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Indian counties attract predatory lenders

WASHINGTON - American Indians in counties where more than 33 percent of the
population is Native can expect to get almost twice the percentage of
sub-prime and manufactured housing loans as the overall rural population,
and at almost three times the prevalence of these loans in the country as a

Sub-prime loans in particular have been identified as high-cost loans
carrying with them the possibility of predatory lending, while manufactured
housing is typically financed at higher interest rates than prime

The Housing Assistance Council here, a nonprofit rural housing agency,
studied "rural minority counties" (RMCs), defining them as those counties
that have had specific ethnic populations above 33 percent in the last
three Census tabulations (1980, 1990 and 2000). The 33 percent refers not
to the total minority population of the county, but to a specific racial or
ethnic group, like African-Americans or American Indians.

HAC found that 42.9 percent of Indians in Indian RMCs that had mortgages
extended to them during that timeframe got sub-prime or manufactured
housing loans. That compares to 23 percent for rural regions as a whole,
and 17.6 percent for the nation as a whole.

Indian RMCs were basically equal with the other two groups on percentages
of sub-prime mortgages, with a big bulge occurring in manufactured housing.
They received 12.6 percent in sub-prime loans, and 30.3 percent
manufactured housing. The total rural group had 13.2 percent sub-prime
mortgages, and the country as a whole 13.5 percent.

This may reflect the fact that until the last decade, manufactured housing
loans were the only home finance available to Indians on many reservations.

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HAC noted the experience in Shannon County, S.D., home to the Pine Ridge
Reservation of the Oglala Lakota. "During 1999, Shannon County residents
applied for a total of 228 mortgage loans. The vast majority of these
applicants (177, or nearly 78 percent) applied to sub-prime or manufactured
housing lenders, while only 22 percent of all applications were processed
by lenders classified as mainstream or prime."

Overall, HAC found that American Indians tend to live in rural areas to a
greater extent than any other rural minority group with about 40 percent of
all American Indians living in rural areas. And 40 percent of those live in
American Indian RMCs, many overlapping with existing reservations. These
counties tend to cluster, as the reservations do, in the Northern Plains,
the Four Corners area and Alaska.

HAC found that 28.9 percent of Indians living in Indian RMCs experienced
overcrowded housing, nearly five times the national average of 6 percent.
And it noted "A recent National American Indian Housing Council study links
domestic crowding and the substandard housing conditions that often
accompany it to increased incidences of tuberculosis, pneumonia,
gastrointestinal disorders, head lice, conjunctivitis, hepatitis and
various other diseases that are easily transmitted in crowded space."

Lack of plumbing is also a problem in Indian RMCs, with 20.7 percent of
Natives living in Indian RMCs lacking adequate plumbing - 20 times the
national level. And 18.3 percent of them are cost burdened, meaning they
pay more than 30 percent of their income for housing.

"The median value of all homes in Native American counties is $66,100, but
the median value of homes owned by Native Americans in these counties is
only slightly more than half at $36,800," HAC reported.

HAC noted Native peoples' traditional connection to the land, as well as
the loss of almost all of their original holdings of two billion acres in
North America. "By 1997 it was merely 54 million acres," the group said.

"Native American RMCs are extremely rural, with only 1.4 persons per square
mile compared to the national rate of 79.6 persons per square mile. Poverty
among Native Americans living in RMCs is very high (38.5 percent) compared
to all rural residents (14.3 percent)," the report noted.