Indian mortgage glass half-empty in 2007

NEW YORK - 2007 was not a banner year for news about mortgages made to American Indians. According to government numbers released in August, the total dollar volume of loans made to Indians and the number of lenders willing to extend credit to Native people fell for 2006, with Indians in danger of being lapped by loans to the much smaller Native Hawaiian contingent.

Not only that, but the subprime mortgage crisis shuttered several of the top lenders to Indians, cutting off credit access that was a two-edged sword, as some of these subprime lenders were accused of predatory lending practices toward Natives.

The subprime mortgage crisis claimed a respected tribal mortgage program when its parent abruptly closed during the liquidity meltdown that has plagued the mortgage industry this year. The closure of GreenPoint Mortgage, Novato, Calif., also shuttered TribalPOINT, an active private-firm mortgage outreach to Indians.

TribalPOINT, started in 2003, extended private mortgages to Indians under the HUD 184 and Rural Housing Services programs, as well as through private mortgages.

The Department of Housing and Urban Development's Section 184 program, which guarantees 100 percent of lender outlays on mortgages to American Indians, continues to be a success story, but it is one of the few bright spots.

The HUD 184, according to the agency's Web site, has guaranteed more than 5,500 loans to Indians both on- and off-reservation, with the biggest state participation in the program coming in Oklahoma, Alaska, California and Arizona.

Oklahoma leads the roll of states, at 1,685 loans as of Dec. 10, according to HUD. It is followed by Alaska at 575 HUD 184s, with Arizona right behind at 572. California, with 386 loans, is next, followed by Wisconsin at 361. Indiana and Missouri share the lowest number of HUD 184s, at one apiece.

In all, HUD 184 loans have been extended in 31 states, and more than 200 tribes are now eligible to participate in the program.

The federal government's 2006 Home Mortgage Disclosure Act numbers (released in 2007) show a steep year-to-year decline in lending to American Indians and Alaska Natives, who are gathered into one group. A sort of this category showed $22.1 billion in lending, down from $27 billion in 2006. That's a drop of nearly 20 percent in a year. And at about a .6 percent share of a total of $3.8 trillion, that's well below Indian representation in the population.

The number of lenders who reported making loans to Indians also fell from 2005 to 2006, by about 100 lenders, to 3,435. The number of firms reporting loans to Native Hawaiians also dropped by about 100 firms, to 2,614.

Lending to Native Hawaiians, a much smaller group in numbers, outstripped lending to American Indians, at $29.5 billion last year, according to HMDA.

However, that number is most likely wrong. Native Hawaiians were just separated from the ''Asian'' category three years ago and there may still be some confusion there. In addition, one lender reported making more than $6 billion in lending to Native Hawaiians, and that looks like a data error. It's more than twice as much made by any other lender, and the reporting lender wasn't even in the top 10 in the category in 2005.

When lenders do reach out to Native people, the specter of predatory lending always seems to be hovering nearby. In 2006 and 2007, at least seven lenders were accused of unfair lending practices on Native reservations, and two of them settled the charges.

Two of the top 10 lenders to Indians in 2006 failed in 2007. Besides GreenPoint Mortgage, which had a Native volume of $370 million, New Century Mortgage, Irvine, Calif., which made $474 million in loans to Indians during 2006, was also a casualty of the subprime downturn.

Even with occasionally unsavory subprime lenders knocking on their doors, Indians clearly continue to be underserved for mortgages, even where they have the greatest heft, population-wise. Consider the state of New Mexico, where 11 percent of the population is American Indian, according to the 2000 Census. Locally based lenders made $14.4 billion in mortgages in New Mexico last year, according to HMDA data, but just $24 million of that went to Indians. That's less than 2 percent.

As with all HMDA data, a few caveats need to be made. The volume does not include mortgages made in New Mexico by out-of-state lenders, nor by in-state branches affiliated with out-of-state lenders. Still, it's not a great showing.