Native American Housing
VA Could Address Some Barriers to Participation in Direct Loan Program Gao ID: GAO-02-654 August 23, 2002Several federal programs have been developed to provide homeownership opportunities for Native Americans because private institutions have rarely supplied conventional home loans to Native Americans on trust lands. In 1992, Congress directed the Department of Veterans Affairs (VA) to create the Native American Veterans Direct Home Loan Program to assist veterans in purchasing, constructing and improving homes. The Native American Veterans Direct Home Loan Program has been characterized by differences in the numbers served, with native Hawaiians and Pacific Islanders together receiving almost five times as many as loans as Native Americans. Several factors that apply to Native Americans, but not to native Hawaiians and Pacific Islanders, may explain this difference. Long-standing barriers to lending on Native American trust lands include insufficient income and credit history, a lack of meaningful interest in land among many Native Americans, and insufficient infrastructure on trust lands. Other factors that VA can address include program limits that may be lower than housing costs for some trust lands and potential applicants' inexperience with the mortgage lending process. VA has conducted outreach but has taken limited steps to meet the assessment and reporting requirements specified in the program's authorizing legislation. VA attends housing conferences, distributes promotional materials, and responds to inquiries about the program to meet outreach requirements specified in its authorizing legislation.
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Director: Team: Phone:GAO-02-654, Native American Housing: VA Could Address Some Barriers to Participation in Direct Loan Program
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Report to Congressional Requesters:
United States General Accounting Office:
GAO:
August 2002:
Native American Housing:
VA Could Address Some Barriers to Participation in Direct Loan Program:
Native American Housing:
GAO-02-654:
Contents:
Letter:
Results in Brief:
Background:
Several Factors May Explain Disparity in Number of Loans Made to
Different Groups:
VA Has Conducted Various Outreach Activities but Has Taken Limited
Steps to Meet Assessment and Reporting Requirements:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Scope and Methodology:
Appendix I: Other Federal Homeownership Programs for
Native Americans on Trust Lands:
Appendix II: Comments from the Department of Veterans
Affairs:
Appendix III: Contacts and Staff Acknowledgments:
GAO Contacts:
Acknowledgments:
Related GAO Products:
Table:
Table 1: Homeownership Assistance Programs for Native Americans on
Trust Lands, in 2002:
Figures:
Figure 1: VA‘s Nine Regional Loan Centers and the States They Serve:
Figure 2: Number of Loans Made by VA through Its Native American
Veterans Direct Home Loan Program to Native American, Native Hawaiian,
and Pacific Islander Veterans (Calendar years 1994-2001):
Abbreviations:
FHA: Federal Housing Administration
HUD: Department of Housing and Urban Development
VA: Department of Veterans Affairs:
August 23, 2002:
The Honorable John D. Rockefeller IV
Chairman, Committee on Veterans‘ Affairs
United States Senate:
The Honorable Daniel K. Akaka
United States Senate:
The homeownership rate among Native Americans[Footnote 1] is one of the
lowest in the United States. While over 67 percent of Americans own
their homes, fewer than 33 percent of Native Americans own homes. For
Native Americans living on trust lands--lands held by the federal
government for the benefit of Native Americans--homeownership
opportunities are more limited, because lenders typically require that
buyers own the land on which their homes will be located.
Because private institutions have rarely supplied conventional home
loans to Native Americans on trust lands, several federal programs have
been developed to provide homeownership opportunities for Native
Americans.[Footnote 2] For example, in 1992, the Congress directed the
Department of Veterans Affairs (VA) to create the Native American
Veterans Direct Home Loan Program to assist veterans in purchasing,
constructing, and improving homes. The program has a specific focus; it
is intended to serve veterans living on trust or equivalent
lands[Footnote 3] on the mainland and in Hawaii and the Pacific. To
obtain loans under this program, veterans must meet income, credit, and
other requirements; and VA must have memorandums of understanding
covering foreclosure and other issues with tribes or other entities
that have jurisdiction over the lands involved. The Congress
reauthorized the program in 1997 and 2001 and is considering making the
program permanent when it is up for reauthorization again in 2005.
To inform the Congress as it considers making this program permanent,
you requested that we analyze which veterans the program has served and
assess VA‘s response to requirements specified in the program‘s
authorizing legislation. Specifically, you asked us to determine:
* if a disparity exists in participation in the program between Native
American veterans and Native Hawaiian and Pacific Islander veterans and
the reasons for any disparity; and:
* what actions VA has taken to meet outreach, assessment, and reporting
requirements specified in the direct loan program‘s authorizing
legislation.
:
To determine if there was a disparity in participation, we analyzed
data from VA, the Census Bureau, and the Bureau of Indian Affairs. We
also interviewed VA program officials in Washington, D.C., and in the
four VA offices responsible for about 96 percent of all loans made
under this program. To determine the steps that VA took to meet program
requirements, we reviewed VA‘s annual reports to the Congress; Census
data and data obtained by VA, at our request, from its nine regional
loan centers; and interviewed officials of selected federal agencies,
Indian tribes, and interest groups.
In April 2002, we briefed your office on our key findings. As you
requested at our briefing, we are also providing information on other
federal programs that provide homeownership assistance to Native
Americans. We did not analyze this information to determine if these
other programs affected participation in VA‘s direct loan program. See
appendix I for additional information.
