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Indian mortgage program may double again

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LAS VEGAS - The federal government's guarantee program for American Indian
mortgages doubled in volume last year - and may double again this year.

That's the message Indian housing officials heard at the National American
Indian Housing Council's legal symposium.

The Department of Housing and Urban Development's section 184 program
guaranteed $64 million in loans in fiscal year 2004, nearly three times the
$22 million done in fiscal year 2003, HUD Assistant Secretary Michael Liu
told the meeting. And Liu, a former official of the Federal Home Loan Bank
of Chicago who now heads the nation's public and Indian housing programs,
has set bank-like quotas for the program that if met will double volume
again in fiscal year 2005.

And although unused federal guarantee money for the 184 from previous years
has reverted back to the Treasury, $5 million has been appropriated for the
program for 2005, enabling at least $145 million in lending, he said.

Defaults in the program have been so low so far, he said, the guarantee
formula is likely to be adjusted, creating an even higher amount that can
be subsidized. More than 2,100 mortgages have been made to Indians through
the program.

Tom Wright, a former Indian housing official with the Lake Traverse band,
has been named to head HUD's loan guarantee office, which includes the 184
and the underused Title VI program. The government guarantees 100 percent
of bank outlays under the 184 and 95 percent under Title VI.

Liu said a key component to increased 184 fundings will be a provision
allowing 184s to be done outside tribal boundaries. The Seminole Tribe of
Florida, for instance, will be allowed to offer 184s to Seminoles anywhere
in Florida, not just on the five reservations.

In addition, loan limits have been lifted in high-cost places like Alaska.
Limits have been lifted to match those used by the Federal Housing
administration section 214 loan programs. For single-family homes, that
means a boost in eligible prices from $290,000 to $435,000, and for
two-family homes, from $372,000 to $558,000.

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In addition, Liu said there will be no problem in combining public housing
section 8 subsidies with the 184 program to help low-income families

The upcoming new year will be a time for tribes that receive housing block
grants under the Native American Housing Assistance and Self Determination
Act (NAHASDA) "to think big." For richer tribes, Liu mused about them
investing in housing securitization measures, creating in effect an Indian
housing secondary market which would expand outside investment. In the
dominant society, the secondary market used by Fannie Mae, Freddie Mac, the
Government National Mortgage Association and the Federal Home Loan Bank
System has acted as a spur to a multi-trillion dollar national mortgage

Liu admitted that the Title VI program is underused. He said just a handful
of loans had been done last year, for a volume of slightly more than $10
million. The program is approaching $200 million in total volume, with more
than a quarter of that coming in one blockbuster loan, to the Cherokee
Nation of Oklahoma.

Liu said the Title VI program, which typically includes larger project or
infrastructure loans, can be a good mechanism for tribes to develop
relationships with banks.

The Assistant Secretary said 2,115 new Indian housing units were built
during fiscal year 2004, decreasing overcrowding in Indian country by 1

He also said that tribes have achieved a 55 percent reduction in unexpended
housing block grant funds during 2004, leaving just $82 million unexpended.
He complimented NAIHC and HUD's Office of Native American Programs in
working to account for the money. With enhanced performance measures
introduced by the federal Office of Management and Budget, the perception
of big volumes of unspent money would present a huge political problem for

Liu acknowledged a reduction in the Indian housing block grant from $647
million to $627 million for fiscal year 2005. An additional mandatory
"haircut" will reduce that by another 0.83 percent. The Indian Community
Development Block Grant seta-side also was reduced, to $69 million from
$71.6 million the year before. However, Liu said that the ICDBG will now be
able to cover imminent threat and disaster assistance.

Liu, who is of Native Hawaiian ancestry, noted that the Native Hawaiian
housing setaside was voted in at $9 million, down from $9.5 million last
year. He said $1 million will go to the 184A program, which is the HUD 184
for Native Hawaiians. A $2 million guarantee amount was included for the
Title VI program, which also saw a large amount of unused guarantee money
from previous year go back to the Treasury.