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Local Initiatives Promote Homeownership in Indian Country

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Spring 2015   


        Obstacles, Solutions, and Self-Determination in Indian Housing Policy
        Who Counts? Identifying Native American Populations
        Local Initiatives Promote Homeownership in Indian Country

Local Initiatives Promote Homeownership in Indian Country


      • Local initiatives, with the support of federal policies and national nonprofits, address unique barriers to homeownership in Indian Country.
      • Infrastructure development and home construction and rehabilitation increase the supply of affordable, quality housing in areas where housing conditions are generally poor.
      • Downpayment assistance programs, in tandem with financial literacy or homebuyer education courses, help families achieve and sustain homeownership with low levels of default.

Residents of Indian Country face a diverse set of housing challenges, including overcrowding, high cost burdens, and a lack of affordable, high-quality housing options for both renters and homeowners (see "Obstacles, Solutions, and Self-Determination in Indian Housing Policy"). Tribal governments, tribally designated housing entities, community development financial institutions (CDFIs), and other stakeholders are addressing these challenges by rehabilitating and constructing rental and owner-occupied housing, fostering credit availability, and providing financial education. Along with the development of affordable rental housing, the promotion of homeownership in Indian Country, a goal valued by many Native Americans, promises to alleviate the pressing need for suitable homes. A number of barriers, however, make homeownership unattainable for many residents of Indian Country. The unique legal framework governing land ownership and mortgage transactions in Indian Country restricts credit access and limits the viability of local housing markets.1 Additional challenges associated with the remoteness of many tribal reservations and trust lands, such as higher construction costs and insufficient infrastructure, further impede development. Finally, high rates of poverty and unemployment, low incomes and savings, and weak credit histories make securing loans difficult for many potential homebuyers.2

Despite these considerable barriers, the American Indian or Alaska Native homeownership rate in tribal areas in 2010 was 67 percent, slightly higher than the national rate of 65 percent.3 This rate, however, is lower than the overall 72 percent homeownership rate in rural areas where land costs are typically low and relatively few rental properties exist.4 Rates of homeownership, although instructive, do not tell the full story of homeownership in Indian Country. Homeownership rates vary widely among reservations, and in some tribal lands, homeownership rates are very high but housing quality is poor.5 For example, in the Navajo Nation Reservation and Off-Reservation Trust Land in Arizona, New Mexico, and Utah, 75 percent of occupied housing units are owner occupied. Yet more than half of all residences lack complete bathroom facilities and complete kitchen facilities.6

A number of local initiatives, with the support of federal policies and national nonprofits, seek to overcome these obstacles to homeownership by supporting infrastructure development and home construction and rehabilitation, increasing access to mortgage credit, cultivating financial literacy, and providing direct financial assistance to homebuyers. A major resource for constructing and rehabilitating housing is the Indian Housing Block Grant (IHBG) program under the Native American Housing Assistance and Self-Determination Act (NAHASDA). Tribes have directed most of their IHBG development funding toward homeownership units, primarily for rehabilitation. Between 2003 and 2008, NAHASDA grantees built, acquired, and rehabilitated 11,100 rental units compared with 39,363 homeownership units, 27,422 of which were rehabilitated. National American Indian Housing Council board members suggest that grantees prefer to develop homeownership units because their ongoing maintenance costs are lower.7 In addition to increasing the supply of homeownership units, tribes use NAHASDA funds and other resources for homebuyer counseling and downpayment assistance. The Navajo Partnership for Housing (NPH), the Ho-Chunk Community Development Corporation, the Lumbee Tribe, and the Federal Home Loan Bank (FHLB) of Des Moines are among the many local and regional entities that are successfully promoting homeownership in Indian Country despite ongoing challenges.

Each of these four organizations endeavors to fill information gaps both for financial institutions unfamiliar with the legal landscape and federal programs unique to Indian Country and for homebuyers unfamiliar with mortgage finance. These organizations also offer financial assistance to meet needs common to low- and moderate-income borrowers inside and outside of Indian Country, helping homebuyers surmount the otherwise prohibitive hurdle of obtaining a downpayment. Although they face largely similar challenges through comparable programs, these initiatives are tailored to local realities such as housing availability and quality. The efforts of these organizations demonstrate the viability of their respective markets and highlight the potential of increased investment in homeownership in Indian Country.