Results in Brief:
The Native American Veterans Direct Home Loan Program has been
characterized by differences in the numbers served, with Native
Hawaiians and Pacific Islanders together receiving almost five times as
many loans as Native Americans since the program was enacted. Several
factors that apply to Native Americans, but not to Native Hawaiians and
Pacific Islanders, may explain this difference--some that VA cannot
address and others that VA can address. The former involve long-
standing barriers to lending on Native American trust lands, such as
insufficient income and credit history and lack of meaningful interest
in land among many Native Americans, as well as insufficient
infrastructure on trust lands. Other factors that VA can address
include program loan limits that may be lower than housing costs for
some trust lands and potential applicants inexperience with the
mortgage lending process. Although some barriers to lending will
remain, we are recommending that VA seek to increase Native American
participation in the program by addressing those barriers it can
change.
VA has conducted outreach but has taken limited steps to meet the
assessment and reporting requirements specified in the program‘s
authorizing legislation. VA attends housing conferences, distributes
promotional materials, and responds to inquiries about the program to
meet outreach requirements specified in its authorizing legislation.
The legislation also requires VA to assess its outreach efforts and
identify the pool of veterans eligible for the program in annual
reports to the Congress. VA has reported that it has made extensive
outreach efforts but has not provided an assessment of the
effectiveness of its outreach activities. VA has reported the number of
Native American and Pacific Islander veterans who identified themselves
as such in the 1990 census but has not identified how many of these
individuals would be eligible for the program. VA plans to utilize the
more detailed 2000 census data to develop a more accurate count of
eligible veterans. We are recommending that VA comply with requirements
to assess its outreach efforts.
VA‘s comments on a draft of this report are reprinted in appendix II.
VA concurred with our recommendations; and also provided technical
clarifications to the report, which we incorporated where appropriate.
Background:
Financing homes on trust lands presents unique difficulties. Because
individuals do not hold unrestricted title to these lands, they cannot
convey the title to lenders to secure financing. To help overcome these
difficulties and promote homeownership among Native American, Native
Hawaiian, and Pacific Islander veterans, the Congress established the
Native American Veterans Direct Home Loan Program in 1992.[Footnote 4]
Begun as a 5-year pilot, the program has been extended twice and is
currently authorized through 2005.
To support loans under the program, the Congress provided an
appropriation of $4.5 million in 1993 that continues to be available
for the lifetime of the program. This amount is sufficient to allow VA
to make more than $58 million in home loans, and $26 million had been
obligated for loans through February 2002.[Footnote 5] VA receives an
additional $0.5 million each year for administration and outreach
activities, including travel to meet with tribes and individuals on the
mainland and in the Pacific.
The program is intended to assist eligible veterans living on trust or
equivalent lands to obtain loans at market rates to purchase,
construct, or rehabilitate homes. On the mainland, most trust land is
located on or near reservations, with about 55 million acres held in
trust by the U.S. government for Indian tribes and individuals. In the
Pacific, communally owned lands in American Samoa, Guam, and the
Northern Marianas and 200,600 acres of Hawaiian homelands[Footnote 6]
are also covered by this program.
Under the program, individual loans are limited by law to the cost of
the home or $80,000, whichever is less. However, the law permits VA to
make exceptions to the loan limit if VA determines that the costs in an
area are significantly higher than average housing costs nationwide.
Loans are available only for single-family homes that the owner
occupies, not for multifamily dwellings, rentals, or investment
properties.
To be eligible for a loan under this program, veterans must meet
certain statutory requirements. Veterans must demonstrate that they
are:
* honorably released from active military duty or members of the
Selected Reserve, including the National Guard, and have served the
required length of time;
* creditworthy, that is, they are a satisfactory credit risk with
stable and sufficient income to meet mortgage payments;
* holders of a meaningful interest in the trust or equivalent land on
which their homes will be located that entitles them to use and occupy
the land; and:
* members of a federally recognized tribe or the equivalent[Footnote 7]
that has signed a memorandum of understanding with VA.
A meaningful interest in the land may take the form of a long-term
lease, allotment or other interest conveyed by the tribe or entity with
jurisdiction over the land. For example, this generally takes the form
of 99-year leases on Hawaiian homelands. The meaningful interest serves
as security for the loan and must be transferable in the event of
foreclosure. The tribe or other responsible entity must enter into a
memorandum of understanding with VA to cover standards and procedures
for foreclosure and related issues before any loans can be made under
this program to an eligible veteran of that tribe. Lands held in trust
for tribes are generally leased and at foreclosure, cannot be taken out
of trust status. Lands held in trust for individuals can be inherited
and can lose their trust status at foreclosure.
VA administers the program through nine regional loan centers and its
Honolulu Regional Office in Hawaii, shown on the map in figure 1 below.
The five regional loan centers in the East, however, have a limited
role in the program‘s operation, because many of the states they serve
have few or no federally recognized tribes.[Footnote 8] However, the
regional loan centers in Denver and St. Paul each serve eight states
with federally recognized tribes, and the center in Phoenix serves
three states with some of the largest concentrations of Native
Americans in the country. In addition, Denver oversees loan activities
conducted out of VA‘s Anchorage office in Alaska. The Honolulu Regional
Office administers the program in the South Pacific.
