo a

few years later would show a couple of dozen new houses

standing in the desert. Now after several years of steady

progress, San Felipe has built hundreds of new houses

and has achieved its vision of creating homeownership

opportunities for its community. The presence of private

lenders and HUD 184 mortgages, considered impossible

just a generation ago, now erased much of the tribe’s

entire housing need.

LENDING PORTFOLIO

In 2000, the San Felipe Pueblo Housing Authority

(SFPHA) of the San Felipe Pueblo became the tribally

designated housing entity (TDHE) by tribal resolution.

INDIAN HOUSING

BLOCK GRANT

$556,756

SFPHA provides affordable housing for income qualified

individuals working with the HUD through the Native

American Housing Assistance and Self-Determination Act

(NAHASDA).

$10 MILLION

ANNUAL BUDGET

$3.6 Million

NUMBER OF EMPLOYEES

Nine

Project description

The Black Mesa View project was the first big housing

project on the San Felipe Pueblo in over two generations.

The hugely ambitious project of building 150 housing

units started with careful planning for infrastructure and

financing. The project is an exceptional example of a

successful large-scale tribal subdivision that was designed

not just to provide housing for tribal members, but also

jobs and economic development.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Being creative and forward thinking, the pueblo acquired a parcel of 100 acres adjacent to a new

school, which benefitted from having the pueblo’s original investment in the school infrastructure.

Since the original ribbon cutting in August 2012 for 28 modular housing units, representing the first

large housing development in over 40 years at the pueblo, the Black Mesa subdivision has added 12

stick-built homes. Total build-out of the subdivision will include 150 housing units consisting of 135

single-family homes and 15 multifamily units for elder housing. In addition, acreage has been set

aside for planned retail development.

Promising approach

With a tribal contribution of 100 acres, it was imperative that the site have a master plan to include

single family-house lots, a multifamily site, a plaza-like central park, and smaller “pocket” parks

incorporated into the neighborhoods, all connected by greenway paths.

The key to the success of the project was good communication between tribal leadership, the

Housing Authority, and the community.

The pueblo leveraged the new infrastructure (wastewater treatment plant, natural gas lines) for

a new school so that the housing site, adjacent to the school parcel, could take advantage of the

overcapacity built into the wastewater treatment plant.

With a large tract of land, the construction and development were designed to be completed in

phases. So far, the home ownership phase of 110 homes has been the highest priority.

Impact

• Homeownership has become a reality among tribal members, particularly to members who

lived outside the pueblo but desired to return home but for the lack of availability housing.

Members have returned from as far away as California.

• The project provided up to 70 construction jobs in the initial construction phase.

• The project was planned and “shovel ready” when funding became available.

• The project is using natural gas as an affordable heat and energy source. Prior to the new

school and housing project, natural gas had not been available at the pueblo.

Lessons learned

• Initial waiting list of over 300 households provided demand that required both large-scale and

long-term thinking.

• Leverage current and proposed infrastructure for other uses to include housing, retail space,

parks, institutional buildings (school, clinic, etc.).

• Tribal members want to move back to the pueblo but may be inhibited by lack of and choice

of housing.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Ongoing challenges

• Funding to construct multiple units at the same time.

• Infrastructure funding to prepare a new site for development.

• Developing an interest in establishing and maintaining good credit and work history during lulls

in building and construction.

On the horizon

For future phases of this project, the pueblo will utilize a USDA self-help grant request for 10 new

homes and seek a Rural Development Section 538 loan for a multifamily rental project. The pueblo

also has a portfolio of loan products (including Section 184 home loans) that provides a service fee

to the Housing Authority, which financially sustains the program.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

When I saw NAHASDA had the

words “Self-Determination” right

in the title, I said, “I’m in.”

—BOB GAUTHIER, Administrator,

United Native American Housing Association

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Historical Housing Programs

in Indian Country

C H A P T E R

C H A PT E R 21

et’s look at historical housing programs in Indian Country to see the shifts

and changes in homeownership and what they mean for these communities.

Low-Rent and Mutual Help Housing

Since 1962, the Office of Native American Programs (ONAP) at HUD

has provided funding to Indian Housing Authorities (IHAs) in American

Indian and Alaskan Native communities. Before the passage of the Native

American Housing Assistance and Self-Determination Act of 1996

(NAHASDA), this funding constituted the majority of all federal resources

for housing in tribal communities.

These early HUD programs had many problems.

• Funding assistance was restricted to low-income tribal members,

with no opportunity for participation from moderate-income

tribal members. The Low Rent and Mutual Help programs created

a proscribed development process with limited vision for creative,

culturally appropriate siting and housing design. Finally, the amount

of funding available was wholly inadequate.

• As a consequence, IHAs could not build enough homes to meet the housing

needs of their communities, could not maintain the homes they did build,

and had to disregard sustainable and traditional designs and layouts.

• In too many instances, the only homes available to tribal members

were small box-shaped houses often located on scattered sites or in

unattractive subdivisions. It was housing that could be immediately

identified as “government” housing, and its residents tended to treat it

as such—compounding problems with poor maintenance.

° For tribal members who desired and could afford to buy a

home, there was virtually no homeownership market, private

development, or mortgage lending on trust land on reservations.

° In this environment, households wanting to purchase a home of

their own faced difficult choices: They could buy a mobile home,

try to build or buy their home without mortgage financing (usually

with exorbitant interest), or move off the reservation.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Both of these problems—insufficient funds for low-income members and little or no available

mortgage credit for moderate-income members—have led to severe overcrowding and a critical

shortage of adequate housing on many Indian reservations across the country. In some cases,

Mutual Help programs have created communities in which families “own” their homes but enjoy

little if any of the benefits of homeownership. This is because they have no financial investment in

the home. Nor did they have any say about its design or location. As a result, there was very little

pride in homeownership.

Earlier homeownership efforts in tribal communities, like the Mutual Help program, usually

were federally funded, heavily burdened by bureaucracy, and involved no private sector financing.

Mutual Help was subject to federal funding allocations and design guidelines, among many other

regulations and restrictions. Monthly payments were calculated as a percentage of income, without

regard to an ability to repay a loan.

True homeownership almost always has an element of personal financial contribution. Home

loan financing is available primarily to households with adequate, reasonably reliable income and

takes into consideration the borrowers’ debts and other financial obligations.

Whether funded by government or private sources, homeownership is commonly financed with

a mortgage. On trust land, a mortgage is a pledge of the borrower’s leasehold interest against the

loan used to buy or construct the home. If the borrower cannot make the payments, the lender

can take title to or repossess the leasehold interest in the land—including the home—through a

foreclosure process. Before any tribal community or tribal member embarks on a path toward

homeownership, a full understanding of the mortgage and foreclosure process is essential.

NAHASDA: Exercising Sovereignty and Leveraging Resources for Homeownership

Since 1996, NAHASDA has offered tribal governments more options to expand their housing

programs and create community-based homeownership opportunities. Although NAHASDA

funding levels are still too low for tribes to fully address housing shortages, they allow tribal

governments to:

• Design housing programs better suited for their members.

• Leverage federal block grants with private funding.

• Set aside a portion of funding for families with higher incomes in need of housing.

The ability to leverage government subsidies with a bank and other private investment is the

key to building more and better homes for tribal members. While NAHASDA is still focused on

low-income households, tribes can use NAHASDA funds to leverage government-guaranteed and

conventional loans for homeownership, thereby providing more housing options to members of all

income levels.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

For instance, in using more bank funding for moderate-income homeownership, tribes are able

to preserve block grant funds to build more rental housing for poorer households—the definition

of leverage. Rather than building four homeownership units, the TDHE could use $150,000 in bank

financing to build two homeownership units and the $150,000 in NAHASDA funding to assist in

the construction of low-income rental housing.

Moreover, by leveraging NAHASDA funding, tribes can create mortgage programs that allow

households to enlarge existing homes, renovate deteriorated houses, or refinance mobile homes at

reduced interest rates or for longer terms.

While NAHASDA can be used to support homeownership and mortgage programs, to develop

and implement these programs successfully often means a shift in a tribe’s approach to housing and

property management.

The Shift to a Homeownership Approach

Providing homeownership opportunities for tribal members means a true shift in approach from

the “old” way to a new way. While programmatic shifts may be difficult, a new approach can

mean serving more tribal members more effectively in the long run. This shift includes a careful

examination of collection efforts for monthly payments and market-rate rentals:

Reducing TARs

The new approach means an emphasis on timely, current rental payments and building a stronger

balance sheet for a Housing Authority or TDHE to take on homeownership development projects.

This program approach also promotes an important “culture of payment” that is critical to

establishing consistent repayment practices for individual mortgage loans.

Charging Market-Rate Rents

The new approach also emphasizes charging market-rate rents as a true reflection of what families

can afford. It can lead them to consider homeownership options. If the difference between

a monthly mortgage payment and a market-rate rental payment is insignificant, potential

homebuyers may look more favorably at homeownership options. Charging below market-rate

rents is a disincentive for homeownership—why pay more for a mortgage if the current rental rates

are so low? A more targeted approach to housing assistance can be accomplished without squeezing

lower-income families out by using rental vouchers where most needed.

By making these shifts and providing homeownership options, tribes can develop a strong

continuum of housing options that meet the needs, payment abilities, and dreams of tribal

members. Providing homeownership options for those who can afford to pay can relieve

overcrowding in rental units and address long waiting lists.

The ability to leverage government funds with a bank and other private

investment is the key to building more and better homes for tribal members.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

Alaska Native Homeownership

Bristol Bay Housing Authority, Dillingham, Alaska

ORGANIZATION

Bristol Bay Housing Authority

CASE STUDY TOPIC & FOCUS

Alaska Native Homeownership

SERVICE AREA

Bristol Bay Region of Alaska

NUMBER OF TRIBAL CITIZENS

Approx. 5,200 or 70% of total

region population

INDIAN HOUSING

BLOCK GRANT

$5.1 million in 2017

NUMBER OF EMPLOYEES

WEBSITE

www.bbha.org

he Bristol Bay Housing Authority (BBHA) was founded

in 1974 and is the tribally designated housing entity

(TDHE) for 31 villages in the Bristol Bay region of southwest

Alaska. BBHA headquarters are in Dillingham, Alaska, and

its service territory includes three census areas:

• Bristol Bay Borough

• Lake and Peninsula Borough

• Dillingham Census Area

BBHA’s mission is to “promote affordable housing for

the Bristol Bay region.” They administer NAHASDA and

Alaska Housing Finance Corporation funds and work with

USDA Rural Development and the BIA. They provide single

and multifamily housing, as well as leverage mortgages

to increase homeownership. Tribal members in the region

served by BBHA are Aleut, Athabascan, Yupik Eskimo, and

American Indian.

While the economy of the Bristol Bay region is better

than many other parts of rural Alaska, local Natives still

live in poverty with limited infrastructure and poor housing

conditions. Housing in Bristol Bay is aging, poorly designed

and constructed, structurally unsafe, energy inefficient,

and unhealthy due to mold and poor indoor air quality.

