'Glitch' causes drop in American Indian mortgages

WASHINGTON ? Mortgages to Native Americans dropped by a whopping 39 percent in 2001 ? but the federal government says that's only due to a reporting glitch.

The percentage of Native applications of the nationwide total also remained well below one percent in all categories, below the Native percentage of the total population, and down from market share in 2000.

American Indians and Alaska Natives got some at least good news in the fact that their loan denial rates dropped 7 percent between 2000 and 2001. Loan approvals also ticked up 4 percent.

The Federal Financial Institutions Examinations Council said the big drop in Native American mortgages reported under 2001 Home Mortgage Disclosure Act (HMDA) data that "virtually all of this, however, can be attributed to over reporting of the number of loans to Native Americans in 2000."

The FFIEC said that over reporting may have occurred in previous years, as well.

That didn't stop John Taylor, president of the National Community Reinvestment Corp., from decrying the decrease.

"Native Americans received 39 percent fewer home purchase loans in 2001 than 2000. NCRC calls on responsible lenders to re-focus their attention to Native Americans and tribal lands," said Taylor, whose group has teamed with the National American Indian Housing Council to focus attention on predatory mortgage lending practices in Indian country.

Indian Country Today has reported that Citigroup, the new owner of The Associates, (a Texas finance company that reported it was the top lender to Native Americans in 2000, at $752 million), has said Associates' Native mortgage numbers had been inflated by clerical error.

By the numbers, in 2001 American Indians received 15,279 "home purchase loans," (those that involve the purchase of an actual home), down from 24,914 in 2000.

While the numbers involve a significant percentage of the mortgage market, there are a few caveats about HMDA data.

For one, FFIEC didn't break out loan approvals on refinancings, which last year accounted for 60 percent of the market. Only applications for refinancings, and home improvement loans, were broken out.

Furthermore, nearly 30 percent of applicants did not indicate their ethnicity on their applications. Native Hawaiians and other American Pacific Islanders are lumped into an "Asian" category, making it impossible to break out volumes for Hawaii, Guam, and American Samoa.

With the numbers adjusted downward, Native gains in mortgages between 1993 and 2001 increased by 28 percent, less than four percent per year during that time frame. Only the percentage increase to whites was lower than that, at 26.4 percent.

HMDA reports indicate that 55.1 percent of American Indian/Alaskan Native applications for "conventional" (non-governmental) loans were approved in 2001, up from 51.3 percent the year before. Denials fell to 35.3 percent, down from 42 percent in 2000.

For government loans, approvals were 49.4 percent, and denials 41.5 percent.

FFIEC said 11,728 Indians/Alaska Natives got conventional loans last year, down 40 percent from the year before. For government loans (like Federal Housing Administration mortgages or Department of Veterans Affairs loans), 3,551 went to Natives, down 30 percent.

Fifteen percent of the nearly 31,000 Native applications were for government loans, and 85 percent for private mortgages.

Natives applied for 36,590 refinancings in 2001, as well as 6,813 home improvement loans.

The refinance volume was a big boost from 2000's 21,184, while applications for home improvement loans actually fell, from 7,936 in 2000. Again, the government reported no numbers on how many of those applications were approved or denied.

Native percentages of applications for one-to-four family mortgages in 2001 were 0.4 percent for governments, 0.5 percent for conventionals, 0.4 percent for refinancings, and 0.6 percent for home improvement loans. Native share dropped year-to-year in all of those categories, except home improvement loans.

The HMDA data came from 7,631 financial institutions, and totaled 28 million loans or applications.