Aggressive mortgage program houses Alaska Natives

ANCHORAGE, Alaska - One of the pioneer efforts to encourage private lenders to make mortgages to Native Americans has seen its 350th loan close and is looking forward to 100 financing efforts a year.

Norman A. Kallender, Athabascan, who is director of the HOME Loan Program for Cook Inlet Housing Authority, was in the process of closing two more loans in his Anchorage office.

The Indian housing authority is affiliated with Cook Inlet Region Inc., the Native corporation that counts Anchorage, the Kenai Peninsula and the Mat-Su region in its service area.

Kallender said it closed its first loan in 1993, years before the Native American Housing Assistance and Self Determination Act of 1996 was passed to encourage tribal housing entities to become partners with private lenders to stretch housing allotments.

Alaska Natives and American Indians in the Anchorage area have been served and Cook Inlet expanded to a rural program which closed another 23 loans.

With pride, Kallender notes his program won a Department of Housing and Urban Development HOME Best Practices award, and that other areas, like the Nome Eskimo community, want to copy it. He said just two of his 350 borrowers have defaulted.

Key to the success of the HOME program is the housing authority subsidy which gives lenders needed comfort to extend a mortgage for the balance. The Rural HOME Loan Program extends even deeper subsidies.

From just a couple of lenders in its early years, the program now works through 17 different financial institutions, including banks, mortgage bankers and credit unions. The banks include National Bank of Alaska and First National Bank of Anchorage. The Alaska Housing Finance Corp. facilitates the loans.

"It reduces risk for lenders. They really embrace our program," Kallender says. CIHA does not act as a broker for any of the lenders, merely states who participates.

Cook Inlet will extend a forgivable "soft second" mortgage to a tribal member, which amounts to 20 percent of the purchase price, plus 2 percent of the loan for a down payment and 4 percent of the loan for closing costs.

Average purchase price is about $123,000, meaning CIHA has helped finance some $40 million of private mortgage money. Average size of the homes is between 1,100 to 1,200 square feet, Kallender says.

It has targeted Native areas of Alaska, such as the Mountain View and Fairview neighborhoods, for special emphasis. It has 350 pending applications of which 112 are eligible for the program. Applicants have to be at or below 80 percent of area median income.

This year, the program received $3.5 million in NAHASDA money to fund its efforts, the same last year. Its target is 100 homes per year.

Kallender says his housing authority had to sift through 3,000 applications to find 350 qualified applicants, and he said, "Education is the biggest problem."

On the rural side, the IHA gives a grant of $25,000 per qualified applicant, and the Affordable Housing Program of the Federal Home Loan Bank of Seattle gives $10,000 for down-payment assistance, in addition to its usual purchase price buy-down.

Of the 23 loans closed in the program, only four have gone to Alaska Native families. Kallender said he would like to see the program bump up its purchase price buy-down to 40 percent to build Native lending in rural areas.