Moreover, there is simply not enough housing – leading to

tremendous overcrowding.

Housing in rural Alaska differs from much of Indian

Country in the lower 48 in many ways:

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Extreme remoteness of the regions, resulting in

high construction costs.

• Significant climate changes, resulting in

excessively high heating costs, which in turn

create housing burdens often exceeding the 30

percent threshold.

As a result, BBHA and other Alaska housing

organizations have responded to these extremes

through design features that keep construction and

energy costs down.

With the new resources provided by

NAHASDA, the BBHA Board embraced the

opportunities to improve and increase

housing in the region. Over the years BBHA

added in-house expertise. Today, BBHC

constructs its own housing, consults with

tribes in the region on their design, and

utilizes the local workforce in the region.

Project description

The BBHA is a recognized leader in promoting

mortgages and homeownership for tribal members in Alaska.

Prior to the 1996 enactment of the Native American Housing and Self-Determination Act

(NAHASDA), HUD managed the housing program for the region, and the outcomes were poor and

unresponsive to local conditions, needs, or the tribal economy. Houses were built in Anacortes, WA,

shipped by barge to Bristol Bay, and erected in straight rows with little regard to design or cultural

considerations. Jobs and economic development associated with home construction were, of course,

lost to the region.

With the new resources provided by NAHASDA, the BBHA Board embraced the opportunities to

improve and increase housing in the region. Over the years BBHA added in-house expertise. Today,

BBHC constructs its own housing, consults with tribes in the region on their design, and utilizes

the local workforce in the region. The result is housing that is culturally responsive, bolsters local

economies, and builds the skills of tribal members.

BBHA also challenged the way HUD provided housing to Alaska Natives. Instead of providing

only subsidized rental housing, BBHA began to promote homeownership as a way to relieve

overcrowdedness and enhance economic development. The key tool for this program is a standard

mortgage model. Mutual Help (subsidized) housing is still an option for tribal members, with a

priority for families with extremely limited financial means and for homes still under contract.

The reasons for promoting mortgages are much the same in Alaska as in the rest of Indian

Country. There is simply not enough federal, state, and other grant dollars to provide the housing

needed in Native village communities. In addition, mortgages provide another source of capital to

the community, which can be leveraged or stretched with other funds, such as NAHASDA, BIA and

other housing resources.

In the case of BBHA, their approach was to leverage the USDA Rural Development 502 Direct

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Program with a buy-down, or “soft second” from Indian Block Grant funds, to make the mortgages

more affordable.

With the additional capital from mortgage loans, BBHA was able to provide housing to many more

families. Even though village poverty remains high, it does not mean that many families can’t afford a

modest mortgage payment. In small villages, even one new home is good for the entire community.

The board continues to provide leadership in several ways, including the allocation of funds for

mortgages or mortgage buy-downs as part of their Indian Housing Plan.

Promising approach

BBHA’s mortgage model has worked very well for the past several years. The key ingredients to this

success:

• Strong Native leaders: BBHA’s willingness to pull away from the Mutual Help rent-to-own model

and prioritize homeownership would not be possible without the sanction of Native leaders in

the region.

• Strong partnerships: BBHC collaborates with many other organizations in the region –Bristol

Bay Native Association, area Native corporations and health organizations, tribal and local

governments, and fishing organizations.

• Multiple funding sources: BBHA utilizes the USDA 502 direct loan program, HUD Section 184 loan

guarantee program, and the BIA Housing Improvement Program, Category D. Economy of the

region.

• Housing Design: Keeping construction costs down requires a concerted effort and intentional

planning – getting land donated, promoting subdivisions as opposed to scattered-site

development, employing innovative construction techniques, and by paying careful attention

to the seasons and construction schedule. The homes built by BBHA crews achieve a six-star

energy rating. Wind, solar, and heat pumps are also being used to lower costs.

• Innovative approaches: Using community and environmentally conscious design and

construction, as well as employing local work forces.

• Consistency: The current administration of BBHA builds on the mortgage approach from

previous BBHA management.

• Understanding the financial needs of the communities: Familiarity with debt among tribal

members is critical. Bristol Bay has a strong fishing economy enabling tribal members to fare

somewhat better; however, tribal members who are benefitting from the local economy have

high costs for fishing boats, permits, and other transaction costs.

• Services to tribal members: The program is marketed to 28 villages. Homebuyer Readiness

classes are mandatory. BBHA also offers post-purchase counseling, budgeting, and home

maintenance advice. BBHA also provides a one-year warrantee for the homes they build.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Impact

• Leveraging Opportunities: The housing problems in the Native villages are severe. More newly

constructed, energy efficient homes are necessary, and additional capital investment in the

form of mortgage financing is a promising approach to build more homes.

• Challenge the stereotypes: The impression that all of Native, rural Alaska is too poor to afford

mortgages has been challenged by BBHA. There are in fact families in many villages who can

afford a reasonable mortgage. Even one new home in overcrowded village housing helps the

entire village.

• Cost Control by Housing Design: The cost of heating fuel in rural Alaska is very high. The savings

afforded by a new energy-efficient home can go a long way toward paying a mortgage.

• Replicability: This model is replicable across Indian Country.

• Pride: Homeownership is a source of pride, self-esteem, belonging, and stability for many tribal

members.

• Viable and healthy native communities: Good housing is the foundation of healthy, viable

Native communities, and mortgages provide another way for tribal members to return to their

communities and attract education, health and other professionals to live there.

Lessons learned

• Patient approach with tribal members: Many tribal members have never thought that

homeownership was possible for them. Others are uncomfortable with banks and debt. There

is a high need for basic financial literacy. BBHA strives to be responsive to the needs of tribal

members and meet them where they are on the journey to homeownership.

• Challenge assumptions: The BBHA model challenges assumption both internally and externally

about both tribal members as homeowners and the options that are available in remote villages

with extreme conditions, including the climate but also poverty, isolation, and employment.

• Take the long view: The BBHA work and experience to date with a home ownership model has

evolved over a 25-year period.

• The “art of the possible”: BBHA leadership since 1993 has not been satisfied by the status quo

and have methodically implemented their vision through innovation and creativity to meet the

changing needs of the people in the region.

• Tribal members want options: The BBHA made a conscious decision to provide alternative asset

building options for housing for tribal members and many have responded.

Ongoing challenges

• Aversion to debt: Many tribal members are uncomfortable and lack familiarity with debt.

• Responsive Lenders: The traditional financial industry could do a better job of promoting

homeownership and providing loans in rural Alaska.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Funding Threatened: Under the current administration, the USDA 502 Direct program is being

challenged.

• Cash flow: Cash in the local economy is very scarce.

• Limited infrastructure: High need for subsidy due to high construction costs and other factors.

• Land status: Alaska is different from the Lower 48 due to the absence of small amount of trust

lands. The cumbersome leasing process by the BIA is not an impediment, but other land status

and availability issues exist in Alaska that create real challenges to land use and development.

• Financial industry responsiveness: There is a huge gap in the availability of private financing for

mortgages to tribal members in the Bristol Bay region.

On the horizon

Stay the course: Under its current leadership, BBHA will continue to promote the promise of

homeownership in the region, strengthen its collaborative relationships with all partners, and

continue to innovate with funding, housing, design, and construction.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Can mortgages work in

Indian Country? At my

reservation, they already do.

At least 20 percent of my

tribal houses have home loans.

And we aren’t checkerboard.

We’re almost all trust land.

—CHERYL CAUSLEY, Executive Director, Bay Mills

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Partnering on Homeownership

nce a tribe, TDHE, or tribal organization has committed to

providing homeownership options for tribal members, it is difficult

to know where to start. The focus often is on the housing stock: What

homes will tribal members purchase? When considering all options for

homeownership, however, it is important to take the broad view of both the

options and the process. For a tribe to successfully provide homeownership,

and to allow private home development within the reservation, it is

important to address all components of homeownership, from assessing

the needs of tribal members, to preparing families for homeownership, to

facilitating the availability of mortgages for qualifying families.

Below is a checklist for developing a homeownership program in tribal

communities. The checklist provides a comprehensive framework of the

various components of homeownership and the questions that should be

addressed. It is important to recognize that a single organization is not

expected to carry out all the different components. In fact, it is rare that

just one organization has the capacity, experience, or staff to handle all

the pieces of the process. More often, one organization takes the lead and

then identifies partners to carry out certain pieces of the framework. The

framework also can assist in identifying gaps in an existing program. Here

are some important questions to ask in reviewing the framework:

• Who is doing this work?

• Who can be a partner on this piece?

• Are new programming, policies, or relationships needed to tackle

this piece?

Key Features of a Homeownership Program

Needs assessment, outreach, and recruiting

Before undertaking homeownership efforts, it is important to assess the

community’s housing needs and interests and then plan around tribal

members’ input.

• A housing needs assessment is a useful first step to get a sense of

income levels, employment status, current commuting patterns, ages,

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

C H A P T E R

C H A PT E R 31

Native Homeownership: Questions Needing Answers

NEEDS ASSESSMENT,

OUTREACH, AND

RECRUITING

☐ Has the tribe

conducted a needs

assessment recently?

☐ Who can conduct

a survey/needs

assessment?

☐ Who are the potential

homebuyers? (TDHE

residents, veterans,

young families, tribal

employees)

HOMEBUYER

EDUCATION AND CREDIT

IMPROVEMENT

☐ Which curriculum will ☐ Is the tribe thinking

be used?

☐ Who can assist

families in improving

credit?

☐ Who can conduct

homebuyer

counseling?

about a subdivision or

scattered sites?

☐ Are leases in place?

Will families need to

obtain leaseholds?

☐ What infrastructure

will be necessary?

(septics, lagoon, water

line, wells, roads)

☐ Where will the

building happen?

☐ How will reaching out ☐ Where do families

to recruit potential

homebuyers be done?

PLANNING, LAND, AND

INFRASTRUCTURE

☐ What are the

infrastructure costs?

want to live?

financial education

and homebuyer

education classes?

☐ How will it be

determined what

families can afford?

☐ Who will work with

families to complete

loan applications?

☐ What sources of

mortgage financing

will homebuyers

access?

☐ Are there existing

relationships with

mortgage lenders?

GAP FINANCING

AND SUBSIDIES

☐ How will you

determine how

much gap financing/

subsidies families will

need?

☐ What gap financing

will homebuyers

access?

☐ How can families who

are credit-ready and

income qualified now

be assisted?

☐ What will the

development budget

include (construction,

roads, infrastructure)?

☐ What sources

of development

financing are

available?

☐ What is repayment

ability for

development

financing?

☐ What needs to be

in place to access

development

financing?

☐ Who can teach

AFFORDABILITY AND

MORTGAGE FINANCING

DEVELOPMENT

FINANCING

HOME DESIGN AND

CONSTRUCTION

CAPACITY AND

PARTNERS

☐ Are you working with

☐ Where are the gaps?

