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Indian CDFIs Are Booming

SANDIA RESERVATION, New Mexico— American Indian community development financial institutions (CDFIs) are booming, with 70 Native CDFIs now certified by the Treasury Department, 14 of them in the last six months.

As recently as ten years ago there was just one Native CDFI, attendees of the First Nations Development Institute’s L.E.A.D. Institute 16th Annual Conference held October 26-28 at the Sandia Resort and Casino in Albuquerque, New Mexico were told. First Nations' wholly-owned subsidiary, First Nations Oweesta Corporation, is an “intermediary” CDFI that helps develop and lends to other Native CDFIs.

Jaci Ree, Crow Creek Sioux and manager of financial education and asset building at First Nations Oweesta, told the meeting that another 60 Native CDFIs are in the process of being certified.

A CDFI is a small, non-profit community lender, specializing in small business and home loans. The Treasury Department’s CDFI Fund grants money to CDFIs once they are certified to loan in low income communities. The CDFI Fund targets Indians through its Native “NACA” component.

Kellie Jewett, a member of the Cheyenne River Sioux Tribe and associate director of enterprise and entrepreneurship development at First Nations Oweesta, said this has been a “great model, working well in tribal communities.”

Jon Panamaroff, a member of the Sun’aq Tribe of Kodiak, Alaska and executive director of First Nations Oweesta, was excited about the possibility of a big pot of new money for Natïve CDFIs.

Panamaroff said the federal Jobs Act of 2010 makes provision for $1 billion a year for three years in bond authority for CDFIs. The Federal Financing Bank will buy the bonds and the CDFIs will relend the money. Included in the Act is $100 million to CDFI intermediaries. First Nations Oweesta is the only Native CDFI intermediary, Panamaroff pointed out.

He said his firm has a portfolio of $3.4 million in loans and that that financing has produced 1200 jobs and 131 affordable housing units, with a low loan loss rate of 1.5 percent.

Chrystel Cornelius told the meeting about her experience with the Turtle Mountain Band of Chippewas’ CDFI, which she served as first executive director of. It created 30 new jobs on the reservation, but many tribal members were not prepared to become borrowers.

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“Financial literacy skills were very low,” she said. Credit repair and teaching people how to save were essential, she said. But, “it’s the only route our communities can take,” she said.

Marvin Ginn, executive director of Native Community Finance, based on the Pueblo of Laguna in New Mexico, said his Native CDFI, certified in 2010, has made 92 loans for a total of $450,000.

Ginn, Choctaw, said he is concerned about predatory lending against Indians and has spent a good deal of effort doing “rescue” loans that refinance high interest loans from payday lenders and Internet lenders.

“Everybody strips assets out of our communities,” he said. He described someone who had taken out a $5000 loan from an Internet company and had paid back $40,000. “This is not unusual,” he said.

NCF operates in all Native areas of New Mexico, and also has lending authority in Arizona although it has yet to lend there. Ginn said he has only 1.5 percent of loans delinquent, and has never had a default. “A bank would love to have that,” he said.

If a borrower becomes delinquent, “we work with our client. If we see they’re getting behind a little bit we bring them in and talk to them.”

NCF has a revolving line of credit from the New Mexico Mortgage Finance Authority. It expects to use these to construct homes that will then get permanent financing from the Department of Housing and Urban Development’s HUD 184 American Indian guaranteed mortgage. Ginn said he has seven or eight loans like this around the state.

NCF also has an active Individual Development Account program. An IDA teaches people how to save. NCF matches by four times what individual Indians put into the account.

Ginn said some of New Mexico’s pueblo tribes are too small to sustain their own CDFIs, which makes a statewide Native lender like his valuable to members of those pueblos.

“We may be able to put them into a house,” he said. “A CDFI can take a little higher risk.”