Navajo Partnership for Housing

Each of the barriers to homeownership discussed above is present in some way in the Navajo Nation, by far the largest and most populous Indian reservation in the United States.8 Since its founding in 1996, the Navajo Partnership for Housing (NPH) has worked to overcome these barriers by increasing access to mortgage credit and affordable homeownership options. The scarcity of credit in the Navajo Nation was particularly severe. No conventional mortgages were made there before 1994, largely because of legal issues surrounding mortgage transactions and ownership of federal trust land.9 In addition to longstanding problems with credit access in the Navajo Nation, much of the existing housing stock is of substandard quality. Not only are kitchen and plumbing facilities incomplete in half of occupied units, but approximately one-third of households depend on water transported from offsite.10 A needs assessment conducted for the Navajo Housing Authority (NHA) in 2011 estimated that more than 34,000 new units and an additional 34,000 repairs to existing homes were necessary to adequately house the population of the Navajo Nation.11 New construction and substantial rehabilitation are needed to ensure that homeowners in the Navajo Nation will have high-quality housing. Yet, despite its expansive area, the 27,000-square-mile reservation lacks available land for needed development; NHA reports that as much as 89 percent of the Navajo Nation’s land is bound by grazing rights issued decades ago. U.S. Government Accountability Office (GAO) research finds that grazing permit holders have been reluctant to relinquish their legal rights in part because of their perception that new housing development would negatively affect their communities.12

Photo shows a single house constructed with straw bale design.
In partnership with the University of Colorado Boulder’s Native American Sustainable Housing Initiative, the Thunder Valley Community Development Corporation is constructing energy-efficient, sustainable housing like the straw-bale design pictured above. Thunder Valley CDC
Some prospective homebuyers have been able to obtain individual homesite leases on plots that are free of grazing or other encumbrances, but this can be a very time-consuming and cumbersome process. In addition, these sites are often remote, which incurs additional construction costs. According to NHA officials, many Navajo communities also lack basic infrastructure to support new construction, including roads and utilities.13 These challenges have prevented the housing market from fully developing, leaving residents largely unfamiliar with the workings of homebuying and mortgage financing.14 Even if financing were more readily available, many residents are unable to borrow because of their low incomes or weak credit histories. According to the 2009–2013 American Community Survey (ACS) 5-year estimates, the Navajo Nation and Off-Reservation Trust Land has an unemployment rate of 21.6 percent, a median income of $26,447, and a poverty rate of 41.3 percent.15

NPH addresses these challenges with both supply- and demand-side approaches. NPH’s primary initiatives are housing construction and development, homebuyer and financial literacy education, and lending and downpayment assistance. NPH functions as both an intermediary and a facilitator, preparing potential homeowners to navigate the buying and borrowing processes, helping lenders understand the unique legal challenges of lending in Indian Country as well as available programs and products such as the Section 184 Indian Home Loan Guarantee Program, and connecting those borrowers and financial institutions with one another.

NPH emerged out of discussions in 1995 among representatives of the Navajo Division of Economic Development (DED), FHLB Chicago, and others about how to increase the availability of mortgage credit and private investment in the Navajo Nation. FHLB Chicago introduced the Navajo DED to NeighborWorks America (then the Neighborhood Reinvestment Corporation), which facilitated workshops that brought together representatives of various tribal departments, state and federal agencies, private financial institutions, and Navajo residents. Acting on feedback from the workshops, the Navajo Division of Community Development and Navajo DED decided to establish the partnership, supplying funding to start the nonprofit organization with additional financial support from NeighborWorks America.16 Incorporated in April 1996, NPH remains a NeighborWorks America affiliate and has been supported by five CDFI Fund awards (in 2002, 2004, 2009, 2012, and 2014) totaling $1,328,479 to fund loans, technical assistance, and operating expenses.17