☐ How can staff capacity

an architect?

☐ Do you have

construction plans,

floor plans?

☐ Who will do your

building? (force

account, contractors,

other crew?)

☐ Is there the capacity

to carry out these

different pieces?

☐ What design features

do families want?

Source: South Dakota Native Homeownership Coalition

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

be built?

☐ Who can be a partner

on some of these

pieces?

and other demographic information. It may be necessary to reach out to potential homebuyers

to participate in the assessment. Are there tribal members who may be unaware of trust land

homeownership options despite being strong candidates for homeownership?

• What are the best ways to reach them? Options may include the media, community meetings,

meetings hosted by key employers, and homeownership fairs.

Financial education, homebuyer education, and credit improvement

Financial education and homebuyer education are critical to effectively providing homeownership

opportunities for families. It is important for families to understand the homeownership process

and the responsibilities of homeownership.

• Money management is key to ensuring that families can pay for and maintain their new

homes. Since credit history is such a critical component of qualifying for a mortgage, it is

important to provide credit counseling and support for families who need to improve their

credit scores in order to qualify for mortgage financing.

Planning, land, and infrastructure

If homeownership in the community involves constructing new homes, it will be important to look

at land sites and infrastructure. This raises many questions to consider before moving ahead.

• Where will new homes be built?

• Where do families want to live?

• What kind of housing concept is desired – subdivisions or scattered sites?

• What kind of infrastructure will be necessary?

• What is the status of the land?

• Will families need to obtain leaseholds?

• What are the steps that tribal members need to take to obtain a lease?

Development financing

If homeownership in the community involves constructing new homes, construction financing

will be needed. The question here is: Who will provide the financing for these projects? Tribal

governments might, if their budgets and borrowing capacity permit. Alternatively, banks and other

private lenders may finance construction if the appropriate legal infrastructure is in place.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Native Homeownership Partners

Native

• Department of

the Interior

• Department of Housing

& Urban Development

• Department of

Agriculture

• Department of

Veterans Affairs

• Congress

• Housing Authorities

& TFHES

Federal and

• Tribal Schools

& Colleges

• Workforce Organizations

• Contractors and

Construction Businesses

Tribal

Leaders

Tribal

Citizens

Bureau

of Indian

Affairs

Partners

tio

Lenders

• State Housing Finance Agencies

• Homeownership Coalitions

• Lenders & CDFIs

• Foundations & Non-profits

gio

nal Partner

Affordability and mortgage financing

Providing homeownership opportunities for tribal members often involves supporting families’

efforts to qualify for a mortgage. A number of mortgage products are designed for rural and Native

homebuyers, including Rural Development’s 502 loan (the RD or RHS 502), the HUD-guaranteed

184 loan (which is originated by a private lender), and the VA’s Native American Direct Loan

(NADL) for Native veterans.

• For tribal members to access some of these programs, such as the widely used HUD 184

mortgages, tribal government may need to enter into specific agreements with the relevant

federal agency.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Legal infrastructure

In addition to the physical infrastructure needed to be in place, providing homeownership

opportunities also means having the necessary legal infrastructure in place. Are the tribe’s lease

documents current with lending standards? What other legal and judicial infrastructure is needed

to support the full homeownership process, including judicial recourse?

Gap financing and subsidies

Affording a mortgage is absolutely essential to successful homeownership, so securing gap

financing and other subsidies can help ensure that families can pay for their home and make

monthly payments.

• Families can access different funding sources for down payment and closing cost assistance.

Some of these resources are designed for Native American borrowers, while others are general

funds that Native homebuyers can tap into.

Home design and construction

If providing homeownership means new construction, it is also important to look at home design

and construction. Here the questions concern who will design the homes and how will families

have input in the home design. Many forms of housing are available to meet the consumer’s need

and the community’s standards, from manufactured to stick-built housing. Selecting a builder is as

important as securing the right lender and designer.

In the chapters that follow, these components of homeownership are discussed in further detail.

Different funding sources help families access

down payment and closing cost assistance.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

With the increases in tribal

populations in our communities,

our housing needs, already

great, are only going to become

greater. Homeownership

needs to be part of the mix.

—SUSAN HAMMOND, Executive Director,

Four Directions Development Corporation

Assessing Tribal Members’ Needs

hen planning tribal homeownership projects, assessing what is

actually needed in the community is an important first step. A

needs assessment may identify different issues and can help steer the

overall direction of projects and developments, as well as help fine-tune

the details of potential projects. An assessment may show, for example, a

need to develop three-bedroom units rather than two-bedroom units, or

that tribal members would prefer a certain location for a new subdivision,

rather than another location.

While time or resources may be a limiting consideration, conducting a

needs assessment actually can save valuable time and money in the long run.

Who does the needs assessment?

A needs assessment can be carried out internally by tribal council or

housing staff, externally by an outside partner or firm, or by a combination

of the two. Options include a consulting firm with experience in conducting

needs assessments or a university with the capacity to connect to the

community. Here the most important factors are that they have experience

working with tribal communities, respect the tribal organization’s role and

experience, and incorporate tribal input into the process.

The survey

The central conduit for gathering information about the community’s

needs is a survey. Using a survey to conduct a needs assessment includes

these steps:

1. Design the survey:

The focus is on who will use the information collected and for what

purpose, and what information they need to accomplish their goals.

What should inform home design and programming? Depending on the

questions that need to be answered, this information might include:

• What are families’ incomes?

• What purchase price can homeowners afford?

• Where do potential homeowners work?

• What kind of credit do potential homeowners have?

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

C H A P T E R

C H A PT E R 4

• Where do respondents want to live?

• What design features are important to potential homeowners?

• What are the demographics of potential homeowners: veterans, single heads of households,

multigenerational households?

2. Determine who to survey:

It is important to know who has the information needed and who should be heard. Potential

homeowner respondents include:

• Housing Authority tenants.

• Tribal government employees.

• Teachers and school employees.

• Indian Health Services and other healthcare employees.

• Head Start families.

• Elders.

• Veterans.

3. How will the survey be conducted?

• At community events.

• By mail.

• Online.

• At central locations in the community (such as a grocery store).

• Through one-on-one meetings with potential homeowners.

• Through group meetings at different worksites, such as schools and tribal offices.

4. Determine the goal at the outset.

Set a goal for the number of completed surveys: To ensure solid information moving forward, use

a community outreach plan to reach a large swath of community members with the survey. The

outreach plan identifies key events and gatherings, popular distribution sites, and news outlets.

Sometimes the grocery store is the best place to connect with people. The overall objective here is

to reach as many people and encourage completion of as many surveys as possible.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Example: Cheyenne River Housing Authority Homeownership Needs Assessment Survey

(a full version is included in the Appendix materials).

Section G: Homeownership

G1.

G6.

Which of the following best describes why you

chose to move into your current home?

Select one

If you were to buy a new home, how many people in

your family would live in this new home together?

Location of unit

Adults

Quality of unit

Children 17 years or younger

G2.

Affordable rent

Have you tried to purchase a home?

Size of unit

Yes

Only choice I had

G3.

If yes, which option best describes the result?

G7.

Why are you interested in homeownership?

Select one

Good investment

I bought a home.

Stability

I did not buy a house because I could not

find one I wanted to buy.

I did not buy a house because I could not

get a loan/financing.

I did not buy a house because I did not

have enough down payment money.

I did not buy a house because I could not

get the land to build it on.

Freedom to build/change/improve home

without landlord approval

Better location

Better house

Other

I did not buy a house because the infrastructure costs

(roads, water, sewer, electricity) were too expensive.

Other

I did not buy a house because the lot did not have access

to infrastructure (roads, water, sewer, electricity).

Other

G4.

How easy do you think it is to find affordable, quality

housing to buy on the Cheyenne River Reservation?

G8.

Select one

Very Easy

Somewhat Easy

Somewhat Challenging

Very Challenging

G5.

If you needed to rent a home today, how many

choices do you think would be available to you?

In general, what do you think about buying a house

in the next year?

Select one

I think it is a great time for me to buy a

house

I think it is a good time for me to buy a

house

I think it is a somewhat bad time for me

to buy a house

I think it is a very bad time for me to buy

a house

Don’t know

None

1-5

6-10

More than 10

Analysis and final report

Once the survey is complete, analyzing the data will be key to understanding current trends

and common themes in the community. Most important, these findings need to be shared and

discussed with tribal leaders, community members, and staff.

In working with an outside consultant, it is important that they have experience

working in tribal communities and understand the nuances of Native projects.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

Housing Needs Study

Cheyenne River Housing Authority, Eagle Butte, South Dakota

ORGANIZATION

Cheyenne River Housing

Authority

CASE STUDY TOPIC & FOCUS

Housing Needs Study

SERVICE AREA

Cheyenne River Indian

Reservation

WEBSITE

www.crhanetwork.org/

index.html

he Cheyenne River Housing Authority (CRHA) is a

tribally designated housing entity (TDHE) created by an

ordinance enacted by the Tribal Council of the Cheyenne

River Sioux Tribe. Its mission is to provide affordable,

safe, and sanitary housing throughout its service area,

which encompasses the boundaries of the Cheyenne River

Reservation, based in north-central South Dakota.

CRHA has a long history of providing homeownership

opportunities, having started down the path of mortgage

lending with the inception of the NAHASDA. Since then,

its homeownership services have evolved and diversified

to meet the needs of its families. CRHA recognizes that

families come to homeownership through different paths,

including contract for deed, new construction, local bank

financing, and mortgage loan products. It has gained

experience in loan packaging for USDA’s 502 loan, the

HUD-guaranteed 184, the VA’s NADL, as well as

conventional bank loans with local lenders.

Project description

In 2016, with the support of the South Dakota Native

Homeownership Coalition and the South Dakota

Housing Development Authority, the CRHA completed

a comprehensive Housing Needs Study to inform and

support its homeownership efforts. According to Executive

Director Sharon Vogel, “In order for us to understand the

interest and preferences of tribal members interested in

homeownership, we needed to gather information and

data.” The Study was conducted by an external consulting

company with extensive experience in Indian Country.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

The importance and value of the CRHA Housing Needs

Study were immediately recognized when developing their new

subdivision, Badger Park:

CRHA recognizes that

families come to

• Interest in homeownership

homeownership through

• Awareness of different loan products

different paths, including

• Understanding of the mortgage loan process and

affordability

contract for deed, new

• Need for homeownership education

• Potential homeowners for the Badger Park subdivision

• Potential sites for future subdivisions (where tribal

members wanted to live)

construction, local bank

financing, and mortgage

loan products.

• Desired neighborhood amenities

The CRHA matched its funds with resources earmarked by the South Dakota Housing Development

Authority for the assessment.

Overall, the completed study provided valuable information for both short-term planning in

designing homebuyer readiness services to prospective homeowners, and long-term planning

in identifying potential sites for future subdivisions.

Promising approach

The CRHA Housing Needs Study succeeded for a number reasons. The key ingredients for success

include:

• Use a professional contractor who understands your community and, preferably, has experience

working in Indian Country.

