GAO: VA's Native Home Loan Program needs help

WASHINGTON ? Congress wants the Department of Veterans Affairs to increase Native American participation in a special trust land mortgage program that has extended just 227 loans in eight years ? the vast majority of them to Native Hawaiians and Pacific Islanders.

The VA should consider upping its $80,000-per-mortgage loan limit in most areas of the mainland United States, networking with groups trying to assist Natives to get loans and reassess its outreach efforts, according to the General Accounting Office, the investigative arm of Congress.

Since it began in 1994, the VA's Native American Veterans Direct Home Loan Program has made 227 mortgage loans; 38 loans went to Native American veterans, while mortgage credit was extended to 189 Native Hawaiian or Pacific Island Native veterans on Guam, American Samoa and the Marianas Islands.

One reason for the disparity, GAO said, is an $80,000 loan limit everywhere on the mainland U.S. except for the state of Washington ($120,000) and one New Mexico tribe ($100,000). The VA also has made exceptions for the Hawaiian and Pacific Islands, raising their loan limits to $120,000, but the mainland limits are much lower than other government mortgage assistance programs for Indians, which are between $144,000 and $278,000.

GAO recommended that the VA obtain local housing cost data for trust lands on the mainland, and increase loan limits where they are too low.

The huge disparity between Native Americans and Pacific Islanders is partially explained by 60 loans extended to Native Hawaiian vets in connection with two housing projects in 1995 and 1996.

Even so, since then Hawaiians and Pacific Islanders vets getting loans under the program have outpaced Native Americans by a ration of two to one, GAO said.

Reasons for the disparity? GAO said Native Hawaiians generally have higher income than Native Americans. Also, Hawaiian Natives do not have to deal with "fractionated" land interests as tribes on the mainland do.

Fractionation has increased on Indian land with each generation, as new heirs are added to the ownership rolls on each parcel. One Native American vet applying for a home loan had just a 1/192 interest in the land, meaning he would have to get agreement from all the other partial owners, GAO said.

The VA can do little about income levels and Indian inheritance issues, GAO acknowledged, nor can it change the disparity between Native Americans and Native Hawaiians on infrastructure costs, since Hawaiian vets can get an up to $50,000 grant for this purpose. But the VA can look into loan limits, outreach, and partnering, GAO said.

On the outreach issue, "VA has conducted outreach but has taken limited steps to meet assessment and reporting requirements as specified in the program's authorizing legislation," said GAO.

In addition, mainland VA offices have not established relationships as effectively as the Hawaiian one has to partner with local groups on homebuyer education.

"By not partnering with other organizations, VA may be missing opportunities to get Native Americans 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."

The 227 mortgages made under the program total $26 million in home financing.

In response to the report, Anthony J. Principi, secretary of Veterans Affairs, told GAO "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 on new data from the 2000 census."

Principi did point out, though, that Native veterans have a homeownership rate of 64 percent, which he said points to the success of the VA home loan program.