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Mortgage program finally set to go on Navajo

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ALBUQUERQUE, N.M. - A roadblock to development of mortgage lending on the Navajo Nation has been removed, and the first loan could close within the next 60 days.

The BIA, after a lengthy (said to be more than a year) consideration, has signed off on a new lease form which will allow the Department of Housing and Urban Development section 184 guaranteed mortgage to be offered on the Navajo Nation, the country's largest reservation.

The crux of the problem was a sovereignty dispute.

HUD claimed the tribe must get its consent to terminate a lease if it was encumbered by a mortgage. The tribe eventually agreed to indemnify HUD against any loss incurred by its exercising a termination.

The government guarantee to secure all lender outlays accelerates the lending process on the Navajo. It has taken about three years for all three parties to sign off on the lease.

Fifty mortgages a year could be financed on the reservation through the 184 program, director Paul Jurkowski said in an interview at the recent National American Indian Housing Council conference here. That first loan could close in 60 days, he said, more than have ever been closed on the gigantic reservation (it is the size of West Virginia).

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The Farmers Home Administration extended a handful of mortgages on the reservation before it became the Rural Housing Service, and the Navajo Partnership for Housing has reached its 50th financing. But the NPH figure includes both first and second mortgages to the same individual, so the total number of homes financed is fewer than 30.

NPH arranged many loans through the federal Rural Housing Service, a smattering of private mortgages, and even a HUD 184 in 1998 before the lease impasse.

Jurkowski said the HUD 184 program has closed 835 mortgages to American Indians nationwide for $82 million in financing during the last five years or so (50 more are pending). Some 300 of those have been on reservation land, much harder than on private property because the federal government holds the land "in trust" for tribes or individuals.

Jurkowski said he is confident that with the paperwork finally approved, and the diligent efforts of the Navajo Partnership to educate and prequalify borrowers, and a network of lenders committed to doing the 184s (such as Zions National Bank, Suburban Mortgage of Albuquerque, and Wells Fargo Home Mortgage), the program finally is ready to fly.

The director said he is interested in combining HUD 184s with low-interest Rural Housing Service section 502 loans to be used as second mortgages to make a lower blended rate. And he said he feels the program should do more outreach to local tribal housing associations to drum up business.

He said he wants to take the HUD 184 to the next level. His random inspection of borrowers indicates a lot of them are more mature individuals working for one of the government agencies that does business on reservations. He'd like to reach out to younger borrowers.

HUD, through section 184 and Title VI of the Native American Housing Assistance and Self Determination Act, can guarantee $275 million a year in loans.