• Secure internal buy-in from the staff (all departments) that the Housing Needs Study is an

integral part of the development and planning process.

• Design the survey to collect the kind of information needed by the community, and engage the

staff in the development of the survey instrument.

• Think outside of the box about what information to gather, like questions around affordability

(what is affordable, compared to an actual mortgage).

• Coordinate the survey with different employers in the community, who could provide access to

their employees (such as the Tribe, the schools, and larger businesses).

• Lead with a vision about the value and importance of the Housing Needs Study and educate

staff, tribal leaders, and the community.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Impact

The CRHA points to a number of beneficial impacts of their Housing Needs Study:

• Enabled the organization to design and deliver homebuyer readiness classes designed for an

identified list of potential homebuyers.

• Informed modifications to the homebuyer readiness curriculum, now an expanded to a 12-week

course taught by financial education experts.

• Reaffirmed that Badger Park is a desired location for families and that prior planning is on

target.

• Validated the need to find subsidies for hard-working families to ensure these families could

achieve homeownership and manage a mortgage.

• Highlighted the need for targeted outreach for veterans, because many were not aware of the

VA loan product available to them.

• Reaffirmed the Housing Authority’s capacity to execute the project using an integrated,

comprehensive housing development approach.

Lessons learned

The CRHA learned many lessons through the process:

• Be flexible in conducting the study and administering the survey – if one outreach strategy isn’t

producing results, it’s important to have the flexibility to modify the approach.

• Consider target groups for special outreach efforts, such as Housing Authority tenants, elders,

veterans, and employees.

• Identify a goal for the number of completed surveys.

• Use the Needs Study as a living tool that is reviewed and updated regularly.

Ongoing challenges

A number of challenges cropped up in conducting the CRHA Housing Needs Study, as well as in

providing homeownership opportunities for tribal members:

• The study creates expectations for services and support, so it is important to have the capacity

to manage these expectations.

• There may be a disconnect between what families want and what they can afford after looking

at affordable design and construction.

• It is important to keep families motivated and engaged in the homebuying process – there are

many steps in the process and it’s easy to give up.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

On the horizon

In the future, the CRHA plans to use the information it has collected to design and develop more

affordable homeownership opportunities for tribal members. The study and its planning process are

now an ongoing process, rather than a “one-time deal.”

In the near future, the CRHA plans to build on the Housing Needs Assessment to conduct a

targeted needs assessment focused on veterans. The CRHA also plans to continue developing

partnership opportunities for subsidy funding to ensure maximum affordability.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

There are thousands of

households in Indian Country

that are ready for homeownership

right now. And there are many

thousands more that could be.

—JOE GARCIA, Councilman, Ohkay Owingeh Pueblo

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Preparing Families for

Homeownership

C H A PT E R 5

critical part of providing homeownership opportunities for tribal

members must focus on preparing families for homeownership.

While some Native American families may live in a home built on

land passed down for generations, many of these homes were probably

built and improved as time, money, or materials were available. Other

Native American families live in rental housing, often the only housing

available for tribal families. In very many cases, no banks, mortgage

lenders, mortgage brokers, or mortgage guarantors were involved in either

scenario. Financing a home is often a new concept. As a result, many

Native American prospective homebuyers have little understanding of the

homebuying or mortgage process.

What is homebuyer education?

Homebuyer education and credit repair are tremendously important.

These courses and programs focus on teaching families the home purchase

process—through individual counseling and coaching, and group

classes. It also includes supporting homebuyers in the different aspects

of purchasing a house, such as finding or constructing the right home,

applying for a mortgage, accessing subsidies to reduce costs, navigating the

leasehold mortgage process, and repairing credit.

Financial education classes

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Financial education classes often are the first

step to homeownership. They cover basic

budgeting and money management, as

well as understanding credit. Many Native

organizations use the Building Native

Communities: Financial Skills for Families

curriculum, developed by First Nations

Development Institute and Fannie Mae, and

managed by First Nations Oweesta Corp.

Oweesta provides instructor training around

the country to prepare local practitioners to

use the curriculum.

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TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

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Homebuyer education classes

Building on financial education, homebuyer education classes focus

on the buying process, to prepare families to purchase, build, rehab,

maintain, and keep their own homes. Many Native organizations and

TDHEs providing homeownership education use the Pathways Home:

A Native Homeownership Guide, developed by the National Congress

of American Indians (NCAI), and managed by the National American

Indian Housing Council (NAIHC). NAIHC conducts train-thetrainer sessions to prepare instructors to teach this curriculum in

their communities. This curriculum covers:

• Understanding the mortgage loan process.

• How to prepare a family budget.

• How to improve credit profiles.

• How to avoid the pitfalls of predatory lending.

• Preventing foreclosure.

• How to maintain a home.

Homeownership counseling

While financial education classes and homebuyer education classes are typically taught in a group

setting, buyer readiness often includes one-on-one homeownership counseling. This counseling

provides support tailored to the borrower’s specific needs, such as their budget, what they can afford

to pay for a new home, and what it will take to make this happen. Homeownership counseling may

also include:

° Loan packaging assistance

Homeownership counseling may involve working with families to determine the loan

product best suited to their needs, and then supporting them to apply for the loan.

Depending on income, families may qualify for Rural Development’s 502 loan, for example,

with a sliding scale interest rate. Veterans may qualify for the VA Native American Direct

40%

...of reservation households have incomes

near or above US Median Household Income

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Most Reservation Residents Have Prime or

Near-Prime Equifax Risk Scores

Percentage of Residents of Federally Recognized American

Indian Reservations (2017 Q4)

50.1%

36.6%

Equifax Risk Score

Prime (>720)

Near-Prime

Subprime (<660)

13.3%

Source: CICD staff calculations based on data from the Federal Reserve Bank of New York/Equifax

Consumer Credit Panel

Loan product. Another option for Native families is the HUD 184 loan, where HUD

guarantees the loan made by a private lender.

° Accessing subsidies

Homeownership counseling can also assist families in accessing subsidies to reduce the

amount of the mortgage loan and monthly payments. These subsidies play an important

role in ensuring homeownership is affordable for families, and they are taking on a home

loan that they can afford to repay.

° Navigating the leasehold mortgage process

Purchasing a home on a reservation often means securing a lease, which can be a daunting

process for tribal members. Homeownership counseling can help families’ efforts to work

with their tribe and the BIA to secure the lease and Title Status Report.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

° Finding the right home/constructing a home

Homeownership counseling also can focus on assisting families in finding the right

home if there is available housing stock or constructing a new home, if stock is limited.

Constructing a home may include choosing a site, securing bids, selecting a contractor, and

choosing a floorplan.

° Coaching to improve credit rating

Having no or bad credit (a history of late payments, too many loans, or collections) is often

a barrier to qualifying for a mortgage loan. For this reason, preparing homebuyers often

means addressing credit issues and working with borrowers to repair credit. That begins

with pulling a “credit report” that outlines all the potential issues. It can include developing

detailed plans to address credit issues, supporting families’ efforts to pay off loans, and

working with families to contact creditors to consolidate debts.

° Coaching to achieve financial goals

Financial coaching focuses on creating financial goals, moving through obstacles, and

providing accountability. A trained coach works one-on-one with a family to help them

articulate and move toward a goal, over time. Ideally, the coaching process leads to learning

new financial habits while accomplishing the family’s self-determined goal. Coaching

is designed to support clients who want to improve their financial situation and turn

knowledge and intentions into action. Throughout the coaching relationship, the goal

serves as motivation and a tool to focus residents’ attention on financial tasks.

Homebuyer education is money well spent.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

Homebuyer Readiness Program

Salish and Kootenai Housing Authority, Pablo, Montana

ORGANIZATION

Salish and Kootenai Housing

Authority

CASE STUDY TOPIC & FOCUS

The Flathead Finance Program

Homebuyer Readiness and

Education

SERVICE AREA

Flathead Indian Reservation

NUMBER OF TRIBAL CITIZENS

7,900

NUMBER OF EMPLOYEES

Three staff in the Homebuyer

Readiness Program

INDIAN HOUSING

BLOCK GRANT

$4.2 million

ANNUAL BUDGET

$10 million

WEBSITE

www.skha.org

he Salish and Kootenai Housing Authority (SKHA) serves

all residents residing within the boundaries of the

Flathead Reservation. The Flathead Reservation is home

to the Confederated Salish and Kootenai Tribes (CSKT) in

northwestern Montana.

SKHA currently manages nearly 700 housing units

including rental, 50 units of Tenant-Based Assistance, an

80-lot trailer park, and the homeownership program.

Established in 1963 by Tribal Council action, the SKHA

operates as an independent tribal entity. SKHA now is

overseen by a seven-member Board of Commissioners

appointed by the Tribal Council.

The SKHA executive director has oversight over six

different departments: Finance, Administration, Housing

Resource, Occupancy, Maintenance and Water, and the

Sewer Department. In addition, all housing programs

and services have been consolidated into the Housing

Authority’s portfolio, including the BIA’s Housing

Improvement Program (HIP), Weatherization Program,

Indian Community Development Block Grant (ICDBG)

Program, and the Tribe’s water/sewer systems. With the

transfer of the Indian Health Service Construction (IHS

121) Program, including the project engineer and inspector

staff, all housing services are unified into one program,

making it easier to serve the community and for the

membership to access tribal programs.

Collectively these programs chart the course for the

future of homeownership on the Flathead Reservation.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Project description

This case study focuses on the Flathead Finance Program for homebuyer readiness and education.

SKHA clients interested in buying a home are required to complete the Flathead Finance Program,

comprised of four major components:

• Application and Intake

• Action Planning

• Homebuyer Counseling and Readiness Education

• Foreclosure Counseling and Prevention

Application and Intake. Here, clients use worksheets to compile their income, outstanding credit

card and other debt, and current credit scores. They then compute their total household income and

complete an initial household budget. All the information about the Flathead Finance Program, the

intake form, and other client worksheets are available online or can be requested from SKHA staff.

Action Planning. Once the application and intake process is completed, the client enters into the

Action Planning phase with SKHA staff. Information from the completed intake forms and worksheets

are reviewed and an in-person interview is scheduled. During this initial meeting, SKHA staff work

with the client to develop an Action Plan that includes, at minimum:

• A detailed household budget

• An analysis of the client’s credit history

• A credit repair plan, if necessary

• A strategy for savings for down payment, closing costs, and post-purchase expenses

The intake forms and worksheets provide SKHA staff with information to determine the client’s

eligibility for down payment and closing cost assistance.

• Clients with no or poor credit histories who are not likely to qualify for a mortgage in the near

term are counseled toward a long-term action plan.

• Clients who are “mortgage ready” but lack the required credit history for a bank loan are

referred to CSKT Tribal Credit Department for further assistance.

• Clients who are mortgage-ready at intake are provided information about local banks from

whom they can apply for mortgages.

