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New program solves reservation home ownership conundrum

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MASHANTUCKET, Conn. ñ Building a home on the reservation can be one of the trickiest problems in Indian country. Individual ownership brings back memories of the allotment policy of the late 19th century, and its not-so-hidden goal of breaking up tribes and taking land from Indian hands. But the federal holding of tribal land in trust, designed to protect tribal territory, makes it very difficult to get a bank mortgage or to obtain the economic return on a home that the rest of the society expects as a matter of course.

Because of this dilemma, Indian home ownership has lagged far behind the rest of the country. Tribes have had very limited access to private bank lending. The economic stimulus from home building and growth in home equity has been almost non-existent, imposing a major drag on reservation economies.

But a solution might be at hand in a program newly launched by the Mashantucket Pequot Tribal Nation. With a framework of innovative tribal ordinances, tribal members are applying to build homes with mortgage financing from a local savings institution. The tribe is planning to assign 89 reservation building lots to members. On Sept. 27, the tribal clerk recorded title for the first lots, which have mortgage financing from the Dime Savings Bank.

The tribal members will own the houses outright and have the power to sell or bequeath them to other tribal members without interference from the BIA. Since the homes arenít subject to a lease, they will grow in value as time goes on and the owners pay down the mortgage, accumulating the home equity that is a major part of net worth for most Americans. But the underlying land will remain in trust held by the federal government, thus insuring that it will stay tribal territory.

The Land Assignment program has drawn strong interest from federal agencies and the home real estate industry, as well as from advocates for Native housing.

ìThis Land Assignment initiative has the potential to draw reputable lenders to Indian country, increasing the shockingly low Native American homeownership rates and reducing the threat of predatory lending,î said Jane DeMarines, director of External Relations for the National American Indian Housing Council. DeMarines is also the chair of NAIHCís Mortgage Partnership Committee. ìThis can also reduce the involvement of the Bureau of Indian Affairs in the home buying process and accordingly reduce the time required to get someone into a house.î

The key to the program is a set of tribal ordinances drafted by Mashantucket Pequot attorney Henry Sockbeson. One allows assignment of building lots to tribal members. The tribe also sets up its own title records office. The program received a major boost when the Solicitorís Office for the Department of Interior ruled that the assignments would not require BIA approval, removing a potential bottleneck.

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The second ordinance is designed to attract bank financing by setting up a foreclosure procedure through the tribal court. Private banks have been extremely reluctant to lend money against tribal trust land because they had no security they could take over if the mortgages went bad.

Sockbeson told Indian Country Today that the foreclosure ordinance would allow the tribal government to back a mortgage and reassign any defaulted property to another tribal member. But it would not go to non-members.

A member of the Penobscot Indian Nation of Maine, Sockbeson said his own tribe had private home ownership when it was state-recognized. The Penobscots received federal recognition in 1995. The tribal territory on Indian Island in the Penobscot River in Maine has the appearance of a well kept working-class neighborhood, with blocks of neatly maintained homes.

But the Mashantucket Pequots, he said, were breaking new ground for a home ownership legal structure on federal trust land. ìAs far as I know, they are one of the first, if not the first,î he said.

Federal officials are already touting the program. Housing and Urban Development Assistant Secretary Orlando Cabrera described it in June 28 testimony to the Senate Indian Affairs Committee. He said that HUDís Office of Native American Programs was working on rules to make land assignments eligible for its own Section 184 loan guarantee program.

A real estate industry spokesman also told Congress that by cutting out the BIA the Mashantucket Pequot ordinance potentially streamlined a key component of private ownership. The creation of a tribal office to record land assignments ìwith procedures similar to a county recorderís officeî would make it easier to obtain title insurance, said Ed Hellewell, a spokesman for the American Land Title Association, in July 31 testimony to the House Financial Services Committee.

