Wells Fargo leads in mortgages lending under HUD guarantee program

PIERRE, S.D. ? Wells Fargo Home Mortgage last year topped all lenders in loans done through the Department of Housing and Urban Development's section 184 guaranteed Indian mortgages.

The Des Moines-based mortgage lender, whose Indian outreach effort is located in Pierre, increased its HUD 184 volume by 90 percent during 2001, lending $6.3 million in HUD 184s to 56 American Indian borrowers.

A unit of San Francisco-based Wells Fargo Bank N.A., Wells Fargo Home Mortgage has closed 211 mortgages for a total of $20 million in financing since it started participating in the HUD 184 program in 1996. It has remained the program's top lender since 1997.

The Wells effort comprised nearly two-thirds of all HUD 184s closed last year. The 2001 volume of $9.8 million has boosted the HUD 184 total to $88.5 million since the program's inception. In 2000, Wells closed 40 loans through the 184 program for a total of $3.3 million, down slightly from 1999, when it extended $3.8 million in finance to 46 Indian borrowers.

The mortgage banker has a staff of five officers who specialize in Indian lending, led by Juel Burnette (Sicangu Lakota). Wells' Indian mortgage operations through the 184 program accounts for just a small portion of the giant bank holding company's mortgage lending to American Indians through its regular channels.

In 2000, for instance, Wells Fargo Home Mortgage closed $129 million in loans to Indian borrowers, according to Home Mortgage Disclosure Act data. [Figures for 2001 are not yet available.] Adding in all other units, Wells Fargo bank's total mortgage lending to Indians both on- and off-reservation came to $233 million.

HUD guarantees all lender outlays on section 184 loans. Increasingly, mortgages have been made both on- and off-reservation. HUD 184s can be used for acquisition or rehabilitation of existing housing, and the construction of new homes, including manufactured housing but are not yet available for home refinancing. Loans under the program total $88.5 million since its inception.

In a related development, HUD has closed another loan in its Title VI loan guarantee program. Wells Fargo is extending $170,000 to the Northern Arapaho Tribal Housing for infrastructure on a ten-unit affordable housing project in Wyoming.

The Title VI program, named after the section of the Native American Housing and Self Determination Act that authorizes it, is a key mechanism tribes or their housing entities can use in leveraging financing.

They can use Title VI to borrow up to five times the amount they receive through HUD for "additional housing need," meaning it has the potential to bring billions of dollars into Indian country for housing.

To date eight loans totaling about $15 million have been extended.

During the last quarter of last year, First National Bank of Alaska closed two Title VI loans, one for $3.2 million to the Northwest Inupiat Housing Authority and the other for $1.66 million to the Native Village of Unalakleet.

The Unalakleet loan helped finance ten single-family units for low-income families. The Inupiat Housing Authority financed 13 rental homes in the villages of Kobuk and Shungnak.

Credit subsidies for both the HUD 184 and Title VI programs may be cut for fiscal 2003, because so much of their guarantee authority from previous years has not been used. The FY 2002 budget provided $6 million in subsidies for each program. Proposals for FY 2003, however, reduce the Title VI subsidy to $2 million, which could guarantee $17 million in loans, and HUD 184 to $5 million, which could support $200 million in loans.

In a new program for next year, $1 million has been added to support loans to Native Hawaiians. And Paul Jurkowski, who heads HUD's Native guarantee programs, said he believes the $4 million that would be lost from Title VI may revert to tribal block grants under NAHASDA.