Several banks offer loan products on the Flathead Reservation. Three reservation-based banks are

certified HUD 184 lenders:

• Eagle Bank, owned by CSKT

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Valley Bank

• Glacier Bank

SKHA does not advocate for a specific loan product or refer the client to a particular bank.

Homebuyer Education Class

The Flathead Finance Program for homebuyer readiness and education is based on the Pathways

Home curriculum, a comprehensive homebuyer education program sponsored by the National

American Indian Housing Council designed to help educate prospective native homebuyers on

how to become successful homeowners. The curriculum is specifically tailored for Native American

communities.

The training begins with a pre-test to assess each participant’s baseline knowledge, and then

moves into eight modules:

1. Exploring Homeownership

2. Considering Mortgage-based Homeownership

3. Budgeting for Homeownership

4. Evaluating Credit for Homeownership

5. Finding a Home

6. Applying for a Home Loan

7. Meeting Your Financial Obligations

8. Protecting Your Investment

The curriculum is culturally adapted to the community, incorporating an opening prayer and

a viewing of Sovereign Lending: A Bright Chance for Survival, the nationally recognized video on

homeownership on the Flathead Reservation produced by the Federal Reserve Bank of San Francisco.

The class is offered one day per month, which means that participants must complete all the

modules, take the review test, and get their certificate of completion the same day. They cannot

attend part of the class one month and another part the next month, primarily because of the

cohesive curriculum.

At the end of the class, participants take a final test, answers are reviewed, and certificates are

distributed to those who successfully completed the course.

Post-purchase classes also are available to support ongoing financial responsibilities of

homeownership.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Promising approach

• The Flathead Finance Program for homebuyer readiness is designed to be as friendly and

flexible for the client as possible, while still maintaining the integrity of the program.

• Representatives from local area banks are engaged as instructors for some of the modules.

Using community bankers as instructors has several benefits:

Local bankers have the opportunity to share their expertise and learn from class

participants about the financial, credit, and other concerns their customers are facing.

Participants get to know and develop a relationship with the local banking representatives.

Familiarity with local people and developing relationships are essential components of

building trust.

• The program is promoted through many modes of communication throughout the community –

the tribal and local county newspapers, the CSKT’s website, the tribal employee newsletter, local

banks, and realtors.

• Local area banks require participation in the Flathead Finance Program for certain loan

products such as the HUD 184 program.

• SKHA has a positive relationship with NeighborWorks Montana, which supports the costs of

the program and also allows SKHA to benefits from the ongoing training, consulting, and other

assistance.

• The program offers options and choices in lenders in the area including three HUD-certified

lenders.

• SKHA staff get instant feedback on the program and can assess modules that are most helpful

and those that are challenging.

• SKHA staff are committed advocates who believe that homeownership is possible. They are

dedicated to their clients and are available to them every step of the way, including accompany

them to meetings with the lenders if requested.

Impact

• The Flathead Finance Program for homebuyer readiness sees approximately 155 clients

annually.

• In 2017, SKHA qualified nine people for down payment assistance and closing costs: seven

qualified for both benefits; one for down payment assistance; and one for closing costs.

• More and more people are successfully closing on homes and becoming successful

homeowners.

• Even if clients are not closing on a home, SKHA sees more people on the reservation who are

working hard to repair their credit and prepare for homeownership.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Lessons learned

• Structured hands-on learning – Clients need a structured, hands-on, and patient approach, and

that is what SKHA offers.

• Credit and credit repair – Many clients are working diligently on credit and credit repair even

though they may not purchase a home in the future.

• Possibility of homeownership – Tribal members are realizing that homeownership is possible.

• Tribal leadership and support is an essential component because they lead by example: they

are homeowners themselves and they support SKHA policies that promote homeownership.

Ongoing challenges

• Affordability and Limited Housing Stock. New home construction costs are increasing and

outpace affordability.

° Although SKHA clients qualify for a mid-range mortgage, recent construction of eight

modest two-bedroom rental homes cost well-above that threshold.

° Consequently, people who qualify for a mortgage may not be able to afford new

construction.

° There is a limited housing market of existing homes on tribal trust lands.

• Funding uncertainty. The ICBG financial assistance program for down payment, mortgage

subsidy, and foreclosure prevention has been eliminated in the proposed 2019 budget, which

disrupts planning new projects.

• State collaboration. SKHA does not receive support from the State of Montana and would

benefit from mutual collaboration around affordable housing.

• More choices. SKHA needs more options to serve its clients. There is a constant need to identify

or develop additional mortgage products with the flexibility for Indian Country lending.

On the horizon

• The Flathead Finance Program for homebuyer readiness will continuing to be a mainstay of the

SKHA housing program.

• SKHA staff has the capacity and desire to serve many more clients.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Mortgage lenders love

standardization.

When we first started

back in the day, the

homeownership process

on our reservation was

anything but standard.

But we improved our efforts

by getting better educated,

which has impacted

our homeownership

program today.

— JAMES "JC" CRAWFORD, Executive Director,

Sisseton Wahpeton Housing Authority

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Lending Processes to Optimize

Opportunities for Homeownership

C H A P T E R

C H A PT E R 6

t the heart of homeownership is the lending process. Most

homeowners need a mortgage to purchase a house, their biggest

lifetime investment. To reduce costs and make the process more efficient,

lenders look to standardize their lending practices. Creating a clear

lending process for mortgage loans on trust land is a critical piece of

Native homeownership programs.

The lending process for most reservations differs in a few significant

ways, however, making standardization a challenge to attain. The two

primary differences are the status of the land and the laws applicable

to lending and recourse in tribal jurisdictions. Lenders typically use

the land on which a home is located as collateral for a mortgage loan.

Most reservation lands—trust lands—cannot be encumbered and may

be subject to other federal conditions. To secure a home loan on trust

land, the lender provides a mortgage on the borrower’s interest in the

leasehold (the lease of the land), not the land itself. A similar process

is used for mortgages on condominiums and townhouses where the

mortgage relates to the dwelling, not the land. Thus, while not an

impediment to lending, the trust status requires additional steps and

considerations in the process.

Before 1992, it was virtually impossible to obtain mortgage financing

to buy or build a home on trust or restricted land, and tribal members

had few choices for housing. The HUD Low Rent or Mutual Help housing

programs were prevalent at the time. Another option was a mobile home,

usually at a high interest rate. Some were able to self-finance construction.

In 1992, Congress created two new federal programs to address the

lack of mortgage lending in Indian Country: the HUD Section 184 Loan

Guarantee and the VA Native American Direct Loan Programs. The

Section 184 program offers a loan guarantee to private sector lenders to

encourage them to make mortgage loans to eligible borrowers for homes

located in Indian Country, while the Native American Direct Loan

program allows the VA to make direct housing loans to Native American

veterans on trust land. The U.S. Department of Agriculture (USDA) Rural

Development Section 502 Direct Loan Program offers another mortgage

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

program to assist low- and very-low-income applicants to obtain housing in eligible rural areas by

providing payment assistance to increase an applicant’s repayment ability.

Each of these loan products allows borrowers to use their leasehold interest and improvements

as security for their loan. Importantly, tribes support these beneficial programs by:

• Enacting a mortgage code and establishing a system of recourse in tribal court,

• Endorsing a lease instrument that meets securitization requirements, and

• Executing a memorandum of understanding (MOU) between the tribe and the federal agency,

or with the lender and government-sponsored enterprise (GSE) for conventional products.

All of these products and programs have made it possible for Native borrowers to obtain home

loans on trust lands, but the process remains more complicated than mortgage financing on fee

simple land. As a consequence, these programs were underutilized for trust land mortgages and

qualified tribal households often opted to purchase or build homes on fee simple land where

mortgage financing was easier to obtain.

With lending in Indian Country still lagging, HUD and the U.S. Department of the Treasury

issued the One-Stop Mortgage Center Initiative in Indian Country: A Report to the President

(2000), summarizing their efforts to streamline the mortgage process and make capital more

available for trust land loans for both federal and conventional loan products. The initiative

brought together tribes, lenders, federal regulatory agencies, and other housing professionals with

a goal of streamlining the lending processes within each agency. The outcome was an interagency

collaboration to recognize and use model documents preapproved by HUD, USDA, Rural

Development, and the VA. This became the “One-Stop Mortgage” project, and hundreds of tribes

adopted the model lease and other documents. Over time, however, the effectiveness of the project

waned due to disjointed agency cooperation and new programs, as well as shifting policy directions

as new Administrations came in.

One of these changes permitted the HUD 184 loan guarantee to be used in tribally designated

areas, which often included areas well beyond the reservation (such as designating an entire state as

an eligible area). The result has been a soaring increase in lending to American Indians on fee lands,

as illustrated in Chart 1.

Even with these challenges, Native homeownership has flourished on many reservations. At the

Bay Mills Indian Community in Michigan, for instance, more than 20 percent of homes on trust

land have mortgages. See Chart 2 and Chart 3 on pages 66 and 67.

Many hands are required to achieve scale development, standardize transactions, and streamline

processes in American Indian communities, Alaska Native villages, and Hawaiian homelands.

These include tribal leaders, federal agencies, and private lenders—all of whom play critical roles in

serving the trust land mortgage market.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Number of HUD 184 Loans by

Type of Land (1995-2015)

Fee Land Loans Dominate Since 2005

5000

Fee simple land

Tribal trust land

Allotted/individual trust land

4000

3000

2000

1000

1994

1997

2000

2003

2006

2009

2012

2015

Source: CICD staff calculations based on data provided by the U.S. Department of Housing and

Urban Development

Role of Tribal Leaders

As discussed in Chapter 1, tribal leaders are in the best position to support mortgage lending in

their communities and create more opportunities to live on the reservation. They can:

• Promote partnerships. Develop financial partnerships with lending institutions to bring

mortgage capital to their communities.

• Enact legal infrastructure. Establish a legal process, based in tribal law with avenues for

judicial recourse, for the tribe, lenders, federal agencies, and secondary market investors, as

well as individual borrowers. The elements of this legal infrastructure include:

° A tribal mortgage lending code enforceable in tribal court or other process that ensures an

opportunity for recourse and due process.

° A residential lease instrument and approval process.

° A process for the lender to access mortgaged properties for the purpose of evaluating and

servicing the loan.

° Priority of lien procedures.

° Foreclosure and eviction procedures.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

States Where Tribes Are Making HUD 184

Loans Work on Trust Land

Percentage on Trust Land

500

1000

1500

2000

2500

Number of Total HUD 184 Loans to Native Americans

* Omits OK (15,491 loans, 1.3% trust land) and AK (3,791 loans, 0.1% trust land)

Source: CICD staff calculations based on data provided by the U.S. Department of Housing and

Urban Development

• Promote homebuyer readiness. Support homebuyer education and counseling programs to

prepare tribal borrowers for the responsibilities of homeownership.

• Streamline leasing processes. Create tribal processes that streamline leases, environmental

clearances, and title status reports (TSRs).