Home Construction. NPH has worked to address the insufficient supply of affordable, high-quality housing in the Navajo Nation through new home construction. Typically, this has meant scattered-site development on individual home-lease plots rather than clustered, multiunit construction. In such a rural area, however, scattered-site development can be very expensive. Although the added costs of transporting materials and workers to remote sites may make scattered-site development less cost effective than alternative methods, it has enabled NPH to “meet the population where they were” and build where they wanted to live, according to Steve Barbier of NeighborWorks America. Scattered-site construction includes both wood-framed homes built onsite and manufactured homes. Buyers primarily use Section 184 loans to finance their homes, sometimes in combination with the NPH downpayment assistance program. The remoteness of home-lease plots, however, complicates extending basic infrastructure to new homes. The purchase price range for newly constructed scattered-site homes has been approximately $150,000. More recently, NPH has been involved with new construction in multihome subdivisions that allow for more efficient investment in infrastructure. NPH built and sold 16 homes in the past year and has already presold 7 of the next 9 homes that are expected to be built in 2015. Development has been funded by a combination of federal programs such as IHBG and private investment, and demand for the new homes, which range in price from $236,000 to $271,000, has been steady. Estimated costs for new construction of nonmanufactured single-family homes in the Navajo Nation are regionally specific, ranging from $150 to $250 per square foot in 2011.18 By comparison, the National Association of Home Builders estimated the average construction cost of a single-family home at $80 per square foot that year for the nation as a whole.19

Homebuyer and Financial Literacy Training. Homebuyer education in the Navajo Nation was and continues to be critical because of the absence of traditional mortgage lending before NPH’s founding. Residents of the Navajo Nation had little to no experience with the basics of mortgage finance. Experience with homebuyer education showed that a more fundamental financial literacy program — on the basics of banking, for example — was also needed; it has since been added. To date, more than 3,000 families have graduated NPH courses. Barbier reports that the ratio of people who graduate homebuyer education courses to those who purchase homes in the Navajo Nation, at about 1 in 10, is far lower than it is for NeighborWorks America programs nationally, which ranges from 1 in 3 to 1 in 7. He believes that this difference reflects the challenges of lending in Indian Country as well as the supply problems specific to the area.

Lending and Downpayment Assistance. NPH counsels would-be homebuyers to connect them with appropriate lenders, sometimes in conjunction with NPH’s construction or downpayment assistance efforts. Since its founding, NPH has helped more than 440 households secure financing. As a Native CDFI, NPH has a small amount of capital to provide direct financing to borrowers who are unable to secure a loan from another lender or secondary financing to support borrowers who have first mortgages with partner lenders. NPH currently has approximately 60 amortizing loans in its portfolio, most of them secondary financing, with a low delinquency rate.

Photo shows construction workers framing a building.
New construction addresses the acute need for quality, affordable housing in the Navajo Nation. Navajo Partnership for Housing
NPH also assists homebuyers through a downpayment and closing cost assistance program. NPH provides participants with $12,500 toward downpayment and closing costs through a loan that is forgivable over 5 years. Most of the mortgages associated with this program have been Section 184 loans, with smaller numbers of conventional, U.S. Department of Agriculture (USDA), or USDA-guaranteed loans. Because it is funded primarily by IHBG, the program is subject to HUD income guidelines dictating that recipients must be at or below 80 percent of the area median income (AMI), and homes must be bought on the reservation by either an enrolled member of a federally recognized tribe or the spouse of an enrolled member. A portion of downpayment assistance funding comes from NeighborWorks America grants or from private financial institutions; assistance from these sources can be used to purchase homes outside of the Navajo Nation.

Lessons Learned and Looking Forward. According to Barbier, the NPH model, with residents and tribal members working with financial institutions on a partnership board, has contributed to the organization’s success. As a trusted intermediary, NPH has created a space for potential Navajo homebuyers to learn about mortgage finance and the programs and products available to them as well as for financial institutions to learn how to lend in Indian Country. Both buyers and lenders have had positive experiences. Barbier notes that 20 years ago, much remained uncertain on both sides, but experience has shown that “folks on the Navajo Nation are good borrowers; they end up being a good credit risk.” He says that a strong market exists for buyers that exceed the income requirements of many of the housing programs operating in Indian Country. However, as financial institutions grow familiar with tribal laws and programs such as Section 184, they may begin to play a larger role in the market for borrowers with incomes over programmatic limits.

