ALBUQUERQUE—An American Indian bank, Oklahoma City-based Bank2, wants to partner with New Mexico tribal housing entities to drum up more Indian mortgages in the Land of Enchantment.
Brett Robinson, vice president of mortgage lending for the Chickasaw Nation of Oklahoma-owned bank, told the Governor’s Housing Summit here that New Mexico tribal TDHEs (housing entities) could refer their members to Bank2 for Housing and Urban Development section 184 mortgages, guaranteed by the federal government.
Or they could take on more complicated roles, such as counseling tribal members on mortgage requirements and handling documentation for the bank, for a fee. The TDHE would perform processing and origination support functions for Bank2 loan officers and processors.
The tribal housing entities would get a custom branded website portal into Bank2’s loan origination system.
A third level would be for tribal housing entities to act as mortgage brokers for the bank and earn lending officer fees as regular brokers do. The TDHE would deliver a fully originated and processed loan application to Bank2 for approval and funding.
If the TDHE takes this option, it would need to acquire a loan origination system, such as Encompass (an Ellie Mae product) or Calyx Point. It would need to obtain a state license to originate on non-trust lands, and would need to get approval from HUD to be a lender in the section 184 program.
Robinson said the bank is talking to officials at Nambe pueblo about this program and hopes that other New Mexico tribes will partner with it as well.
Bank2 makes more mortgages to Indian than any other Indian-owned bank. In 2009 it made more than $140 million in home loans to Indians, ranking it ninth overall in the country.
In other news from the Tribal lending session at the Summit, the New Mexico Mortgage Finance Authority has granted a line of credit to enable a startup lender at the pueblo of Laguna to fund construction of homes it plans to offer mortgages on.
Eric Schmieder, Indian land specialist for NMMFA, announced the line of credit. The $450,000 line of credit will enable Native Community Finance, a Native CDFI (community development financial institution) to finance the building of a couple of homes at a time. It will then make mortgages on the homes to people in its service area, which includes Laguna residents as well as all American Indians in New Mexico.
The line of credit will be revolving, meaning once the CDFI has repaid the money to NMMFA the lender will have access to the same amount of money again.
Construction finance is a formidable barrier to creating housing in Indian Country both in New Mexico and elsewhere. Existing housing stock is thin and home building companies are scarce on reservations, and the necessity to bring in remote contractors adds costs in areas that have limited affordability.
The mission of Native Community Finance, headed by Marvin Ginn, “is to provide financial/homebuyer education and affordable community-oriented consumer, mortgage and business loans to Native Americans in the state of New Mexico.”
It also provides tax preparation services and Individual Development Accounts for its clients. It recently received a $148,000 award from the federal CDFI Fund (a unit of the Treasury) to get it going.
In another presentation on Indian mortgage finance at the Summit, NMMFA director of homeownership Erik Nore detailed an outreach to Indians on reservation through the MFA’s Building Trust program.
The program can be combined with other NMMFA programs like Mortgage$aver and Mortgage Booster to provide downpayment and closing costs to individual Indians.
NMMFA will extend the loans, which have an extended mortgage rate lock (good for 12 months), while U.S. Bank will service the loans (do the paperwork and collect the money owed).
New Mexico tribes participating include the pueblos of Cochiti, Isleta, Jemez, Picuris, Pojoaque, Santo Domingo, Zuni, Laguna, Sandia, San Felipe and San Juan, plus the Navajo Nation and the Jicarilla and Mescalero Apache tribes.
The NMMFA’s outreach to Indians reflects its attempt to step in and make up for a pervasive lack of lending to state Indians by New Mexico-based lenders. Home Mortgage Disclosure Act numbers for 2009 show such lenders made less than 1% of their total mortgages to Indians, who make up 11% of the state’s population.