Hellewell, an executive and legal counsel for a title guaranty company, said diplomatically that his experiences in obtaining title information from the BIA ìhave ranged from excellent to baffling.î

MASHANTUCKET, Conn. ñ Building a home on the reservation can be one of the trickiest problems in Indian country. Individual ownership brings back memories of the allotment policy of the late 19th century, and its not-so-hidden goal of breaking up tribes and taking land from Indian hands. But the federal holding of tribal land in trust, designed to protect tribal territory, makes it very difficult to get a bank mortgage or to obtain the economic return on a home that the rest of the society expects as a matter of course.Because of this dilemma, Indian home ownership has lagged far behind the rest of the country. Tribes have had very limited access to private bank lending. The economic stimulus from home building and growth in home equity has been almost non-existent, imposing a major drag on reservation economies.But a solution might be at hand in a program newly launched by the Mashantucket Pequot Tribal Nation. With a framework of innovative tribal ordinances, tribal members are applying to build homes with mortgage financing from a local savings institution. The tribe is planning to assign 89 reservation building lots to members. On Sept. 27, the tribal clerk recorded title for the first lots, which have mortgage financing from the Dime Savings Bank. The tribal members will own the houses outright and have the power to sell or bequeath them to other tribal members without interference from the BIA. Since the homes arenít subject to a lease, they will grow in value as time goes on and the owners pay down the mortgage, accumulating the home equity that is a major part of net worth for most Americans. But the underlying land will remain in trust held by the federal government, thus insuring that it will stay tribal territory.The Land Assignment program has drawn strong interest from federal agencies and the home real estate industry, as well as from advocates for Native housing. ìThis Land Assignment initiative has the potential to draw reputable lenders to Indian country, increasing the shockingly low Native American homeownership rates and reducing the threat of predatory lending,î said Jane DeMarines, director of External Relations for the National American Indian Housing Council. DeMarines is also the chair of NAIHCís Mortgage Partnership Committee. ìThis can also reduce the involvement of the Bureau of Indian Affairs in the home buying process and accordingly reduce the time required to get someone into a house.îThe key to the program is a set of tribal ordinances drafted by Mashantucket Pequot attorney Henry Sockbeson. One allows assignment of building lots to tribal members. The tribe also sets up its own title records office. The program received a major boost when the Solicitorís Office for the Department of Interior ruled that the assignments would not require BIA approval, removing a potential bottleneck. The second ordinance is designed to attract bank financing by setting up a foreclosure procedure through the tribal court. Private banks have been extremely reluctant to lend money against tribal trust land because they had no security they could take over if the mortgages went bad.Sockbeson told Indian Country Today that the foreclosure ordinance would allow the tribal government to back a mortgage and reassign any defaulted property to another tribal member. But it would not go to non-members.A member of the Penobscot Indian Nation of Maine, Sockbeson said his own tribe had private home ownership when it was state-recognized. The Penobscots received federal recognition in 1995. The tribal territory on Indian Island in the Penobscot River in Maine has the appearance of a well kept working-class neighborhood, with blocks of neatly maintained homes. But the Mashantucket Pequots, he said, were breaking new ground for a home ownership legal structure on federal trust land. ìAs far as I know, they are one of the first, if not the first,î he said.Federal officials are already touting the program. Housing and Urban Development Assistant Secretary Orlando Cabrera described it in June 28 testimony to the Senate Indian Affairs Committee. He said that HUDís Office of Native American Programs was working on rules to make land assignments eligible for its own Section 184 loan guarantee program.A real estate industry spokesman also told Congress that by cutting out the BIA the Mashantucket Pequot ordinance potentially streamlined a key component of private ownership. The creation of a tribal office to record land assignments ìwith procedures similar to a county recorderís officeî would make it easier to obtain title insurance, said Ed Hellewell, a spokesman for the American Land Title Association, in July 31 testimony to the House Financial Services Committee.Hellewell, an executive and legal counsel for a title guaranty company, said diplomatically that his experiences in obtaining title information from the BIA ìhave ranged from excellent to baffling.î