Many American Indian reservations are mortgage deserts, with lenders avoiding them like the plague because of difficulties over land status, persistent poverty, and lack of lending infrastructure, not to mention outdated attitudes. But here’s one that’s not.
The Bay Mills Indian Community of Michigan shows a fairly high percentage of mortgage finance on the reservation. Bay Mills Housing Authority executive director Cheryl A. Causley said 74 of the 324 houses on the reservation (as of last year) had mortgages, or more than 20%. And six more have closed this year to date.
What makes that unusual is that the community is entirely trust land, and mortgage lenders have shied away from making loans on trust land because of its complicated legal status.
Causley said the housing authority has two lenders that will make mortgages on the res, and uses federal mortgage programs like those run by the Department of Housing and Urban Development and the U.S. Department of Agriculture. Wells Fargo lends Bay Mills tribal members mortgage money using the HUD 184 program, which guarantees 100% of a lender’s outlays.
What makes this percentage even more impressive is that Bay Mills, an Ojibe tribe, is located on 3400 acres in the remote Upper Peninsula of Michigan on the shores of Lake Superior, about 25 miles from Sault Ste Marie. It has a low unemployment rate compared to many tribes (about 12%) as the tribe’s two casinos employ many tribal members. And jobs equals borrowers able to repay their mortgages.
Bay Mills’ commitment to homeownership is also evident in its aggressive “reconveying” of so-called “HUD homes” to their occupants. To date it has reconveyed exactly half, 61, of 132 units it managed under the old HUD Mutual Help program, a much-derided program superceded by NAHASDA (the Native American Housing Assistance and Self Determination Act).
More Indian Housing Authorities (IHAs) and tribally designated housing entities (TDHEs) should look to the results of the Bay Mills tribe and Causley, who is also chairwoman of the National American Indian Housing Coalition.
And more mortgage lenders should get on board. If a mortgage is 100% guaranteed by the federal government, it is difficult to see what a lender has to lose by making it. The program has been a great success, with almost $3 billion in mortgage finance guaranteed (granted, much of it not on trust land, but a significant amount of it on or near reservations).