Figure 1: VA‘s Nine Regional Loan Centers and the States They Serve:
[See PDF for image]
Source: GAO map based on data provided by VA.
[End of figure]
Several Factors May Explain Disparity in Number of Loans Made to
Different Groups:
Native Hawaiian and Pacific Islander veterans have received more loans
than Native American veterans during the lifetime of the program, and
several factors may explain this difference.[Footnote 9] VA cannot
address some of these factors, such as applicants‘ income levels and
credit history, or their lack of a meaningful interest in the land; VA
also cannot address the availability of infrastructure on trust lands.
Other factors that VA can address are program-related, such as loan
limits and assistance with the mortgage process.
Number of Loans to Native Hawaiian Veterans and Pacific Islander
Veterans Is Almost Five Times That of Native American Veterans:
Four out of every five loans made under the program‘s auspices have
been provided to Native Hawaiian or Pacific Islander veterans. Of 227
total loans, 143 have been made to Native Hawaiians and 46 to Pacific
Islanders. Combined, the 189 loans made to these two groups greatly
exceed the 38 loans made to Native American veterans.[Footnote 10] The
year-by-year analysis in figure 2 indicates that the number of loans
made to Native Americans has been relatively constant. While the number
of loans for Native Hawaiians and Pacific Islanders combined has
varied, it has consistently exceeded the number of loans made to Native
Americans, averaging twice as many loans since 1998.
Figure 2: Number of Loans Made by VA through Its Native American
Veterans Direct Home Loan Program to Native American, Native Hawaiian,
and Pacific Islander Veterans (Calendar years 1994-2001):
[See PDF for image]
Source: GAO‘s analysis of VA loan data.
[End of figure]
In the first 5 years of the program, Native Hawaiians received most of
the loans. VA officials in the Honolulu office explained that the
number of loans made to Native Hawaiians peaked in 1995 and 1996
because the officials were able to grant 60 loans to veterans
purchasing homes in two housing subdivisions. VA officials said that
loans to Pacific Islanders rose in 1996 and 1997 because they made a
conscious decision to launch the program in stages--focusing initially
on the nearest and easiest to serve areas of Hawaii and later moving on
to promote the program in American Samoa, the Northern Marianas, and
Guam.[Footnote 11] Although the number of loans completed in Hawaii in
recent years has declined, VA officials anticipate an increase in the
future as other eligible veterans obtain leases on Hawaiian homelands.
Factors That VA Cannot Address May Contribute to Lower Participation of
Native American Veterans:
Among the factors that VA cannot address that may contribute to lower
participation of Native American veterans are low-income levels and
unacceptable credit histories of potential applicants. To implement the
statutory creditworthiness requirement, VA requires that an individual
have sufficient income to qualify for a program loan. Based on 1990
census data, Native Americans had an average annual income of $16,800
while the average annual income of Native Hawaiians was $26,600. VA
officials said that while they make every effort to assist applicants
in qualifying for a loan, insufficient income and unacceptable credit
history are still major barriers to loan approval for Native Americans
who are found not to be creditworthy. Specifically, 23 of the 39 Native
American loan applications in the St. Paul, Minnesota VA region were
denied because of applicants‘ insufficient income and unacceptable
credit history. The remaining 16 were denied because of problems with
land ownership. Officials at the Denver, Colorado, VA regional office
also said that insufficient income and unacceptable credit history were
the reasons for denying three of seven Native American veterans‘ loan
applications received in the region since the program‘s inception. VA‘s
Honolulu field office stated that while insufficient income and
unacceptable credit history have been a barrier for some veterans in
American Samoa, other Native Hawaiian and Pacific Islanders have less
difficulty meeting this eligibility requirement because of their higher
income.
Problems with establishing a meaningful interest in trust lands have
also precluded some Native American veterans from obtaining a mortgage
loan under this program. To obtain a mortgage loan, VA requires that
veterans have a meaningful interest in the trust land on which their
homes will be located. However, ownership of some Native American trust
land has become fractionated[Footnote 12] as the ownership interests
passed through several generations of multiple heirs, with an
increasing number of people owning smaller shares of land over time.
This land fractionation has increased at a rapid pace.[Footnote 13]
Under such circumstances, a loan applicant would need to obtain the
approval of everyone with shares in the land in order to mortgage it.
For example, one applicant for a VA mortgage loan in the St. Paul
region was unable to obtain a loan because he owned a 192nd interest in
the trust land where he wanted to locate his home. This veteran would
have had to obtain the approval of other co-owners to mortgage the
land. In addition, all four federally recognized tribes in Kansas
informed VA that they were not interested in participating in the VA
direct loan program because of the extent of fractionated land
interests within their reservation boundaries. In VA‘s St. Paul region,
12 of the 39 loans, which have been denied since the program‘s
inception, were denied because the applicant had a fractionated
interest in the land. This unique land ownership problem does not exist
on the Hawaiian homelands because the land is leased.
