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U.S. Comptroller plugs $2.7 billion tribal market

WASHINGTON, D.C. ? Indian country offers an untapped $2.7 billion market for mortgage lenders, says the U.S. Comptroller of the Currency, one of the country's most important bank regulators.

In an unusual acknowledgement of American Indian sovereignty by a high-ranking federal official, Comptroller John D. Hawke Jr. says that at the core of solving tribal credit and financial problems is the need "to listen ? really listen, carefully and with respect ? to what tribal leaders and individual tribal members want."

Hawke makes these observations in an article in the most recent edition of "Community Developments," the newsletter of the Office of the Comptroller of Currency (OCC). The fall issue is devoted entirely to Indian country, and its 12 articles provide an unusually thorough overview of the Native financial terrain.

Hawke estimates that $2.7 billion in mortgages could be made to qualified borrowers on Indian lands right now. He cites a Department of Housing and Urban Development estimate of how may Indian families could qualify right now for mortgages ? 38,000 ? and multiplies it by the average loan amount ($70,000) that the mortgage agency Fannie Mae has been buying in its Native American initiative.

According to current estimates, he says, less than 2,000 mortgages are extended on tribal lands. But this is starting to change, he says, with the help of instruments like the HUD 184 guaranteed Indian mortgage, the federal One Stop Mortgage Center programs, and financial literacy campaigns.

The Mortgage Center programs are up and running on the Navajo Nation and the Pine Ridge Reservation of the Oglala Lakota in South Dakota. The newsletter describes a literacy program run by First Nations Development Institute of Fredericksburg, Va.

Regarding tribal self-determination, Hawke says "those institutions that are most successful in Indian country forge strong partnerships with tribes and together find creative solutions to lending challenges."

He points out that a common key to all the initiatives described in the newsletter is "active and ongoing collaboration among tribal leaders, lenders, government agencies and nonprofit organizations with a shared commitment to overcoming obstacles and creating opportunities where none had been thought to exist."

While acknowledging pervasive lack of Indian access to credit and financial institutions, Hawke touts progress in delivery of financial products to Indian country by the national banks his agency regulates. He notes that tribes and individual Indians now own or control 11 banks.

"Alternative methods of providing financial services ? such as locating branches in shared office space or incorporating greater electronic delivery of salaries and benefits ? hold promise to increase access to financial services on tribal lands," said Hawke.

And he points out several helpful how-to manuals OCC has published on Native finance, including "A Guide to Lending in Indian Country," "A Guide to Tribal Ownership of a National Bank," and "Providing Financial Services to Native Americans in Indian Country."

The Comptroller also discusses a long-neglected aspect of Indian finance ? access to loans for commercial businesses in Indian country. He says it is evolving beyond finance for Indian casinos, and that tribes in Alaska, Arizona, California and New Mexico have used Community Development Financial Institution Fund grants "to build and support small businesses, farms, and affordable housing."

One of the other articles in the newsletter discusses how to run a successful commercial lending program in Indian country, using the example of Arizona Business Bank, which has made about 10 percent of its commercial loans on tribal lands.

The bank has used a federal program run by the Department of Agriculture that guarantees repayment of up to 80 percent of a loan.

Some of its loans include those for commercial buildings in an industrial park on the Gila River Indian Community south of Chandler, Ariz.

It has also made a loan for a Hampton Inn near Monument Valley, Ariz., which has resulted in 50 jobs for Native Americans in that area.

The newsletter also contains four articles on the Native mortgage area. One discusses Fannie Mae's $350 million commitment to buying Indian mortgages. Another discusses the HUD 184 program and a second HUD housing guarantee, the Title VI program. A third discusses the use of Low Income Housing Tax Credits in Indian country, while a fourth looks at the innovative Apache Dawn project on the Fort Apache reservation in Arizona.

Other articles examine Wells Fargo Bank's outreach in Indian country, and describe how Nevada Bank and Trust is constructing a branch on the Duck River Indian Reservation.

And the newsletter contains observations on two of the Native-controlled banks, Borrego Springs Bank of California and Woodlands National Bank of Minnesota.