Indian Home Mortgages Underfunded in 2012

Mark Fogarty

Nearly one in two American Indians who applied for a mortgage last year didn’t get the money, federal data show.

About $7.5 billion in home finance was extended to American Indians and Alaska Natives in 2012, according to yearly numbers lenders were required to file by the Home Mortgage Disclosure Act (HMDA). But another $5.6 billion in applications were unfunded, making the positive/negative ratio 56 per cent approved and 44 per cent unfunded.

Native Hawaiians and other Pacific Islanders (like natives of Guam and American Samoa) received a slightly smaller dollar volume of loans last year than Indians, but their funded ratio is higher. They got $7.4 billion in mortgages with a 60 percent approval rate. Native Hawaiians saw $4.8 billion in mortgages not funded.

Both Native groups had a smaller funded ratio than the national average, which was 64 percent. “Unfunded” does not mean that the loan was actively denied by a lender. Other examples of unfunded loans are when an application is incomplete or withdrawn by the borrower.

More than 7,000 mortgage lenders filed HMDA reports last year with the Federal Financial Institutions Examination Council, which supervises HMDA compliance. The Council is a unit of the Federal Reserve and other government agencies. More than 2,600 lenders reported making loans to Indians/Alaska Natives, while about 2,000 said they made loans to Native Hawaiians.

Wells Fargo Bank made the most loans to Indians last year, at $1 billion, HMDA data show. It was well ahead of the next largest lender, Bank of America, with $400 million, and taking the bronze was JPMorgan Chase at $361 million. Wells was also the largest lender to Native Hawaiians, at $900 million.

California was a bright spot for Indian mortgages last year. About $2 billion, or more than 25 percent of the national total, was extended to Indians both on and off the more than 90 rancherias in the state. The funded rate in the Golden State was 60 percent, higher than the national average for Indians.

Looking at other state comparisons, some states saw big favorable funded/unfunded ratios for Indians, traditionally one of the most underserved populations. While the ratios were negative in North Carolina, West Virginia, New York, New Jersey, Maine and Louisiana, other states had highly favorable ratios of up to more than 2 to 1. Alaska, for instance, had $249 million in mortgages for Indians (Native Alaskans are counted in the “Indian” total) with just $123 million in denials, South Dakota, a state with a large Indian population but traditionally a mortgage desert, showed $29 million in approvals versus just $13 million in unfunded. New Mexico, another state with a significant Indian population, also had a favorable ratio, at $139 million funded and $130 million unfunded.