Another barrier for Native American veterans that VA cannot address is
the lack of infrastructure that is needed for housing development on
trust lands. The remoteness of some tribal lands has been an ongoing
problem for housing development on Native American trust
lands.[Footnote 14] In contrast to metropolitan areas, where basic
infrastructure systems (such as sewers, electricity, and water supply)
are already in place, building in remote trust lands requires the tribe
or homeowner to install infrastructure to support new housing, or self-
contained housing must be built. For example, much of the housing
constructed on Navajo and Sioux trust lands is scattered across remote
sites. A builder on Navajo lands told us that the cost to provide
infrastructure to remote home sites is often too expensive for the
tribe or homeowners and can cost over $20,000 per home. For Hawaiian
veterans, infrastructure costs do not present such a barrier. The state
of Hawaii, as part of its homeland development program, provides
eligible Native Hawaiians (veterans and nonveterans) with
infrastructure funding. For example, in a remote housing development
containing homes purchased by Native Hawaiian veterans with VA loans,
the Department of Hawaiian Homelands provided as much as $50,000 per
lot for sewer, water, and electrical services.
VA Can Address Some Factors That May Contribute to Lower Participation
of Native American Veterans:
One program-related factor that VA can address that may have affected
participation of Native American veterans is the $80,000 loan limit,
established by the Congress when it created the program in 1992. VA has
the authority to raise the loan limit for a geographic area if VA
determines that the average housing cost in the area is significantly
higher than the national average. Using this authority, VA officials
said that the loan limit was raised to $120,000 for Hawaii, the Pacific
Islands, and the state of Washington--and to $100,000 for one tribe in
New Mexico, to more closely approximate the housing costs in those
areas. However, VA has not attempted to determine if the maximum loan
limit should be raised for other Native American tribes. VA reported
that they have not initiated increases for other areas because neither
the VA regional loan centers nor the tribes have requested a change.
Officials at the Denver Regional Loan Center said that the $80,000 loan
limit may prevent some veterans from participating in this program. One
tribal housing specialist with the nation‘s largest tribe, the Navajo,
has directed veterans who wanted to purchase homes costing about
$100,000 to other loan programs because he was not aware that VA could
make exceptions to the $80,000 loan limit. In comparison, other federal
programs that provide homeownership assistance to Native Americans on
trust lands[Footnote 15] have loan limits between $144,000 and $278,000
(depending on the geographic region) and during 2001, guaranteed loans
averaging $102,000.
Finally, recent reports[Footnote 16] on mortgage lending concluded that
Native Americans could benefit from homebuyer counseling and education.
One report stated that Native Hawaiians could also benefit from
homebuyer counseling and education. These two groups were found to have
little experience with the mortgage lending process and the necessary
steps required to obtain a mortgage loan. To overcome this barrier, the
Director of VA‘s Honolulu field office said that local housing
authorities and other organizations in Hawaii and the Pacific Islands
provide mortgage counseling and homebuyer education that assist Native
Hawaiians and Pacific Islanders to negotiate the homebuying and
mortgage process. Officials at VA‘s Honolulu regional loan center said
they help ensure that veterans receive the services and assistance of
these organizations by actively communicating and partnering with them.
VA‘s mainland regional loan centers have not established similar
relationships with organizations to provide the same types of services
for Native American veterans.
For example, VA regional loan centers have not partnered with other
organizations that focus on mortgage lending on trust lands, such as
the One-Stop Mortgage Centers[Footnote 17] located on the Navajo
reservation in New Mexico and Arizona, and the Oglala Sioux reservation
in South Dakota. The centers are nonprofit organizations that
specialize in mortgage lending and credit counseling, guiding potential
Native American borrowers through the homebuying process, simplifying
procedures, and educating potential borrowers about the types of home
loans available on trust lands. We found that VA regional offices in
Phoenix and St. Paul have had little contact with these centers and
have not used them to identify, educate, and assist prospective
borrowers. For example, a One-Stop Mortgage Center official in Arizona
estimated that as many as 200 Navajo veterans who had visited the
center and expressed an interest in homeownership did not receive
complete information about the VA program because the One-Stop Mortgage
Center‘s staff was not familiar with it.
VA Has Conducted Various Outreach Activities but Has Taken Limited
Steps to Meet Assessment and Reporting Requirements:
VA has conducted outreach but has taken limited steps to meet
assessment and reporting requirements as specified in the program‘s
authorizing legislation. Outreach requirements specified in the
program‘s authorizing legislation state that VA, among other things, is
to attend housing conferences, and provide information to veterans,
tribal governments and organizations. VA has performed many of these
activities. Other program requirements state that VA should annually
assess and report to the Congress on the effectiveness of its outreach
activities and annually report on the pool of eligible Native American,
Native Hawaiian, and Pacific Islander veterans. VA has reported that it
has undertaken extensive outreach activities but has not reported on
how effective its outreach has been. VA‘s annual report has included
information on how many Native American and Pacific Islander veterans
identified themselves as such on the 1990 census but has not indicated
the number of these individuals who would meet the program‘s
eligibility requirements. However, VA said it will use new data
available from the 2000 census to provide a more accurate count.
