Mortgage Lending on Tribal Land: A Report From the Assessment of American Indian, Alaska Native, and Native Hawaiian Housing Needs
The Section 184 Loan Guarantees for Indian Housing program, established in 1992, encourages private lenders to make home loans to Native Americans. Section 184 loans were 100 percent guaranteed at the time of the study and can be made to enrolled tribal members for homes in eligible areas, which are proposed by participating tribes and reviewed for approval by HUD. This report covers Section 184 loan originations from 1994 through May 2015 and analyzes the views of lenders and other key informants on barriers and facilitators of mortgage lending in Indian Country. The authors argue that lending in Indian Country faces barriers similar to those in other underserved markets and rural areas but is more complicated because tribal trust land cannot be alienated or encumbered. Between 1994 and May 2015, there were 28,840 Section 184 loans made, with a total value of $4.709 billion (in nominal dollars); most (93 percent) of these loans were made after 2005, reflecting new regulations resulting in expansion of eligible areas for the loans. Section 184 lending is the program most often used to support tribal trust mortgage lending. Most (88 percent) Section 184 loans, however, were made for homes on fee simple land. The Section 184 loan guarantee program enables lending on tribal trust land, but lenders identified daunting administrative barriers to establishing leases and title records. In addition, potential borrowers often have bad credit and lack knowledge of homebuying and home ownership.