Housing problems in the Navajo Nation, including the low stock of high-quality homes for owners, remain daunting. Barbier says NPH could have a bigger impact if it could expand the scale of its activities. To do so, NPH would need more investment from screened private financial institutions — meaning that NPH has identified them as being good-faith partners — who consider the Navajo Nation a sound investment. Although the Navajo Nation has enjoyed expanded autonomy over the leasing of trust land under the Navajo Surface Leasing Reform and HEARTH Acts (see “Obstacles, Solutions, and Self-Determination in Indian Housing Policy”), land titles must still be recorded through the Bureau of Indian Affairs in Albuquerque. The tribe is working to take control of this process to expedite mortgage transactions and development.20 By building capacity through partnerships with both native and nonnative financial institutions and by continuing to confront housing barriers on multiple fronts — through construction, homebuyer and financial literacy education, and lending and downpayment assistance — NPH can build on its previous accomplishments to further promote homeownership in the Navajo Nation.

Downpayment Assistance Programs

As NPH’s experience indicates, downpayment requirements can be a prohibitive obstacle for prospective Native American homebuyers who are otherwise prepared for homeownership and able to afford monthly mortgage payments. A number of local programs throughout the country assist potential homebuyers by providing financial assistance for downpayment and closing costs. Research suggests that such initiatives have the potential to increase homeownership in Indian Country; Herbert and Tsen conclude “that downpayment assistance programs that provide even modest amounts of assistance can have significant impact on the number of low-income and minority households that buy homes.”21

A man and woman holding a large check.
The Lumbee Tribe’s downpayment assistance program puts homeownership in reach of first-time buyers like Miranda Lockey, pictured here with tribal councilman Walter Lowery. Lumbee Tribe
Evidence on the long-term performance of loans associated with downpayment assistance programs, however, is mixed. A 2005 GAO study found that loans with downpayment assistance that are insured by the Federal Housing Administration (FHA) “have higher delinquency and claim rates than do similar loans without such assistance.”22 Other research indicates that such programs pose no threat to loan quality; Freeman and Harden find no difference in mortgage performance for low- and moderate-income borrowers using downpayment assistance programs compared with those who did not.23

Krystal Langholz, director of programs for the First Nations Oweesta Corporation, says that downpayment assistance programs are most effective when “matched with individual development account programs that encourage strong financial skill development before homeownership,” and that “they definitely need to be coupled with financial education and self-sufficiency training.” She notes that more research is needed to assess whether foreclosure rates are in fact lower for downpayment assistance programs that require intensive financial capabilities training compared with those that do not require such training. In addition to whether or not an assistance program requires homebuyer training, program aspects such as income qualifications and assistance amounts vary widely and could be subject to further research. Perhaps the more important research objective, says Langholz, would be “longitudinal, multi-year follow-up quality of life data for those who participate in downpayment assistance, individual development account, and other programs to ascertain the success of these programs in creating long-term change in the lives of participating families.”24

One benefit of homeownership for Native Americans is the opportunity to build wealth through home equity. The potential for equity building depends on the quality of the home and the viability of a resale market, among other factors, and therefore varies considerably throughout Indian Country. In the Navajo Nation, where many homes are of substandard quality, the median home value according to ACS was $65,100 in 2013.25 As a result, homebuyers participating in NPH new construction programs have the potential to build much greater equity than most Navajo homeowners. Median home values in other tribal areas are much higher, in part because housing in these areas is of comparatively better quality. For example, the median home value in 2013 was $100,600 in the Chickasaw Oklahoma Tribal Statistical Area and $218,600 in the Knik Alaska Native Village Statistical Area.26 Participants in the downpayment assistance programs described below get a jump start on building equity in their homes and may be able to purchase homes of above median value in their markets.

Ho-Chunk CDC

The Ho-Chunk Community Development Corporation (CDC), a Native CDFI like NPH, promotes homeownership in Indian Country through downpayment assistance. Formed by the Winnebago Tribe of Nebraska in 2000, the Ho-Chunk CDC serves Native Americans in Thurston County with a focus on housing, commercial, and community (especially youth) development.27 The northern half of Thurston County is home to the Winnebago Indian Reservation, which, coupled with off-reservation trust land, has a growing population of around 2,700.28 Only 61 percent of occupied housing units are owner occupied, and the tribal lands have relatively little new housing stock.29

A 25 percent poverty rate and 10 percent unemployment rate indicate persistent economic challenges for residents of the Winnebago reservation. Yet Frank Schersing, executive director of the Ho-Chunk CDC, says that there are many people on the reservation with decent-paying jobs who can afford a monthly mortgage payment — the median household income of the reservation and off-reservation trust lands is $44,615 — but who lack the necessary savings for a downpayment.30 This problem is compounded by the absence of depository institutions on the reservation; many residents lack not only a sufficient amount of savings but also a savings account itself. To help households with sufficient income but insufficient savings achieve homeownership, the CDC began providing homebuyers with downpayment assistance in 2002.