VA Has Conducted Various Outreach Activities:
The direct loan program‘s authorizing legislation states that VA must,
among other things, attend housing conferences and conventions; and
produce and disseminate information to tribal governments, tribal
veterans service organizations, and tribal organizations regarding the
availability of such benefits. VA‘s regional loan center staff have
attended and made presentations at housing conferences sponsored by the
Department of Housing and Urban Development‘s Office of Native American
Programs, the Department of Hawaiian Homelands, other Native American
housing organizations, and Native American veterans forums. For
example, the Phoenix regional loan center made a presentation on the
direct loan program at the National Native American Veterans Symposium
in February 2001.
In addition, VA produced a video called ’Coming Home: Native American
Veteran Home Loans“ that has been distributed to tribal officials and
organizations. This video shows Native American veterans and tribal
officials how the direct loan program may be used to help them achieve
their homeownership goals. VA has also distributed information
pamphlets and applications to interested veterans and organizations.
VA‘s regional loan center staff has also traveled to tribal trust lands
to meet and talk with tribal representatives and veteran liaison
representatives to solicit their assistance in reaching tribal members
who are veterans. For example, the Phoenix and St. Paul regional loan
centers sent representatives to talk to tribes in those areas about the
program.
Furthermore, the Honolulu field office has expanded on these outreach
activities to promote the program to Native Hawaiian veterans.
Officials at the Honolulu office said they use local media, including
radio, television, and newspaper to promote the program. In addition,
officials said they use local housing organizations to inform veterans
of the program.
VA Has Taken Limited Steps to Meet Assessment and Reporting
Requirements:
The program‘s authorizing legislation requires, among other things,
that VA assess the effectiveness of outreach efforts it undertakes in
connection with the direct loan program and report this assessment to
the Congress annually. In its reports, VA states that the low level of
program participation is not due to a lack of outreach on its part.
However, program officials said that VA has not assessed the
effectiveness of its outreach efforts. VA notified us that it plans to
evaluate the Native American Veterans Direct Home Loan program as part
of a larger study that it expects to complete in 2003, but an
assessment of outreach effectiveness is not part of the planned work.
The program‘s authorizing legislation directs VA to report annually on
the pool of eligible veterans. To meet this requirement, VA reported
that about 436,000 individuals had identified themselves as Native
American and Pacific Islander veterans in the 1990 census. VA also
acknowledged that the number of veterans obtained from census data did
not wholly correlate to eligible veterans because the tally included
veterans who were living in cities and who may not have been members of
tribes--thus, included were some veterans not eligible for leases or
ownership of trust lands. Also, VA officials stated that they could not
definitively quantify the pool of veterans who might be eligible for
the program because they are dependent on veterans volunteering to
identify their race and ethnicity.
We analyzed the 1990 census data, however, and were able to distinguish
Native American veterans who were living in tribal areas with trust
lands from those living elsewhere. Our analysis revealed that there
were approximately 18,000 veterans living on trust lands associated
with about 50 federally recognized tribes. Although, it is likely that
there are eligible veterans associated with the remaining federally
recognized tribes, the data were not readily available.
Further identification of eligible veterans might be possible with an
examination of 2000 census data. Population data for Native Hawaiians
who live on their equivalent of trust lands--Hawaiian homelands--were
not collected in the 1990 census but were collected in the 2000 census.
The more recent census will also identify Native American veterans
living on trust lands associated with nearly 90 federally recognized
tribes. VA program officials said they have asked VA‘s Office of Policy
and Planning to analyze the 2000 census data and will use the data to
provide a more current, accurate count of veterans eligible for the
program. This analysis could allow VA to report to the Congress a more
accurate count of the eligible pool of program participants.
Conclusions:
Although the program is designed to help Native American, Native
Hawaiian, and Pacific Islander veterans living on trust lands achieve
homeownership, our review suggests that certain elements of the program
may be barriers to participation for Native Americans. Some of these
barriers are difficult to overcome; for example, problems with
establishing meaningful interest in trust lands. But, VA can address
some of the other barriers. For example, the program loan limit of
$80,000 may be limiting the usefulness of the program to Native
American veterans on some trust lands. By not partnering with other
organizations, VA may be missing opportunities to get Native American
veterans into the program and to guide them through the mortgage
process to buy a home. Furthermore, by not assessing its outreach
efforts, VA cannot be certain that it is effectively reaching the
population that the program was designed to serve. While VA has not
completely met requirements for reporting on the pool of eligible
veterans, we are not making a recommendation because VA plans to use
the 2000 census data to provide a more accurate count of eligible
veterans. Changes to VA‘s loan program might improve the program‘s
contribution to the federal effort to increase opportunities for Native
American homeownership on trust lands.
Recommendations for Executive Action:
To increase opportunities for participation for all Native American,
Native Hawaiian, and Pacific Islander veterans, we recommend that the
Secretary of Veterans Affairs:
* Direct regional loan centers to obtain local housing cost data for
trust lands to determine the need for exceptions to the current loan
limit. Additional exceptions should be granted if the data support such
increases.
* Explore partnerships with local housing organizations, such as One-
Stop Mortgage Centers, that assist and support Native Americans on
trust lands with the mortgage lending process.
* Assess program outreach efforts to Native American, Native Hawaiian,
and Pacific Islander veterans and report on this assessment to the
Congress, as the program‘s authorizing legislation directs.
