Native American Housing

In 1996, private lenders provided $785 billion to help families and individuals buy homes in the United States. Most of this money came from private lending institutions. However, for the 1.2 million Native Americans living on trust lands, private institutions have rarely supplied conventional home purchase loans. As a result, government assistance is almost always needed to provide homeownership opportunities for these Native Americans. In response to congressional interest in expanding homeownership opportunities for Native Americans on trust lands through private conventional lending, this report answers the following questions: How many conventional home purchase loans have private lenders made to Native Americans on trust lands? What are the major barriers to conventional home purchase loans to Native Americans on trust lands? What efforts are under way to facilitate conventional home purchase lending to Native Americans on trust lands? Will implementation of the Native American Housing Assistance and Self-Determination Act of 1996 lead to more conventional home purchase loans being made to Native Americans on trust lands. GAO also discusses whether the Bureau of Indian Affairs' backlog of requests for certifying documents affecting the legal status of trust lands has been a deterrent to conventional home purchase loans to Native Americans.

GAO noted that: (1) few Native Americans have purchased homes on trust lands by using private, conventional financing; (2) during the 5-year period of calendar year 1992 through 1996, lenders made only 91 conventional home purchase loans to Native Americans on trust lands; (3) moreover, of the 91 such loans GAO identified, 80 were made to the members of two tribes--the Tulalips of Marysville, Washington, and the Oneida Tribe of Indians of Wisconsin; (4) making conventional home purchase loans on Native American trust lands involves overcoming long-standing barriers; (5) the most significant barriers are that lenders: (a) are uncertain about whether they can foreclose on Native American trust lands to recover their loan funds; (b) have difficulty understanding the implications of the different types of land ownership because of the complex status of Native American trust lands; (c) are unfamilar with the tribal courts in which litigation is conducted in the event of a foreclosure; and (d) are concerned about the absence of housing ordinances governing foreclosure in tribal communities; (6) some mortgage lenders, as well as public and private organizations, have initiated efforts to increase Native Americans' opportunities to finance homes on trust lands with conventional home purchase loans; (7) to make the 91 loans GAO identified, lenders created special programs emphasizing the development of housing ordinances and homeownership counseling services or used long-standing relationships with tribes and tribe members; (8) other broader public and private efforts begun recently, such as the Federal National Mortgage Association's lending initiatives for Native Americans, may have some potential for increasing the number of conventional home purchase loans on trust lands; (9) other efforts by the Federal Home Loan Bank System and the Office of the Comptroller of the Currency may have some potential for improving Native Americans' overall access to financing and capital, which may, among other things, encourage more conventional home purchase loans on trust lands; (10) the extent to which the Native American Housing Assistance and Self-Determination Act of 1996 will increase conventional home purchase lending for Native Americans on trust lands is uncertain; (11) this act, which became effective on October 1, 1997, contains provisions that allow tribes to leverage housing block grant funds and extend land lease terms from 25 to 50 years; and (12) however, whether tribes can or will use leveraged funds to encourage conventional home purchase lending is uncertain, and many tribes' land lease terms have already exceeded 25 years.