• Engage in land use planning. Practice master planning and create master leases for large-scale

development as well as residential zoning.

• Promote loan product options. Develop a full menu of conventional and federal loan products

that cover the spectrum of community incomes and needs.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Making HUD 184 Loans Work on Trust Land

Percentage on Trust Land

100

*Ewiiaapaayp

Red Cliff

*Port Gamble

Isabella

Grand Ronde

Lake Traverse

Hollywood

Nez Perce

Umatilla

L’Anse

Yakama

Tulalip

Flathead

Lummi

Brighton

Lac Courte Oreilles

*Augustine

Lac du Flambeau

*Fort Yuma

Morongo

Oneida (WI)

Puyallup

Eastern Cherokee

*Navajo

*Standing Rock

100

200

300

400

Number of Total HUD 184 Loans to Native Americans

Note: Represents clusters of ZIP Codes that cover reservations. In some cases multiple reservations are

grouped into a single cluster due to zipcode overlapping multiple reservations.

*Augustine, Cabazon, Torres-Marinez, and Twenty-Nine Palms; *Fort Yuma and Cocopah; *Port Gamble

and Port Madison; *Ewiiaapaayp and Viejas, Navajo, Acoma, Hopi, Isleta Pueblo, Jicarilla Apache, Laguna

Pueblo, Southern Ute, Ute Mountain, and Zuni; *Standing Rock and Cheyenne River.

Omits Osage (610 loans, 34% trust land).

Source: CICD staff calculations based on data provided by the U.S. Department of Housing and Urban

Development

• Create risk mitigation options. Create and fund a risk pool to assist with the liquidation

process in the event of foreclosure, such that when a mortgage loan on the reservation goes

into foreclosure, the tribe purchases the home and resells it to an eligible homebuyer.

• Emphasize early intervention during delinquency. In the event a homebuyer becomes

delinquent with their mortgage payments, engage early intervention and foreclosure

prevention strategies to assist the borrower to maintain their mortgage, remain in their home,

and minimize lender risk.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Role of federal agencies and private lenders

Lending partners can facilitate the flow of public and private capital for homeownership into

tribal communities, which further helps tribes and TDHEs extend their resources to meet the

community’s homeownership goals. Following are examples of how they can support access to

capital and increase Native homeownership:

• Share financial expertise. Lenders and mortgage companies can share their experience in

financing homeownership loans to Native communities and facilitate the development of the

legal infrastructure needed to support lending in Indian Country.

• Channel capital. Federal agencies and secondary market investors like Fannie Mae and Freddie

Mac can provide sources of capital and guarantees tailored to the needs of Indian Country

borrowers.

• Promote mission-focused lending. Community-focused and Native-owned financial

institutions such as credit unions, community banks, and Native community development

financial institutions bring capital to their communities, as well as critically important

development services for the homebuyer.

• Prioritize interagency coordination. Recommit to interagency coordination (such as the OneStop concept) to streamline the federal lending processes on trust land.

• Find the best product fit for borrowers. Be familiar with loan options and support the best fit

for the customer, regardless of remuneration for the lender.

• Promote early intervention. Exercise customer-focused loan servicing, utilizing all partners

(tribes, TDHEs, HUD-approved housing counseling agencies, Native CDFIs, and other

nonprofits) to engage with early delinquency intervention.

• Exhaust all mortgage relief options. Pursue foreclosure options only after all other mortgage

relief procedures have been exhausted to protect the integrity of mortgage lending on trust.

• Expedite property disposition. Accommodate smooth and equitable transfers of properties,

such as through a tribe’s first right of refusal or loan acquisition if foreclosure is imminent.

Types of Loans: Construction Loans, First Mortgages, Second Mortgages

Construction loans are separate from mortgage financing. They typically are shorter in term and

considered higher risk because the collateral securing the loan is not yet complete. Several loan products

available to Indian Country offer terms close to a “construction to permanent” mortgage feature.

First mortgages, also referred to as permanent mortgages, are secured by the leasehold and

improvements. Typical terms are 15 or 30 years.

Second mortgages provide a level of gap financing for down payment and closing costs. They

often are the key to successful financing for low-, moderate-, and sometimes middle-income

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

purchasers because they bridge the gap between the cost of the home, closing costs, and the amount

of funding available through the first mortgage loan.

The Lending Process on Trust Lands

The process for making loans on trust lands can vary from tribe to tribe and by loan product.

More standardization of the lending process across Indian Country will increase the flow of capital

to reservation communities and help streamline the overall process. Tribes and TDHEs also can

encourage standardization throughout their region to attract more lending partners.

Here is the typical reservation-based lending process for a home purchase:

1. Lender preapproves borrower.

• Verifies applicant and tribe are eligible to participate in the program.

• Verifies land status and eligibility to mortgage.

• Determines whether to lend funds against a Leasehold Mortgage on trust land or a

trust mortgage on allotted trust land.

• Gathers prequalification documents on their checklist such as:

° Pay stubs for the last 30 days.

° Bank statements for the last two months.

° Last two years of tax returns for self-employed borrowers.

° Per capita 1099s for the last two years (if applicable).

2. Borrower selects a property to buy or applies for a residential lease and obtains

its accurate legal description.

If the purchase involves a new residential lease (also known as a homesite lease), the

borrower will need a residential lease application along with biological, cultural, and land

surveys. The lease must meet the requirements of the selected loan product.

In addition, the prospective borrower should:

• Obtain prepurchase counseling and follow the homebuyer work plan, such as

reducing debt or saving for the down payment and closing costs.

• Select the preferred loan product based on the borrower’s circumstances.

• Compare, select, and negotiate with a builder and execute a contract for design and

construction.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

3. Tribe/Tribal Representative authorizes leases and seeks BIA approval.

The tribe or tribal representative authorizes lease by resolution or administrative

authority and sends it to the BIA Realty Office for approval. The borrower also requests

Environmental Assessment or Categorical Exclusion Review from the tribe or BIA.

4. BIA superintendent provides approved lease to tribe.

5. Tribe, borrower, or lender contacts BIA to obtain a Certified TSR to verify the

leasehold interest in land, legal description, and existing liens/encumbrances.

The residential lease, with attached survey map, legal description, the rider for the

mortgage, and the tribal approval, then are submitted to the BIA Office of Land Titles

and Records for the BIA recording process and preparation for the TSR.

6. Lender reviews executed lease by Tribe, BIA, and borrower for program compliance.

7. Lender updates credit package.

8. Lender orders appraisal.

According to HUD guidelines, appraisals are good for only 120 days. Lenders may

order an appraisal sooner than this in some cases.

9. Lender underwrites loan package.

10. Lender issues loan commitment.

For allotted land, the lender sends credit package to BIA for approval of loan. BIA

provides the approval letter in writing to the lender.

11. Lender closes loan.

Within 30 days of closing, the lender batches the loan into a loan pool for sale on the

secondary mortgage market.

12. Lender or closing agent files loan documents.

Filing usually is with the BIA or County Recording Clerk, or with the tribal Land Title

Records Office (LTRO).

13. BIA LTRO or Realty issues a Subsequent or Updated Certified TSR.

This includes a summary of all activity since the Initial Certified TSR was issued,

satisfaction and cancellation of any existing liens and encumbrances, and approval of

lease and mortgage documents.

14. Lender reviews closing package for program compliance.

The lender submits closing package to guarantor/insurer/or direct lender or issuance of

guarantee certificate.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Twenty years ago, industry experts expected to see large numbers of defaults in Indian Country

because mortgage lending was so new and because of concerns about economic resiliency in tribal

communities. Instead, tribal leaders realize that when borrowers treat mortgages as loans, not

grants and when all parties meet their obligations and responsibilities, mortgage lending in Indian

Country is no riskier than mortgage loans on fee simple land. This successful track record will help

to attract investors.

Mortgage lending in Indian Country is no riskier than mortgages on fee simple

land when tribal leaders and borrowers treat mortgages as loans.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

Native Community Development Financial

Institutions Focusing on Homeownership

Lending in Indian Country

ORGANIZATIONS

• Four Directions

Development Corporation

• Native Community Finance

• Mazaska Owecaso Otipi

Financial

CASE STUDY TOPIC & FOCUS

Native CDFIs focusing on

Homeownership Lending

ative Community Development Financial Institutions

(CDFIs) play a vital role in providing homeownership

opportunities for tribal members. These communitybased loan funds are developing loan products to meet

the needs of tribal members, creating strong lending

portfolios, and showing private lenders that mortgage

lending on trust land can be done. Here are three Native

CDFIs focused on mortgage lending in different regions of

the country:

Four Directions Development Corporation,

Orono, Maine

Created in 2001, Four Directions Development Corporation

(Four Directions) is a Native CDFI serving the four Wabanaki

tribes in Maine: the Penobscot, Passamaquoddy, Micmac,

and Maliseet nations. In addition to a small business

lending portfolio, Four Directions focuses primarily on

home improvement, home mortgage, credit-builder, and

home equity/debt consolidation loans. It also provides

financial capability workshops and counseling. Based in

Orono, Maine, its board of directors and advisory board

are composed of tribal leaders, council members, and

directors of tribal government departments, as well

as non-Native members specializing in banking, small

business, community development, and housing.

Native Community Finance, Laguna, New Mexico

Native Community Finance (NCF) is a CDFI started in

2007 through the interest of the Pueblo of Laguna (POL).

NCF serves all of New Mexico’s tribes and pueblos,

offering a variety of products and services for any Native

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Key information on these Native CDFIs

Four Directions

Development

Corporation

Mazaska Owecaso

Otipi Financial

Native Home Finance

Year founded

2001

2004

2007

Service area

State of Maine: 4

Wabanki tribes and

Native Americans in

Maine

Pine Ridge Reservation

and adjacent

communities, and

Cheyenne River

Reservation

New Mexico

Types of

homeownership

loans

• 30-year fixed rate first

mortgage

• Home opportunity

loan (5-year balloon,

to refinance with

another lender)

• Construction loans

for 184/VA/USDA take

outs

• Home improvement

loan

• Equity/debt

consolidation loan

• Credit builder

consumer loan

• Traditional mortgage

loan (30 years)

• 30-year mortgages

for Pueblo of Laguna

Home loan program

• Rehab loan (up to 15

years)

• Rehab (mainly roofs)

up to 7 years

• Construction loan

• Gas conversion loans

7 years

Average size

of loan

Approximately $70,000

(after subsidies)

Approximately $150,000

Average interest rate

1% - 8.5%

Size of portfolio

$5.44 million

$3.0 million

$2,034,787

# Loans originated

Over 210

121

Primary sources

of capital

NACA/FA (CDFI Fund)

NACA (CDFI Fund)

Pueblo of Laguna

TD Bank (Line of Credit)

Northwest Area

Foundation

NACA (CDFI Fund)

SD VOAD (Disaster)

NM Mortgage Finance

Authority

Oweesta

Thunder Valley CDC

Native Capital Access

Bangor Savings (EQ2)

Enterprise Foundation

Katahdin Trust (Line of

Credit)

Capital campaign

OFN

Package loans for

other lenders?