Agency Comments:
We provided a draft of this report to VA for its review and comment. We
received written comments on the draft report (see app. II). VA agreed
that it could do more in delivering its benefits, and concurred with
our recommendations. In addition, VA provided technical clarifications
to the report, which we have incorporated into this report where
appropriate.
As part of its comments, VA suggested that we use statistical data from
its National Survey of Veterans 2000 on veteran homeownership and
income, rather than the general population. VA did not provide a copy
of this unpublished survey, and we were unable to verify these data to
determine their validity. Therefore, we did not include them in this
report.
Scope and Methodology:
To address the issues discussed in this report, we reviewed the
statute, regulations, annual reports, and informational materials on
VA‘s Native American Veterans Direct Home Loan program as well as our
other work and related studies of Native American trust land issues. We
also interviewed numerous officials in Washington, D.C., and elsewhere
with responsibilities for the program or knowledge of Indian housing
issues. To gain a fuller perspective on Native American housing and
trust land issues, we interviewed HUD officials, who administer block
grant and home-loan programs for Native Americans. We also interviewed
an official at the Bureau of Indian Affairs, who is familiar with
Native American tribes and trust land issues. We gained some
perspective on the views of Native American veterans by interviewing
officials from the National Congress of American Indians, the National
American Indian Housing Council, and the Center for Minority Veterans
as well as representatives of the Navajo Tribe and the Oglala Sioux
Tribe. We selected these tribes because they are among the largest in
the nation, have completed memorandums of understanding with VA, and
are served by the two VA regional loan centers we visited.
To determine if there was a disparity in program participation, we used
VA data to calculate the number of loans made to Native Americans on
the mainland by each regional loan center in every year since 1992 and
compared the results with the number of loans made to Native Hawaiians
and Pacific Islanders during the same period. To identify the factors
contributing to the disparity, we interviewed program officials at VA
headquarters in Washington D.C., and at four VA centers: Honolulu,
Denver, St. Paul, and Phoenix. We selected these four centers because
they are responsible for about 96 percent of all loans made under the
program since its inception. During site visits to the St. Paul and
Phoenix centers, we reviewed case files to determine the reasons that
loan applications had been rejected and describe contacts with veterans
and tribes. To see how income and other program requirements may affect
eligibility for the program, we reviewed available census data on
Native Americans‘ incomes, poverty levels, veteran status, and
residency on or near reservations. We also interviewed an official at
the One-Stop Mortgage Center in Window Rock, Arizona, to discuss the
significance of providing assistance with the mortgage process.
To determine the steps VA has taken to meet outreach, assessment, and
reporting requirements, we reviewed data provided at our request from
all nine VA regional loan centers. This data provided information on VA
program staffing, loan activity, and outreach efforts. We assessed the
availability of information that VA could use to better identify the
pool of eligible veterans by reviewing Census Bureau statistical
reports and by interviewing officials concerning the availability of
2000 census data on Native Hawaiians and on Native Americans residing
on trust lands. We conducted our work from November 2001 through May
2002 in accordance with generally accepted government auditing
standards. We checked data that we obtained from federal agencies for
internal consistency, but we did not independently verify the data.
As arranged with your offices, we will also send copies of this report
to the Secretary, Department of Veterans Affairs; the Ranking Minority
Member of the Committee on Veterans‘ Affairs, U.S. Senate; and the
Committee on Veterans‘ Affairs, U.S. House of Representatives. We will
make copies available to others on request. In addition, this report is
also available on GAO‘s Web site for no charge at http://www.gao.gov.
If you or your staff have any questions about this report, please call
me at (202) 512-2834. Key contacts and major contributors to this
report are listed in appendix III.
Stanley J. Czerwinski
Director, Physical Infrastructure Issues:
Signed by Stanley J. Czerwinski:
[End of section]
Appendix I: Other Federal Homeownership Programs for Native Americans
on
Trust Lands:
In addition to VA‘s Native American Veterans Direct Home Loan program,
four other federal programs provide homeownership assistance to Native
American individuals or tribes on trust lands on the mainland. The
Department of Housing and Urban Development (HUD) administers two
programs,[Footnote 18] and the Department of Agriculture administers
two programs through its Rural Housing Service. Key aspects of each of
these programs are shown in table 2.
Table 1: Homeownership Assistance Programs for Native Americans on
Trust Lands, in 2002:
[See PDF for image]
[A] Section 184 of the Housing and Community Development Act of 1992;
12 U.S.C. 1715 z-13a.
[B] Section 248 of National Housing Act, as amended; 12 U.S.C. 1715 z-
13.
[C] Section 502 of Housing Act of 1949, as amended; 42 U.S.C. 1472 (h).
[D] Section 502 of Housing Act of 1949, as amended; 42 U.S.C. 1472.
[E] The Federal Housing Administration (FHA) loan limits are $144,000 -
$278,000 or $262,000-$503,000 in high cost areas.
Sources: GAO analysis of HUD and Rural Housing Service data.
