YERINGTON, Nev. - Five years after Nevada's first reservation became eligible with a national program that guarantees loans for homebuyers, local banks are jumping on board to offer capital for property investment.
Section 184 of the federal Housing and Urban Development program (HUD) dates back to 1992 as the Yerington Paiute tribe was the first to adjust its by-laws to accommodate this initiative. At a luncheon where tribal leaders from western Nevada attended on Feb. 24, representatives of the town's branch of Wells Fargo pointed out financial institutions see the benefits of lending money when the risks have been minimized for American Indian homebuyers or in the construction of new houses on tribal lands.
To have obtained protection for the lenders, Section 184 requires tribal laws to acknowledge the occurrences of bankruptcy or the inability to repay. In such an event, it's HUD that takes over the property though in most cases, the tribe retains the right of first refusal to secure the lease. Most often the local council would likely turn the house over to the tribal housing authority that would find a new owner from the reservation itself.
"Mortgage ordinances is how you will deal with foreclosures and evictions which then become tribal law," said Raymond Gonzales, the housing project coordinator for the Inter-Tribal Council of Nevada.
Unlike other federal programs and grants, Section 184 is not income sensitive and is more applicable for those families in higher economical brackets. However, like other national plans for new homeowners in lower-income areas, down payments are minimal at an average of 2 percent of the appraised value, making ownership attainable with a modest amount of saving.
With a population of 420 on the reservation and another 700 enrolled with the tribe, the Yerington Paiute experiences a similar shortage of affordable and modern homes as seen elsewhere on the nation's reservations. When taking the banking representatives on a tour of the only vacant new home, the tribe's housing authority Executive Director Ralph Rogers pointed out several of the amenities of the 2-bedroom house. Detailing the insulation of the walls and their fire-retardant design, the collective praise during this presentation came for the expansive backyard.
Because of the present shortage, Rogers tossed out the idea homeowners who have established themselves as good financial risks to the tribe through previous regular house payments might be some of the first who get into the new homes.
"We've already got their credit established and so why not move them into a brand new home?" Rogers threw out, adding the older, less -expensive houses would become a venue for those trying to establish a line of credit.
Yerington is just one of three Nevada reservations eligible for Section 184 assistance, in part because of the complexity of altering tribal laws. Three years and tens of thousands of dollars in legal fees were required for the Paiute and such a task might scare other tribes from attempting their own changes.
Any reluctance though, Gonzales said, should be offset by the rewards in the effort to comply with this national program.
"There were generations who didn't have to use banks but now there is money available," said Gonzales. "That's why partnerships are coming between banks and tribes."