Photo shows a construction site with men in hard hats and the Quinhagak prototype house in the background.
Efforts to enhance energy efficiency, as in the Quinhagak prototype designed by the Cold Climate Housing Research Center in partnership with the Native Village of Kwinhagak, reduce a household’s utility costs, which in turn can make homeownership more sustainable.
Ho-Chunk CDC has adjusted its administration of downpayment assistance programs in response to experience and to the varying requirements of funding sources. When downpayment assistance funds come from HUD grants, the CDC applies the appropriate income requirements, but when funds come from other sources, typically through the tribal government, income limits do not apply. The CDC’s first downpayment assistance grants, between $3,000 and $15,000 per homebuyer, were funded through a set-aside from the tribal gas tax. Later iterations of assistance programs offered borrowers larger amounts — closer to $80,000 — by combining various funding sources. In 2010 and again in 2014, the Winnebago Tribe designated dividends from the tribal enterprise Ho-Chunk, Inc., to fund a Housing Stimulus Program (HSP). This program has made $2.5 million available to provide homebuyers with $50,000 in downpayment assistance, requiring only that recipients be enrolled members of the tribe and that the home purchased be new construction located on the reservation. New construction in the rural area, however, is likely to have high downpayment requirements and therefore can be cost-prohibitive for potential buyers. Ho-Chunk CDC helps borrowers meet these requirements by leveraging HUD grants, building assistance packages that also include funds from the Winnebago Tribe’s gas tax and HSP as well as, occasionally, the Nebraska Affordable Housing Trust Fund.31 Currently, the amount of assistance typically offered is approximately $65,000, with an average home purchase price for program participants of approximately $180,000, which is higher than both the median value of a home on the reservation ($66,900) and the statewide median home value ($128,000).32

Most of the loans associated with the program have been Section 184 guaranteed loans offered through an off-reservation depository institution. Because Section 184 loans require relatively low downpayments, Ho-Chunk CDC’s assistance may also cover closing costs and a portion of the principal. Since 2002, the CDC has provided more than $2 million in downpayment assistance to 40 families, and Schersing reports that during that time only one recipient has defaulted on a mortgage. The CDC’s assistance programs have also fostered the development of a more viable housing market on the reservation. When the CDC first began offering assistance, real estate professionals had trouble appraising new construction in rural areas where most of the other housing dated to the 1930s and 1940s. Over time, the homes purchased through the program have helped provide a market basis of comparison for appraisals and raised home values.

Although financial literacy and homeowner education are not a formal eligibility requirement, the Ho-Chunk CDC connects program participants with these courses to promote a greater understanding of terms and products that financial institutions offer. The courses emphasize credit scores and histories and help participants understand how to challenge items on their credit reports. Schersing says that many people in the area have low credit scores due to past-due medical bills that were actually the responsibility of a third party. Schersing says that the need for financial literacy training has been one of the main lessons learned over the course of the program, and that the Tribal Council may require recipients of downpayment assistance to take these courses in the future. Demand for the downpayment assistance program has been steady; all of the CDC’s assistance funds are currently committed.33

Lumbee Tribe

Taking a somewhat different approach from the Ho-Chunk CDC, the Lumbee Tribe of North Carolina has administered a successful downpayment assistance program since 2002, shortly after the formation of the tribe’s current governing structure. Compared with the Ho-Chunk CDC, the Lumbee program serves more families with smaller amounts of assistance, but its goals and rationales are the same. According to the Lumbee Tribe’s housing manager, Kathy Locklear, housing is available in the tribal area, but many residents lack the income and credit history needed to attain homeownership. Recognizing, however, that some households do have a high enough income to afford a monthly house payment but have difficulty amassing sufficient savings for a downpayment, the Lumbee Tribe created the program to bring homeownership within reach for these families.