[End of table]
[End of section]
Appendix II: Comments from the Department of Veterans Affairs:
THE SECRETARY OF VETERANS AFFAIRS WASHINGTON:
July 12, 2002:
Mr. Stanley J. Czerwinski:
Director, Physical Infrastructure Issues U. S. General Accounting
Office:
441 G Street, NW Washington, DC 20548:
Dear Mr. Czerwinski:
This is in response to your draft report, NATIVE AMERICAN HOUSING: VA
Could Address Some Barriers to Participation In Direct Loan Program
(GAO-02-654). The Department of Veterans Affairs (VA) is strongly
committed to providing its benefits to all eligible veterans including
Native Americans. Given the focus of your report, VA believes it is
more meaningful for the General Accounting Office (GAO) to use
homeownership data for veterans rather than the American population in
general. Homeownership rates for veterans are considerably higher than
for the general population. According to National Survey of Veterans
(NSV) 2000, 78 percent of veterans own their own home. Furthermore, 64
percent of Native American Veterans own their own homes. These
statistics illustrate the success of VA‘s home loan program benefits.
VA agrees it can do more in delivering its benefits, and concurs with
your recommendations. The Department will continue working to obtain
local housing cost data for trust lands to determine the need for
exceptions to the current loan limit. VA will also explore partnerships
with local housing organizations and assess its program outreach
efforts based upon new data from the 2000 census.
The enclosure provides action plans to implement GAO‘s recommendations.
Sincerely yours,
Anthony J. Principi:
Signed by Anthony J. Principi:
Enclosure:
DEPARTMENT OF VETERANS AFFAIRS COMMENTS TO GAO DRAFT REPORT, NATIVE
AMERICAN HOUSING: VA Could Address Some Barriers to Participation In
Direct Loan Program (GAO-02-654):
To increase opportunities for participation for all Native American,
Native Hawaiian, and Pacific Islander veterans, GAO recommends that I:
* Direct regional loan centers to obtain local housing cost data for
trust lands to determine the need for exceptions to the current loan
limit. Additional exceptions should be granted if the data support such
increases.
Concur - The authorizing statute (38 U.S.C. §3762(c)) established that
the principal amount of any direct housing loan made to a Native
American under this program may not exceed $80,000. This statute also
provided an exception to this limit. Pursuant to 38 U.S.C.
§3762(c)(1)(B), the Secretary may make loans exceeding $80,000 in a
geographic area if the Secretary determines that housing costs in the
area are significantly higher than average housing costs nationwide.
There is no statutory cap on the amount of any increase the Secretary
might determine is appropriate.
Since this program‘s inception, VA has increased the statutory limit
for loans made under this program every time a request has been made.
In addition, in at least three cases, increased loan limits were
established when VA field office personnel determined that the existing
loan limit was insufficient, without a request from a tribal government
or individual. Shortly after the Native American Direct Housing Loan
Program started, the Veterans Benefits Administration‘s (VBA) Loan
Guaranty Service determined that requests would be granted when and
wherever supportable by local data and for all land subject to a
particular Memorandum of Understanding (MOU), instead of on a loan-by-
loan basis. To date, loan limits have been increased under 11 MOUs, as
follows:
Loan Limit; $120,000; Tribal Government; Samoa; Guam *; Hawaiian
Homelands;
Northern Marianas; Loan Type: All.
Loan Limit; $120,000; Tribal Government; All Federal Trust Land in
Washington
State (6 tribes currently participating from Washington State); Loan
Type:
Stick-builthomes.
Loan Limit; $100,000; Tribal Government; Picuris Pueblo; Loan Type:
All.
Loan Limit; $90,000; Tribal Government; All Federal Trust Land in
Washington State
(6 tribes currently participating from Washington State) *; Loan Type:
Double-wide manufactured homes.
[End of table]
* Limits increased by VA based on its own findings of housing costs.
The tribal governments submitted no requests.
VBA has been pro-active in implementing this program and in working
with tribes to establish appropriate loan limits. At the same time, VA
recognizes that other Federal loan programs available to Native
Americans and Pacific Islanders have higher loan limits. VA will
continue working to obtain local housing cost data for trust lands to
determine the need for exceptions to the current loan limit. VA will
also continue to grant exceptions if the data support such increases.
*Explore partnerships with local housing organizations, such as One-
Stop Mortgage Centers, that assist and support Native Americans on
trust lands with the mortgage lending process.
Concur - VA has and will continue to explore partnerships with local
housing organizations, such as the One-Stop Mortgage Centers, that
assist and support Native Americans on trust lands with the mortgage
lending process.
*Assess program outreach efforts to Native American, Native Hawaiian,
and Pacific Islander veterans and report on this assessment to the
Congress, as the program‘s authorizing legislation directs.
Concur - VA‘s ability to assess program outreach has been subject to
limitations on information regarding the location of potentially
eligible veterans. The data available to VA in recent years has been
dated and of limited use. As VBA officials discussed with GAO staff, VA
plans to use the 2000 census data to provide a more accurate count of
eligible veterans. This should help VBA assess program outreach in the
future.
[End of section]
Appendix III: Contacts and Staff Acknowledgments:
GAO Contacts:
Carol Anderson-Guthrie, (214) 777-5600:
Acknowledgments:
Dwayne Curry, Shelia Drake, Patricia Elston, Colin Fallon, John
McGrail, Michael Mgebroff, and William Sparling made key contributions
to this report.
