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HUD Indian mortgage program surges

WASHINGTON – The Department of Housing and Urban Affairs’ Section 184 Native American mortgage program just had its most successful year, generating nearly half a billion dollars of home finance to American Indians and Alaska Natives in fiscal 2010 through more than 3,000 loans.

Just 6 percent of the loan volume, 183 loans, was on tribal trust or allotted land, continuing a trend that has come down steadily since fiscal 2004, when 40 percent of HUD 184s were on reservations. Since program inception, about 2,000 HUD 184s have been done on trust or allotted land out of a program total of more than 12,000, or about 16 percent.

To put that number in some perspective, the General Accountabilty Office, an arm of Congress, could find only 91 mortgages made on reservation land to just two tribes between the years 1992 and 1996.

In fiscal 2010, which ended Sept. 30, lending on fee simple land (private property) came to $465 million through 2,845 mortgages. Reservation volume was $21.8 million. Reservation loans averaged about $119,000 apiece, while off-reservation loans averaged quite a bit higher, at about $163,000. Total volume for the year was $492 million.

Loans on reservations for tribal trust land or allotted land (land allotted to individual Indians) are much harder to make than on fee simple land. The federal government owns the land and holds it in trust for tribes and individual Indians. Mortgages can be made through specific federal programs like the HUD 184 or through leasehold mortgages, where the improvements (house, barn, etc.) can be mortgaged.

A lot of the private property loans, however, are located in Alaska and Oklahoma, two states where reservations per se do not exist, but many people live in Native areas there. And, in fact, Oklahoma ($593 million in volume) and Alaska ($290 million in volume) are the two states with the biggest HUD 184 volume, with nearly half the total financings. California was third, with $267 million in volume.

In a year where overall mortgage lending has been stagnant, the HUD 184 has kicked it up a gear and increased by 25 percent over fiscal 2009 (when it did $395 million in volume). And the program has tripled its annual fundings since 2006 during an era of retrenchment and disaster for the mortgage industry. During that time, total mortgages to Indians (both government and private) have decreased by about 60 percent.

Since inception during the 1990s, total fundings for the HUD 184 are $1.8 billion for 12,062 mortgages, for an average of about $150,000 per financing. Fee simple mortgages have averaged $160,302, while trust land loans have averaged $103,351 and allotted land $128,226.

In 2010, HUD 184s were made in 32 states, with the smallest going to Maine, which saw one loan made for $75,000. Wisconsin had the most trust land/allotted land loans, at 34 for about $3 million. Florida was next, with 28, followed by Washington at 21 and New Mexico at 18.

In South Dakota, one of four states where Natives make up nearly 10 percent of the population or higher, 22 loans were made in 2010, for $2.2 million; 16 of those were on private property. Over the life of the program, 373 HUD 184s have closed in South Dakota for $31.2 million, an average of about $83,500.

In New Mexico, which was 11 percent Native as of the 2000 census, 68 loans were made for $11.3 million, an average of about $166,000; 50 of them were on private property.

The program made its first loans in 1995, a total of 11 for about $900,000, and is currently at $1.8 billion.

HUD also administers a separate program, the HUD184a, for Native Hawaiians.