Not at this time

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

USDA 502 intermediary

American residing in the state. In addition to its POL mortgage loan product, NCF offers loans for

home improvement and repairs, and provides construction loans for families that have qualified for

another mortgage loan product.

Mazaska Owecaso Otipi Financial, Pine Ridge, South Dakota

Founded in 2004, Mazaska Owecaso Otipi Financial (Mazaska) serves members of the Oglala Sioux

Tribe living on, or in communities adjacent to, the Pine Ridge Reservation, as well as tribal members

on the Cheyenne River Reservation, both based in South Dakota. Mazaska’s mission is to create

safe and affordable housing opportunities by providing loans, development services, and financial

guidance to help build assets and create wealth. Focusing on homeownership lending, Mazaska

provides 30-year traditional mortgages, five-year balloon loans, construction loans, and rehab loans.

Ingredients for Success

Elements of a successful homeownership lending program for tribal borrowers:

• Understand the tribes involved – their traditions, needs, and how they want loan products

structured.

• Develop strong relationships with borrowers and the target market–these relationships and the

trust that develops are a big part of borrowers repaying their loans and letting you know when

issues arise.

• Build strong relationships with funders, the main sources of loan capital for the project–

diversify funding and go beyond the CDFI Fund.

• Establish solid lending policies and practices to help mitigate risk and demonstrate to lenders

(including sources of loan capital) that mortgage lending can be done.

• Make payments affordable for borrowers–to ensure that they can make timely payments and

maintain homeownership.

Impact of Native CDFIs’ Homeownership Lending

Looking at the impact of their work, each of these Native CDFIs underscores that they are putting

people in homes–creating homeownership opportunities for tribal families where this opportunity

may not have existed. These CDFIs also have realized other important impacts:

• Helping Native families create equity.

• Providing a way for families to build credit (by repaying their loans), which lowers their cost of

capital and qualifies them for lower interest rates on other products.

• Showing that low-income borrowers can successfully replay loans (all three CDFIs have strong

portfolios with excellent repayment histories).

• Relieving overcrowding as families can move out of tight living situations into their own home.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Native Community Finance is proving that qualifying for a mortgage does not need to be

determined by a credit score. With its new POL mortgage loan product, NCF works to determine a loan

amount that families can afford, without using credit reports. Instead, NCF’s loan underwriting and

qualification process analyzes the borrower’s whole financial picture (debts, income, spending) to

calculate what the borrower can successfully repay.

Lessons Learned

In developing their mortgage lending programs, these Native CDFIs point to a number of lessons

learned:

• Financial literacy education and homebuyer education is key in preparing families for

homeownership, and should be required before closing any loan.

• Adequate software is necessary to track loans, show payment histories, and generate reports.

• Credit reports aren’t always the best way to show the likelihood that borrowers will repay their

loans.

• A strong board of directors is crucial–to provide guidance and stay on course.

• Strategic plans are critical to the work of a Native CDFI, and activities need to be aligned with

strategic goals.

• Native CDFIs are maturing lenders that must regularly evaluate staffing, structure, products,

pricing, and partners.

Ongoing challenges

Leaders of each of the Native CDFIs agree that finding long-term, low-cost capital for homeownership

lending is their biggest challenge. While focusing on business lending can work with shorter-term

funding, ideally, homeownership lending means accessing capital for 30-year mortgages.

With this in mind, the Native CDFIs necessarily are creative in assisting tribal families achieve their

homeownership goals. In addition to making direct loans to families, Mazaska and NCF provide shortterm construction financing that help families build their new homes. When construction is complete,

families then access another loan product (such as USDA’s 502 loan, the HUD-guaranteed Section

184 loan, or the VA Native American Direct Loan). Mazaska also provides 5-year balloon loans, which

families can then refinance with a private lender.

Beyond accessing capital, other challenges may depend on the community and tribes involved.

For Four Directions, because the tribes in Maine are small and the market is somewhat limited, the

housing stock may not be as robust. For Mazaska, the prevalence of predatory lending and payroll

deductions can be a challenge to working with clients to improve their credit scores. It is difficult

to change financial behavior and stay focused on budgeting and saving, when these options are so

available.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

On the horizon

Looking beyond their current homeownership lending activities toward the future, each of the Native

CDFIs has exciting developments on the horizon:

• Native Community Finance is consolidating with two other Native CDFIs, Cha Piyeh (based at the

Ohkay Owingeh Pueblo) and Native Capital Access, based in Phoenix.

• Four Directions is expanding its community development lending products to provide

larger-scale development financing to tribes. Building on its work with the Penobscot and

Passamaquoddy tribes in Maine, it also is expanding its partnerships with the Maliseet and

Micmac tribes, as well as exploring partnerships with other tribes in the region.

• Mazaska is preparing to implement a new 502 re-lending program, where it will use capital

received from USDA to make 502 loans directly to qualified tribal members. It also is working

with Lakota Funds, a sister CDFI on the Pine Ridge Reservation, to provide mortgages for

families living in its Eagle Nest community (a Low-Income Housing-Tax Credit subdivision) who

are purchasing their units as the project converts from rental to homeownership.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Homeownership in native

communities is about more than

personal wealth. It is about

perpetuation of culture, preparing

future generations, and building

collective wealth.

—JEFF GILBREATH, Executive Director,

Hawaiian Community Assets

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Navigating Land Issues

lmost everything in Indian Country relates to the status of the land.

Today, about 60 million acres of Indian land are held in trust by the

federal government and managed by the BIA on behalf of the Secretary of

the Interior for the use and benefit of the 573 federally recognized tribes.

Social and cultural connections to the land remain strong for the 5.2

million American Indian and Alaska Native peoples. A high percentage

of this rapidly growing population (about 60 percent), lives on or near

reservations.

Tribal and Indian Lands in Indian Country

In Indian Country, most economic and community development activity

depends on the status of the land. Both tribes and individuals own lands in

three basic categories: trust, restricted fee, and fee simple (or fee).

Planning an economic development project in Indian Country requires

three essential steps:

1. Identify the land to be developed.

2. Determine and understand the legal ownership status of the land.

3. Identify or create an appropriate property right to support a mortgage

on the property.

Land Status

Trust lands

• The most common form of land tenure in Indian Country.

• Legal title is held by the federal government.

• Tribal trust lands are held in common and managed by the tribal

government with oversight of the BIA.

• Individuals may hold parcels of trust land as well, often as trust

allotments.

• Trust lands may not be conveyed or sold without the consent of the

federal government.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

C H A PT E R 71

° While this makes trust lands more difficult to use as collateral, leases on trust land are

readily pledged as security for loans.

° Leasehold mortgages are the main vehicles for lenders to invest in housing and business on

trust lands.

• The state of Hawaii also holds about 200,000 acres of Hawaiian home lands in trust for Native

Hawaiians, which may be used as homestead sites eligible for leasehold mortgages.

Restricted fee lands

• Legal title of restricted lands is held by a tribe or the individual, but the land is subject to

restrictions against sale or conveyance without the approval of the BIA.

° While this makes restricted fee land more difficult to use as collateral, leases on restricted

fee land are readily pledged as security for loans.

° Leasehold mortgages are the main vehicles for lenders to invest in housing and business on

restricted fee lands.

• These lands are under tribal jurisdiction and the protection of federal law, and usually are not

subject to state or local taxation.

Fee lands

• The owner of the land holds the legal title to the lands.

• Fee lands are freely alienable without federal approval and thus can be used as collateral for a

mortgage.

• When owned by a tribe or individual within the boundaries of a reservation, fee lands are

subject to tribal jurisdiction.

Other Land Categories

Allotments

Allotments are discrete parcels held by individual tribal members. Original allotments were

established by the General Allotment Act of 1887, which divided reservation land into individual

parcels of about 160 acres for each tribal member. More than 120,000 tracts of allotted lands are

held in trust by the federal government for individual Indian owners, mostly on reservations in the

Great Plains, Rocky Mountain, Northwest, and Western regions.

The federal government, through the BIA, manages allotted lands, including managing the

income and property of the allottee. In practice, this generally consists of leasing the parcels or

negotiating royalties from, for example, rights-of-way, grazing, mining, and farming. The leasing

proceeds are held in the federal trust account for distribution to the owners of the allotment.

Allotments present challenges to land use similar to trust lands:

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Federal approval required due to restricted trust status.

• Increasingly fractionated ownership.

• Complex probate processes for multiple common interests.

Fractionation – Divided Ownership

When an allottee dies without a will, ownership often is divided among all the heirs, but the land

itself is not physically divided.

• The heirs of an original allottee own undivided interests in the allotment.

• Many allotments now have hundreds and even thousands of individual owners.

Here is a simple illustration of fractionation using only three offspring in each generation.

ORIGINAL ALLOTMENT

100 Acres

SECOND GENERATION

1/3 of original

THIRD GENERATION

1/9 of original

FOURTH GENERATION

1/27 of original

FIFTH GENERATION

1/81 of original

SIXTH GENERATION

1/243 of original

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Fractionation is a serious problem facing Native communities.

• BIA estimates on fractionation (2017):

° 150 reservations with 2.9 million fractional interests owned by approximately 243,000

unique owners.

• Consent from a majority or supermajority of the parcel’s owners is required to use the land for

any purpose – leasing for agriculture or natural resources purposes, or business and home site

development.

• With so many owners, individual income from the land is minimal – sometimes less than

what it costs the federal government to process the payment.

Congress has attempted to fix this fragmented system through these strategies:

• Encourage land consolidation – the Land Buy-Back Program.

• Promote gift deed conveyances, wills, and estate planning – American Indian Probate

Reform Act.

• Relieve federal bureaucratic burdens on land use while returning control to tribes—the

HEARTH Act.

The Land Buy-Back Program for Tribal Nations. Established in 2014, this ambitious program

implements the land consolidation component of the Cobell Settlement, which provided $1.9

billion to purchase fractional interests in trust or restricted land from willing sellers at fair market

value. Consolidated interests are immediately restored to tribal trust ownership for uses benefiting

the reservation community and tribal members. As of September 2017, the program has purchased

more than two million acres from more than 700,000 fractional interests on almost 40,000 tracts at

45 locations.

The American Indian Probate Reform Act of 2004 created a nationwide Indian probate code and

changed the way trust estates are distributed to heirs. In effect, it replaced state law with a federal

probate code. The Act applies to all individually owned trust lands unless a tribe has its own probate

code. Its purpose is to:

• Limit fractionation.

• Encourage estate planning and

drafting wills.

Million

Acres of trust land throughout

Indian Country

• Maintain land in trust status.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

General probate rules:

• When the landowner dies, the BIA must “probate” the land in order to pass it to the owner’s heirs.

• With a will, the landowner may do almost anything with their land, except devise the land in

trust to a non-Indian unless they are lineal descendants.

