The Navajo Partnership for Housing, which will mark its 15th year of doing the incredibly difficult next year, has bucked the housing depression to continue to bring mortgage finance to members of the Navajo Nation on or near their giant reservation, which sprawls across New Mexico, Arizona and Utah.
And, according to executive director Lanalle Smith, the Native CDFI (community development financial institution) has ambitious plans to branch out into housing project development on or near the reservation to go along with its scattered-site financings.
To date, NPH has arranged or provided 435 loans and grants to 334 families to help tribal members buy, build or rehabilitate a home. Total financing comes to $36.3 million to date.
To give an idea of what an accomplishment 435 loans on or near the reservation is, it's instructive to remember that before the 1990s, no private bank had ever done mortgage lending on the Navajo Nation, which is the size of West Virginia and has nearly 200,000 residents. In addition, there is no real estate market there as the rest of the country knows it. And, there is very little mortgage infrastructure: no Realtors, no homebuilders, no appraisers, no title plants, no closing attorneys.
And, many potential borrowers there are less than optimal mortgagors. According to a Neighborhood Reinvestment Corp. study of NPH, between 25%-43% of people on the reservation are unemployed, 40% of families are below poverty level and median household income is $20,000.
Before saluting NPH as high desert miracle workers, it's worth pointing out that more of its volume is done off the reservation than on it, where land status has made it hard for lenders to perfect a security interest. A dispute with the U.S. Department of Agriculture over homesite lease documents (just now resolved) has led to just one Rural Housing Service loan being done in the past several years. Its 2009 balance sheet shows an imbalance between revenue and expenditures. And, like all lenders, NPH has suffered higher rates of delinquency and foreclosure in the recession, and in the fall-off-the-table year of 2008 it managed just seven loans.
But that volume rebounded smartly in fiscal 2009, to 40 loans and grants for $4.2 million, and its fiscal 2010 goal is an ambitious 63 loans (21 have closed to date). If the 13 employees of NPH (11 in Gallup and two at a satellite office in Page, Ariz., another Navajo border town) are not miracle workers, they're not far short of it, either.
Conventional mortgage lending is still elusive on the Navajo. It makes up less than 10% of the NPH total, at 37 mortgages, and no lender has made a conventional mortgage to an NPH client since the mortgage bust began in 2008.
Government-insured mortgages are the bulk of NPH financings, with 98 coming through the Department of Housing and Urban Development's Section 184 program, and 99 through three RHS programs. More than 50 financings for downpayment and closing costs have come from Native American Housing Assistance and Self Determination Act money.