The program provides income-based assistance ranging from $4,000 to $10,000 that can be applied to a downpayment, closing costs, or principal reduction. The lead applicant must be an enrolled member of the Lumbee Tribe. Recipients must be first-time buyers purchasing a home within the tribal service area (Robeson, Cumberland, Hoke, and Scotland counties of North Carolina), and household income must be at or below 80 percent of the national median income to qualify for assistance. Households earning 70 to 80 percent of the national median income receive $4,000 in assistance, with the amount increasing incrementally as income decreases to a maximum of $10,000 for households earning 49 percent or less of the national median. The assistance takes the form of a five-year loan that is forgivable as long as the recipient lives in the home as a primary residence for five years. Locklear reports that very few families sell before the five-year mark. Most loans associated with the downpayment assistance program are guaranteed either by FHA or USDA, as few local lenders participate in the Section 184 loan guarantee program.34 Program participants must attend a homebuyer education workshop.

The homeownership and downpayment assistance programs, along with the tribe’s rehabilitation and new construction programs, are funded by NAHASDA Indian Housing Block Grants. Since it began in 2002, the downpayment assistance program has provided $3 million to approximately 440 families. Program-assisted loans have performed well; Locklear estimates that only five or six loans, or less than 2 percent, have entered default over the life of the program. For reference, the average national foreclosure rate from 2004 to 2010 according to the U.S. Census Bureau was 2.51 percent, and the average rate of U.S. properties with at least one foreclosure filing from 2007 to 2014 was 1.5 percent as reported by RealtyTrac.35 The Lumbee Tribe’s assistance program has evolved based on experience. The program initially paid all of the participants’ closing costs and the required downpayment, but it shifted to the current income-scaled model to provide assistance to more families and to do so through a preset, income-based allocation. Administrators also found that instead of relying only on designated real estate attorneys, the program could work more smoothly by allowing lenders to select attorneys with whom they were accustomed to working, especially as local attorneys have become acquainted with the program.36

Federal Home Loan Bank of Des Moines

The Federal Home Loan Bank of Des Moines’ Native American Homeownership Initiative (NAHI) promotes Native American homeownership in the states of Iowa, Minnesota, Missouri, North Dakota, and South Dakota — home to approximately 330,000 Native Americans, including large numbers of Chippewa in Minnesota and North Dakota and Sioux in North and South Dakota.37 The NAHI was established in 2002 following discussions with Native American members of FHLB’s advisory council about the unique difficulties of achieving homeownership in Indian Country. The NAHI is part of the bank’s Strong Communities Fund, which it created in 1989 to meet its statutory requirement to contribute at least 10 percent of the previous year’s net earnings to an Affordable Housing Program (AHP). FHLB Des Moines’ AHP has two parts, a mandatory competitive application grant program and an optional homeownership set-aside program.38 Authorized uses of the set-aside program include assistance with downpayments and closing costs. FHLB Des Moines allocated $400,000 to its AHP in 2014.39

The NAHI downpayment assistance program operates though FHLB member institutions (local banks, thrifts, and savings and loans), which offer first-time homebuyers with incomes at or below 80 percent of AMI grants for up to $10,000 in assistance for downpayments and closing costs, forgivable after 5 years. Although regulations set the maximum amount of assistance at $15,000, the $10,000 amount available through the NAHI program is twice that of FHLB Des Moines’ general downpayment program in recognition of the special challenges facing Native American homebuyers.40 Gary Dodge, vice president and director of community investment for FHLB Des Moines, indicates that $10,000 is more than enough to cover not only the downpayment and closing costs in most of the district’s housing markets but also a portion of the loan principal, thereby lowering monthly payments. Recipients use various loan types based on their financial qualifications. In 2014, for example, of 24 homebuyers assisted, 11 used conventional loans, 10 used Section 184 loans, and 3 used USDA-guaranteed loans. Homes can be purchased anywhere within the five-state district, and price caps are determined by each state’s respective housing finance authorities. Participants must complete a Fannie Mae- or Freddie Mac-approved financial literacy program offered by the member bank, a nonprofit, or a tribal housing authority. Dodge says that online programs have been especially useful because many areas of the district are very remote.