[End of section]
Related GAO Products:
Welfare Reform: Tribes Are Using TANF Flexibility To Establish Their
Own Programs. GAO-02-768. Washington, D.C.: July 5, 2002.
Economic Development: Federal Assistance Programs for American Indians
and Alaska Natives. GAO-02-193. Washington, D.C.: December 21, 2001.
Indian Issues: Improvements Needed in Tribal Recognition Process. GAO-
02-49. Washington, D.C.: November 2, 2001.
Rural Housing: Options for Optimizing the Federal Role in Rural Housing
Development. GAO/RCED-00-241. Washington, D.C.: September 15, 2000.
Native American Housing: Information on HUD‘s Funding of Indian Housing
Programs. GAO/RCED-99-16. Washington, D.C.: November 30, 1998.
Native American Housing: Homeownership Opportunities on Trust Lands Are
Limited. GAO/RCED-98-49. Washington, D.C.: February 24, 1998.
Hawaiian Homelands: Hawaii‘s Efforts to Address Land Use Issues. GAO/
RCED-94-24. Washington, D.C.: May 26, 1994.
Veterans‘ Benefits: Availability of Benefits in American Samoa. GAO/
HRD-93-16. Washington, D.C.: November 18, 1992.
Indian Programs: Profile of Land Ownership at 12 Reservations. GAO/
RCED-92-96BR. Washington, D.C.: February 10, 1992.
[End of section]
FOOTNOTES:
[1] As defined in P.L. 102-547, Native American means an Indian, a
Native Hawaiian, an Alaska Native or a Pacific Islander. In this
report, except when referring to the title of the program, we use the
term Native American more narrowly to refer to Indians and Alaska
Natives, as distinguished from Native Hawaiians and Pacific Islanders.
[2] See app. I for additional programs serving this purpose and Native
American Housing: Homeownership Opportunities on Trust Lands Are
Limited, GAO/RCED-98-49, (Washington, D.C.: Feb. 24, 1998) for a
summary of the involvement of the private sector and federal government
in housing programs for Native Americans on trust lands on the
mainland.
[3] In this report, we use the term equivalent lands to refer to those
included under P.L. 102-547 that are held by individual Indians,
individual Alaska Natives, or Alaskan regional or village corporations
and are subject to restrictions that may require the Secretary of the
Interior‘s approval when ownership is transferred. Also included are
the Hawaiian homelands and lands on Pacific islands that have been
communally owned by cultural tradition.
[4] P.L. 102-547.
[5] The appropriation is for the subsidy cost of the loans, that is,
the portion of the loans‘ value that the government does not expect to
be repaid.
[6] The Hawaiian Homelands were created by P.L. 67-34 in 1921. Hawaii,
upon statehood in 1959, assumed responsibility for managing the
homelands through the Department of Hawaiian Homelands.
[7] In the Pacific, veterans eligible for loans in Hawaii must be
Native Hawaiians, and elsewhere they must be Pacific Islanders. The
state or territorial governments are considered the equivalents of
tribal organizations and must have signed memorandums of understanding
with VA for the program to provide loans on lands in these locations.
[8] The states on the mainland without federally recognized tribes are
Arkansas, Delaware, Georgia, Illinois, Indiana, Kentucky, Maryland,
Missouri, New Hampshire, New Jersey, Ohio, Pennsylvania, Tennessee,
Vermont, Virginia and West Virginia. The District of Columbia has no
federally recognized tribes. Tribes with land in two or more states are
considered to be located in the state with the greatest share of the
tribes‘ membership in order to avoid double counting of tribes for the
purposes of this report.
[9] Data was not available to determine how the distribution of
borrowers among groups compares with the distribution of veterans among
the groups.
[10] No loans under this program have been made to Alaska Natives. VA
officials explained that Alaska Natives have not responded to their
outreach efforts and are utilizing other loan programs.
[11] Of the loans completed in these Pacific Islands, 29 have been in
American Samoa, 16 in the Northern Marianas, and 1 in Guam.
[12] Lands held in trust for individuals are those most affected by
fractionation, because these are the lands where ownership can be
inherited and passed down through succeeding generations. About 10
million out of the total 55 million acres on the mainland are held in
trust for individuals rather than tribes.
[13] Indian Programs: Profile of Land Ownership at 12 Reservations
(GAO/RCED-92-96BR, Feb 10, 1992).
[14] GAO/RCED-98-49.
[15] See appendix I for details on other Native American homeownership
assistance programs and their loan limits.
[16] One-Stop Mortgage Center Initiative in Indian Country, the
Department of Housing and Urban Development and the Department of the
Treasury, October 2000; The Report of the Native American Lending
Study, Community Development Financial Institutions Fund, the
Department of the Treasury, November 2001.
[17] An Executive Memorandum established the One-Stop Mortgage Center
Initiative in 1998. It directed HUD and the Department of Treasury to
develop recommendations to streamline mortgage lending on trust lands.
[18] HUD also provides housing assistance to Native Americans on the
mainland through a block grant, enacted by the Native American Housing
Assistance and Self-Determination Act of 1996. In fiscal year 2002, HUD
provided about $649 million in block grants to tribal entities to use
for housing.
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