Drastic dropoff in mortgages to Indians in 2008

WASHINGTON – Mortgage lending to American Indians and other Native people fell off the table last year, dropping by nearly half from 2007 levels and down more than two-thirds from the market peak in 2005 and 2006. Lending to Indians and Alaska Natives was so anemic it fell behind lending to Native Hawaiians.

While the national mortgage market has contracted substantially as well during that time period, as a mortgage crisis crippled the market, loans to Native people have contracted even more. The subprime mortgage market that granted credit to many American Indians vanished, a mixed blessing as many of those firms charged Indians high interest rates in return for perceived credit risk.

In 2005, Home Mortgage Disclosure Act data show, more than $53 billion in home finance was given to American Indians, Native Alaskans, Native Hawaiians and Pacific Islanders. Last year, that number dropped to just $17.5 billion, after falling to $51 billion in 2006 and $31.6 billion in 2007.

In addition, fewer lenders were willing to make loans to Natives last year. While 3,000 lenders extended finance to Native Americans and Alaska Natives in 2007, and 2,300 made loans to Native Hawaiians and Pacific Islanders (there are two separate categories), in 2008 just 2,790 lenders served Indians and 2,155 Native Hawaiians. More than 8,300 firms reported mortgage loans in 2008 to the Federal Financial Institutions Examination Council, an arm of the Federal Reserve Board and other federal regulators.

American Indians and Alaska Natives, a much larger cohort than Native Hawaiians, found themselves lapped last year by the smaller category. Lenders made $8.6 billion in mortgage to Indians and Alaska Natives, and $8.9 billion to Native Hawaiians and Natives of Guam and American Samoa.

Countrywide Home Loans, the longtime leader in mortgages to Native people, was so again last year, despite being merged into Bank of America. Countrywide made $1.17 billion in mortgages to Native Hawaiians and Pacific Islanders, and $1.25 billion to Indians and Alaska Natives. Its total of $2.42 billion in all Native categories just bested Wells Fargo, at $2.34 billion.

Wells, through its bank, finance company and largest state bank, made $1 billion in loans to Native Hawaiians and $1.3 billion in finance to Indians and Alaska Natives.

Third place went to JP Morgan Chase, with $1.14 billion in loans to Native Hawaiians and $859 million to Native Americans.

Fourth place went to mortgage lender Taylor Bean & Whitaker, which failed this year. TBW made $825 million in loans to Native Hawaiians and $172 million in mortgages to Native Americans, for a total of $1 billion.

In fifth was Bank of America, with $372 million to Native Hawaiians and $555 million to Native Americans, for a total of $920 million.

A pro forma merge of Countrywide and Bank of America would give more than $3.3 billion in Native lending last year. It will be interesting to see if the combined institution keeps a focus on Native lending.

These top five lenders control almost half the Native lending market, with $8.6 billion out of $17.5 billion.

The nation’s largest state by population, and one with more than 90 Indian tribes, saw the most lending to Native people. California Native Americans received $2.8 billion in loans last year, just above the $2.7 billion loaned to Native Hawaiians.

Hawaii was the state with the second highest volume of loans to Native Hawaiians, at $1.3 billion. Washington followed far behind in third at $351 million in this category, with Florida fourth at $332 million and Texas fifth at $321 million.

Texas was second to California in the Indian and Alaska Native category, at $500 million. Oklahoma was just behind in third place at $488 million. Washington, at $370 million, and Arizona, at $291 million, were fourth and fifth.

In 2007, Countrywide, along with its affiliate Countrywide Bank FSB, made the most dollar volume in mortgages to Indians and Alaska Natives. The California lender made $3.8 billion in loans through the two units to place both first and third. Bank of America, Charlotte, N.C., made a further $1 billion in loans to Indians, meaning the combined institution’s total would have been $4.8 billion.

Wells Fargo was the only other lender that made more than $1 billion in loans to Indians in 2007, HMDA data show. Wells Fargo Bank, Minneapolis, loaned Indians $1.6 billion in mortgage finance, while Wells Fargo Funding, its finance unit, did another $278 million.

In 2006, Countrywide, based in Calabasas, Calif., reported $3.5 billion in loans to Indians last year. A second unit, either the firm’s thrift or its subprime unit, made an additional $461 million in loans, bringing the company total to some $4 billion.

Second place in 2006 went to San Francisco-based Wells, at $1.6 billion. But adding up all Wells units in the top 300, which includes its finance company and state banks located in California, Arizona, Washington, Utah and New Mexico, Alaska, Florida and Colorado, comes up with a Native figure of $2.02 billion.

Bank of America, Charlotte, N.C., was the third largest lender for 2006, at $877 million. Lehman Brothers, New York, through its Aurora subprime unit, came in fourth at $829 million.

Fifth place went to Wachovia Bank of Charlotte, N.C., if added together with the volume of World Savings Bank, which it acquired. A pro-forma on the two comes up with about $750 million in mortgages to Indians.