Funds are disbursed to eligible applicants on a first-come, first-served basis. Demand for the program, which has been channeled primarily through about a dozen member banks, has remained steady and has not been oversubscribed in any single year. Initially, the program was limited to assistance for home purchases in what FHLB Des Moines called “service areas,” which included tribal reservations and trust lands. More recently, the program has been available to enrolled members of federally recognized tribes for home purchases anywhere in FHLB Des Moines’ five-state district. This change opened up the program to individuals pursuing jobs and other opportunities outside of reservations. As of September 2014, the program had disbursed $4.7 million to more than 600 homeowners since it began in 2002. Dodge reports that foreclosure rates in the district’s downpayment programs are generally very low and that based on anecdotal evidence, the NAHI program has a low rate of default. To date, FHLB Des Moines is the only one of the 12 FHLBs to offer a downpayment assistance program specifically for Native Americans.41

Building on Success

Promoting homeownership is just one of several approaches to address pressing housing needs in Indian Country; others include improving housing conditions and increasing the availability of quality, affordable rental housing. Langholz says that although each of these issues deserves attention, homeownership remains a worthwhile goal in its own right as “one of the major bedrocks of asset development and family stability.”42 Local organizations in Indian Country, including Native CDFIs, tribal governments, and financial institutions, are promoting homeownership using approaches that address the supply- and demand-side challenges of their local housing markets. NPH’s construction efforts, for example, are critical for increasing the supply of affordable, quality housing in an area where housing conditions are generally poor. Similarly, differences in how the Ho-Chunk CDC, Lumbee Tribe, and FHLB Des Moines implement their downpayment assistance programs reflect local realities. For example, the comparatively low amounts of assistance that the Lumbee Tribe provides offer meaningful aid to a larger number of households in a market with an existing supply of quality housing, whereas the higher amounts that the Ho-Chunk CDC offers encourage new construction in a market lacking affordable options.

The downpayment assistance programs administered by these organizations have been successful in helping families achieve and sustain homeownership, overcoming the often prohibitive barrier posed by downpayment requirements. Although some research has pointed to potential problems with loan performance associated with downpayment assistance, these programs self-report very low levels of default, supporting other research that has not found such problems.43 This low default rate holds true both for programs offering assistance in larger amounts (and a larger percentage of the total purchase price), such as those administered by the Ho-Chunk CDC, and for programs offering smaller amounts of assistance, such as the Lumbee Tribe’s program. Notably, all of these programs require (or, in the case of Ho-Chunk CDC, are complemented by) financial literacy or homebuyer education courses. Further research of existing programs may shed light on which program characteristics lead to the best outcomes.

Although these programs have successfully opened up opportunities for homeownership for hundreds of households, great need remains. The organizations profiled here and others like them can expand their efforts as they build internal capacity, increase the financial literacy of potential borrowers, and encourage the development of financial institutions and housing markets. Perhaps the greatest potential for these organizations to promote homeownership in Indian Country on a larger scale lies in their ability to demonstrate the demand for and viability of homeownership and development in Indian Country. These local organizations hope to build on their success and attract greater investment from both Native and non-Native financial partners.

Related Information:

