Starting a title plant

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LAS VEGAS - Tribes tired of enduring massive delays on Bureau of Indian
Affairs approvals for land transactions, including mortgages and
inheritances, can exercise their sovereignty and start their own title
operations.

But, it is a hard thing to do, and to date, just a handful of nations have
implemented their own title plants, the legal symposium held here by the
National American Indian Housing Council heard. And while there are a
variety of ways of doing it, a common one is to get BIA to contract the job
out to a tribal entity. With BIA supervision and approval, tribal title
work becomes the equivalent of the agency's official TSR (title status
report).

Tribes that have ventured into this area include the Salish and Kootenai
Tribes of Montana, the Saginaw Chippewa Tribe in Michigan, the Colville
Tribe in Oregon and the Seminole Tribe of Florida.

Ken Goosens, mortgage specialist for the Florida Seminoles, said that the
title process is essentially a government function, usually local county
governments but also the federal government through the BIA and now tribal
governments as well. And he said lenders require title insurance on loans
to establish the primacy of their liens, and title insurers require quality
title recordations to issue the insurance.

Why would a tribe take over, at its own cost, a free BIA service? "The
quality of BIA service or lack of it," he told the meeting. Having heard
the BIA pledge to facilitate TSRs within 30 days, he asked the Indian
housing officials present if any of them had ever gotten a TSR within 30
days, to general laughter. (The federal General Accounting Office a few
years ago estimated that BIA had a 113 staff-year backlog in TSRs.)

Tribes have gone about their own title plants in somewhat different ways,
Goosens said. At the Colville Tribe, for instance, the title plant is
located within a BIA agency, but workers are employees of the tribe. They
use BIA software and tie in to the BIA network under contract to the
agency. The BIA supervisor signs off on titles and certifies the operation.

In addition, the tribe had to demonstrate to the BIA that it could do the
job better than the agency, which it demonstrated by detailing multi-year
waits for TSRs.

With the Salish and Kootenai, the operation is housed entirely in the
tribe, Goosens said. The tribes have a cooperative agreement with BIA and
get BIA funds. Titles are signed off by the director of the plant and the
local BIA superintendent. The operation is reviewed annually by BIA.

The Saginaw Chippewa run a "parallel" system, Goosens said. They operate
and fund within the tribe, and then co-record with BIA and the local county
government. Recordations are initiated at the tribe, though, and are
accepted by the other governments. BIA does review, certify and sign off on
title reports generated by the tribe.

The Florida Seminoles started its own realty office during the 1980s
because "the records were a mess."

However, the tribe does not share recordations with the BIA, nor with the
county, in an attempt to protect sovereignty, making for an "incomplete"
process. Just one bank, for instance, will accept Seminole title reports
for mortgage purposes. And, the federal section 184 mortgage program
requires a BIA TSR, effectively shutting the Seminoles out of that program
if they do not use BIA.

Goosens said in recent years he has attempted to get BIA TSRs in order to
be able to offer the HUD 184 program on tribal land, but has succeeded in
getting only three.

He said the BIA regional office in Nashville was unable to provide the
service, forcing him to try the BIA agency in Anadarko, Okla.

April Borton, executive director of the Saginaw Chippewa Housing Authority,
estimated it costs the tribe about $70,000 a year to run its title plant,
including salaries and the cost of a fireproof vault, building space and
computer scanning and imaging systems.

She stressed the importance of forming partnerships, getting council buy-in
first, and getting a legal infrastructure in place, after first developing
a plan at the housing authority level.

Important partnerships for her have included BIA, the local county
register, lenders, and their title insurance provider, Stewart Title
through its local agency, Mt. Pleasant Abstract and Title.

The benefits to the tribe have included 30-day turnaround from BIA and
relationships with three lenders that have financed more than 150 new homes
on the Saginaw Chippewa reservation through mortgage finance.

Sharon Redthunder of the Colville Tribal Realty Office said records on
7,000 tracts of lands were eight to 10 years outdated before the tribe got
a contract from the BIA to do the title work itself.

Redthunder identified a rigorous process of establishing the chain of title
on all those parcels, in some 3,000 cases from the original allottee back
in the 1800s.