• Without a will, the process of dividing the land to the owner’s heirs is complicated: The

surviving spouse gets a "life estate" and holds property until death, then it is inherited by

children, grandchildren, parents, or siblings.

Writing a will or using a gift deed to convey land is very important because:

• The owner has more control over the property and assets.

• Trust land retains trust or restricted status if it passes to eligible heirs.

• Fractionated ownership is reduced or eliminated.

• Land with consolidated ownership interests becomes more usable and economically

productive.

Several programs offer specialized resources and assistance for will writing and estate planning

for landowners of trust lands. For example, the Indian Land Tenure Foundation provides extensive

information and forms for managing the probate process.

The HEARTH Act of 2012

Leases of trust lands play an important role in tribal housing development since trust lands may not

be sold or encumbered. In Indian Country, mortgage financing typically is secured by a leasehold

interest. Delays in approving individual leases cause a great deal of frustration to homebuyers and

lenders alike.

In 2012, in a major shift of authority over tribal lands, Congress amended the Long-Term

Leasing Act through the Helping Expedite and Advance Responsible Tribal Homeownership Act

(commonly referred to as the HEARTH Act). The HEARTH Act amendments provide authority

for Indian tribes to lease tribal trust lands directly pursuant to tribal law, without further Secretarial

approval. This enables tribes to exercise more decision-making authority over land use decisions

and engage more efficiently in larger scale homeownership and business development.

The passage of the HEARTH Act amendments was nationally lauded by tribal leaders and tribal

organizations as a valuable tool that would:

• Empower tribes to realize their potential for economic growth and job creation on tribal lands;

• Increase community development; and

• Strengthen tribal self-determination.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

The HEARTH Act amendments establish an alternative land leasing process for tribes to

negotiate and enter into leases with minimal involvement from the BIA.

• Tribes that adopt their own tribal leasing regulations approved by the Secretary of the Interior

no longer need BIA approval to issue leases.

• Tribal lease regulations may provide for the lease of lands for residential purposes for up to 75

years.

• Where the federal government has undertaken an environmental review process in

connection with a federally funded activity, the tribe can rely on that federal environmental

review.

• Tribes issuing leases under approved tribal leasing regulations are required to provide the BIA

with copies of the leases issued.

This means that tribes can avoid having to obtain BIA approval for each lease on a transactionby-transaction basis. More tribal authority over leasing reinforces sovereignty and self-governance,

and further enhances the tribes’ ability to develop their lands more efficiently.

Implementing the HEARTH Act – Deference to Tribal Land Use Decision-Making

Amendments to the Part 162 Leasing Regulations

The BIA implements the HEARTH Act through amendments to the long-term leasing regulations

in 25 Code of Federal Regulations Part 162, with new subparts particularly for business and

residential leases. These regulations reflect stronger deference to tribes for decisions related to the

leasing of tribal trust and restricted lands, such as:

• Mandatory approval of leases, amendments, subleases, assignments, and leasehold mortgages,

unless the BIA identifies a “compelling reason” for nonapproval.

• Elimination of insurance and bonding requirements.

• Deference to a tribe’s negotiated valuation.

Advantages to using tribal leasing regulations:

• Speeds up the process for approval of homeownership documents such as leases, leasehold

mortgages, and promissory notes.

• Builds a readily accessible local recording system of tribal homeownership documents and

normalizes the recording process.

• Allows tribal housing developers to more efficiently plan larger-scale housing projects.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

• Creates more certainty to the homebuyer and lender around interest rates and closing time

frames, and allows potential homebuyers to “lock” in a rate with a lender.

Despite the substantial benefits of the HEARTH Act, coupled with the BIA leasing regulations,

to date very few tribes have taken advantage of the opportunity to use these tools by promulgating

tribal leasing ordinances that take advantage of HEARTH Act authority. While securing lease

approval authority under the HEARTH Act does not provide a cure-all for tribal leasing concerns,

it can be an excellent start.

Securing a Leasehold Interest in Tribal Trust Land

Leases of trust lands play an important role in tribal housing development since trust lands may not

be sold or encumbered. In Indian Country, mortgage financing typically is secured by a leasehold

interest in the land on which the home will be located. Delays in approving individual leases cause a

great deal of frustration to homebuyers and lenders alike.

Leasehold Interest

A long-term lease of tribal trust land issued by a tribe to a tribal member for homeownership

or residential purposes (homesite lease) is different from a lease of a dwelling. The lessor is

often the tribe. The goal of a lease is to give the tribal member an interest in the land resembling

homeownership, so the lease term typically is 50 years. Now the HEARTH Act permits residential

leases up to 75 years. These longer term leases also make the mortgages eligible for purchase in

the secondary mortgage market (25-year term leases do not correspond to the requisite 30-year

mortgages). The residential lease essentially creates a private property interest in Indian Country.

Tribal leasing and lending laws are important to defining ownership rights and responsibilities.

These laws must balance the individual’s expectations as a landowner with the tribe’s need to maintain

its lands as a steward of tribal resources and development.

Model Lease for Homeownership

A popular model lease form used by tribes and recognized across the federal government was the

HUD “One-Stop” lease for homeownership on tribal trust lands. The One-Stop lease was drafted

in the 1990s to collectively accommodate the HUD Section 184 program, the USDA RD 502

programs, and the VA lending program. That model lease sets out generally agreed upon terms for

using trust and restricted land as collateral for mortgage lending.

Today, tribes that enact tribal leasing laws demonstrate the tribe’s commitment to creating

meaningful ownership rights for its citizens while maintaining tribal authority over trust lands and

public safety. Importantly, these tribal laws inform both the homebuyer and lender who invest in a

home on trust land under a long-term lease about the rules and process to enforce their respective

rights and responsibilities.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Tribal leasing laws should address these key issues:

• Eligibility for a residential lease.

• The application process, including the environmental review process.

• Circumstances under which mortgages will be permitted without further approval by the

tribe, such as mortgages for home purchase, construction, or improvements.

• Maximum lease terms of up to 75 years are permitted under the HEARTH Act.

• Standard requirements (no illegal use of the premises, use only for principal residence).

• Ownership of improvements.

• The lessee’s right to transfer the leasehold (usually limited to tribal members).

• Upon death, the right of the lessee’s heirs to inherit the leasehold for the remainder of its term,

either under a will, intestate succession, or a special beneficiary designation outside of probate

(usually limited to tribal members).

• The right of a nonmember to occupy the premises pursuant to a court order upon a divorce

decree issued by tribal or state court.

• Dispute resolution procedures, presumably in tribal court where one exists.

Securing a Residential Lease

Every tribe has its own unique process for securing a residential lease of its tribal lands. This process

usually involves a set of core actors: the tribal housing program, the tribal council, and the BIA.

Here are the typical steps in this process.

Almost everything in Indian Country

relates to the status of the land.

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

Tribal Leasehold Approval Process Flowchart

START

Homebuyer identifies a home site

and submits completed application BIA

BIA verifies legal description of the site

TRIBAL LAND

ALLOTTED LAND

BIA notifies Tribal Council

of application

Homebuyer obtains majority consent

of land owners (with BIA assistance)

and rent waiver

Tribal Council grants consent of

home site by resolution

If rent not waived, BIA obtains rental value

from Office of Appraisal Services

BIA conducts NEPA review and cultural

resources inventory

BIA ensures homebuyer has permitted access to site

BIA prepares lease contract; landowner(s)

and homebuyer sign contract

BIA notifies homebuyer of landowner consent

and completes lease package

Superintendent approves lease contract

BIA forwards contract to LRTO for recording

BIA mails recorded contract and IHS service

application to homebuyer

BIA assists homebuyer with all required

utility service line agreements

Homebuyer makes site improvements

(home with electrical, water, and sewer)

END

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

CASE STUDY

HEARTH ACT Implementation

Ho-Chunk Nation Reality Division, Black River Falls, Wisconsin

he recently established (2016) Ho-Chunk Realty Division

provides land, leasing, title, and realty services within

the boundaries of the Ho-Chunk reservation, comprised of

15,037 acres, with approximately 6,633 acres in tribal trust

land status.

ORGANIZATION

Ho-Chunk Nation

Realty Division

CASE STUDY TOPIC & FOCUS

HEARTH Act Implementation

SERVICE AREA

All Ho-Chunk Tribal Lands:

15,017 acres/6633 trust land

acres

NUMBER OF TRIBAL CITIZENS

7,663 (10/31/17)

NUMBER OF EMPLOYEES

Realty Division - 6 Staff,

including one staff dedicated

to HEARTH Act leasing.

The Ho-Chunk Realty Division reports directly to the

Department of Administration under the Office of the

President. Ho-Chunk Realty is supported by six staff:

Director; Register of Deeds; Leasing Specialist; Lands

Specialist; GIS Coordinator and a GIS Specialist, including

one staff dedicated to HEARTH Act leasing.

Project description

The Ho-Chunk Nation has assumed responsibility

for leasing activities on its tribal lands through the

implementation of the HEARTH Act. The HEARTH Act

acronym stands for (H)elping (E)xpedite and (A)dvance (R)

esponsible (T)ribal (H)omeownership Act.

Signed into law in 2012 (PL 112-151), the HEARTH Act

encourages tribes to assume self-governance over

leases on tribal trust and restricted lands without the

intermediary steps of seeking review by the Bureau of

Indian Affairs (BIA) or the approval by the Secretary of the

Department of the Interior. To exercise this authority, tribes

must first approve leasing regulations and submit them for

approval to the BIA Central Office.

Tribal leasing regulations require: (1) consistency with

the BIA’s current regulations and (2) an environmental

review process. This process includes the identification

TRIBAL LEADERS HANDBOOK ON HOMEOWNERSHIP

and evaluation of significant effects of the proposed

lease on the environment, along with notice to the public

and an opportunity to comment on the impact of the

proposed lease prior to tribal approval.

A multitiered final approval process includes review

by the BIA Division of Real Estate Services and the Office

of the Solicitor, with final approval from the Assistant

Secretary of Indian Affairs and the Secretary of the

Department of the Interior.

“That’s sovereignty - that’s what

we work for. We have dramatically

increased our ability to exercise our

sovereignty on our own lands.”

—Ho-Chunk President Jon Greendeer

Beginning in 2012, the Ho-Chunk Nation recognized

two significant benefits in the HEARTH Act:

• The Act’s central policy objectives are to support tribal self-determination and sovereignty.

Ho-Chunk Nation leadership believes that the nation is in the best position to make decisions

about how its lands are used and for what period of time.

• Tribal leadership also believes that affording tribal citizens the opportunity to lease lands for

residential, agricultural, and business purposes is in the nation’s best interests – and to do so in

an expedited manner rather than waiting as long as a year or more for lease approval from BIA.

The Ho-Chunk Nation submitted its proposed leasing regulations to the Department of the Interior

in late 2014, opting for all of the flexibility afforded under the Act to administer leasing for all land

purposes – residential, business, and agricultural. In February 2015, the Assistant Secretary of Indian

Affairs issued final approval to all of the nation’s leas

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.