Native Communities Build Sustainable, Culturally Relevant Housing

  1. Yair Listokin. 2001. “Confronting the Barriers to Native American Homeownership on Tribal Lands: The Case of the Navajo Partnership for Housing,” Urban Lawyer 33:2, 440.
  2. U.S. Government Accountability Office. 2014. “Native American Housing: Additional Actions Needed to Bet­ter Support Tribal Efforts,” 4; 10–2.
  3. Kathryn L.S. Petit, G. Thomas Kingsley, Jennifer Biess, Kassie Bertumen, Nancy Pindus, Chris Narducci, and Amos Budde. 2014. Continuity and Change: Demographic, Socioeconomic, and Housing Conditions of American Indians and Alaska Natives, Washington, DC: U.S. Department of Housing and Urban Development, 54; U.S. Census Bureau. 2011. “2010 Census Shows Second Highest Homeownership Rate on Record Despite Largest Decrease since 1940,” 6 October press release.
  4. Housing Assistance Council. 2012. Taking Stock: Rural People, Poverty and Housing in the 21st Century, 4; William Hawk. 2013. “Expenditures of Urban and Rural House­holds in 2011,” Beyond the Numbers 2:5, 3.
  5. Richard M. Todd and Fedrico Burlon. 2009. “Home­ownership Gaps among Indian Reservations Prove Puzzling,” Community Dividend.
  6. U.S. Census Bureau. 2009–13 American Community Survey 5-Year Estimates; RPI Consulting, The Jones Payne Group, Native Home Capital, and Alternative Marketing Solutions. 2011. Phase II Housing Needs Assessment and Demographic Analysis, Navajo Housing Authority, 18.
  7. U.S. Government Accountability Office. 2010. “Tribes Generally View Block Grant Program as Effective, but Tracking of Infrastructure Plans and Investments Needs Improvement,” 15.
  8. Tina Norris, Paula L. Vines, and Elizabeth M. Hoeffel. 2012. “The American Indian and Alaska Native Popula­tion: 2010,” 2010 Census Briefs, 14; U.S. Department of the Interior, Indian Affairs. “District IV” ( Accessed 10 February 2015; Interview with Steve Barbier, 22 January 2015.
  9. Listokin, 439.
  10. RPI Consulting et al., 87.
  11. Ibid., 23.
  12. U.S. Government Accountability Office 2014, 42; 45.
  13. Ibid., 42.
  14. Listokin, 443–6.
  15. U.S. Census Bureau. 2009–13 American Community Survey 5-Year Estimates.
  16. Interview with Steve Barbier.
  17. U.S. Department of Treasury. “CDFI Fund Award Database” ( Accessed 16 April 2015.
  18. RPI Consulting et al., 154.
  19. Heather Taylor. 2014. “Cost of Constructing a Home,” National Association of Home Builders website ( Accessed 3 June 2015.
  20. Interview with Steve Barbier.
  21. Christopher E. Herbert and Winnie Tsen. 2007. “The Potential of Downpayment Assistance for Increasing Homeownership Among Minority and Low-Income Households,” Cityscape 9:2, 153; Christopher E. Herbert, Winnie Tsen, and Abt Associates. 2005. “The Potential of Downpayment Assistance for Increasing Homeownership Among Minority and Low-Income Households,” prepared for U.S. Department of Hous­ing and Urban Development, Office of Policy Develop­ment and Research.
  22. U.S. Government Accountability Office. 2005. Addi­tional Action Needed to Manage Risks of FHA-Insured Loans with Down payment Assistance, 4.                                       
  23. Allison Freeman and Jeffery J. Harden. 2013. “Af­fordable Homeownership: The Incidence and Effect of Downpayment Assistance,” UNC Center for Com­munity Capital, 1.
  24. Email correspondence with Krystal Langholz, 20 January 2015.
  25. U.S. Census Bureau. 2013 American Community Survey 1-Year Estimates.
  26. Ibid.
  27. Ho-Chunk CDC. “Home” ( Accessed 14 January 2015.
  28. Winnebago Tribe. “About Us” ( Accessed 14 January 2015; U.S. Census Bureau. 2009–13 American Community Survey 5-Year Estimates.
  29. U.S. Census Bureau. 2009–13 American Community Survey 5-Year Estimates.
  30. Ibid.; Interview with Frank Schersing, 13 January 2015.
  31. Ho-Chunk CDC. 2013. “Ho-Chunk CDC RHED Final progress report for March 5, 2010 through July 31, 2013.”
  32. Interview with Frank Schersing; U.S. Census Bureau. 2009–13 American Community Survey 5-Year Esti­mates.
  33. Interview with Frank Schersing.
  34. Interview with Kathy Locklear, 13 January 2015.
  35. U.S. Census Bureau. 2011. Statistical Abstract of the Unit­ed States: 2012, Washington, D.C., 743; RealtyTrac®. Various years. Year-End Foreclosure Market ReportTM.
  36. Interview with Kathy Locklear.
  37. U.S. Census Bureau. 2009–13 American Community Survey 5-Year Estimates; Interview with Gary Dodge, 16 January 2015. The 330,000 estimate is based on identification as American Indian and Alaska Native alone and in combination with other race or races.
  38. 12 CFR 1291.2.
  39. Interview with Gary Dodge.
  40. 12 CFR 1291.6; Interview with Gary Dodge.
  41. Interview with Gary Dodge.
  42. Email correspondence with Krystal Langholz.
  43. U.S. Government Accountability Office 2005; Herbert and Tsen; Freeman and Harden.


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