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Mortgage insurer makes big Indian allocation

SAN FRANCISCO - A mortgage insurance company here has made commitments over the past two years to insure $100 million of mortgages to members of 13 American Indian tribes.

PMI Mortgage Insurance Co. has made a total of 18 commitments to the Aleutian tribe of Alaska, the Ute tribe of Utah, the Acoma Pueblo of New Mexico, the Rio Grande Pueblo of New Mexico, the Apache tribe of Oklahoma, the Osage tribe, the Menominee of Wisconsin, the Cherokee, Choctaw, Chickasaw and Citizen Potawatomi nations of Oklahoma, the Navajo Nation, and the Oglala Sioux tribe.

It also has committed to spend $2 million of its own money to administer these programs and to educate potential Indian borrowers.

PMI is not a mortgage lender, so it is working with lenders such as Washington Mutual Bank and Wells Fargo Home Mortgage in its effort. It sells mortgage insurance to borrowers which put up less than 20 percent of their own money as a downpayment. Mortgage insurance is required by the big mortgage agencies, such as Fannie Mae and Freddie Mac, that facilitate home-loan finance.

PMI began its commitments in 1998 with a $10 million program for the Chickasaw Nation in 1998 and has quickly accelerated. That program, which won a Social Compact award, became the model for others in Oklahoma, the Cherokee, Choctaw and Citizen Potawatomi.

Those commitments, however, were all for private property, as there are no reservations in Oklahoma. This year, PMI has extended its program to try to facilitate lending on reservation trust land, signing a pact to do so with the huge Wells Fargo Home Mortgage, the largest mortgage banking firm in the country.

It announced programs on the Navajo Nation and for the neighboring Ute tribe. The Navajo program is an attempt to build a real estate market on the reservation by buying and rehabbing homes for resale. The Ute program is a first mortgage effort.

Roger Houghton, chief executive of PMI, attributed his passion for Indian finance to an experience he had building a house on the Cheyenne River Sioux Tribe reservation in South Dakota in 1995.

The home was sponsored by Habitat for Humanity. PMI employees built it in five days at Eagle Butte while living in tents. As a result he directed PMI affordable housing specialist Jean Garrison to start looking for opportunities in Indian country.

Before he retires, Houghton would like PMI to build another house in Eagle Butte, hopefully next summer. He also listed Acoma Pueblo, the Navajo, and the Pine Ridge reservation of the Oglala Sioux Tribe as key initiatives.

Houghton is exploring innovative public-private partnerships with government entities like the Federal Housing Administration.

Usually, FHA, which provides government mortgage insurance, and a private mortgage insurance company would not work together. PMI has been working with private sector partners like Wells, Washington Mutual, Freddie Mac and First Americans Mortgage Corp. of Kansas City.