A brain trust of tribal and federal government officials recently sat down in Albuquerque, New Mexico to ponder how to get more American Indian veterans into an underused Department of Veterans Affairs (DVA) program designed specifically to provide mortgages for them.
Jeffrey Wilson, loan production officer for the VA’s Phoenix Regional Loan Center, said at the biennial New Mexico Housing Summit, held August 22-24, that despite some successes in states such as Minnesota and North and South Dakota with the Native American Direct Loan Program (NADL), in other areas, the loans are not happening.
In New Mexico, he said, just one mortgage had been provided through the program last year, in a state with more than 14,000 Native veterans.
Native vets are also eligible for the standard VA mortgage any veteran (with the appropriate discharge) can get. Wilson said he knew of three mortgages done for New Mexico Native veterans through the standard program last year by Wells Fargo, though he said there could have been more.
“The VA loan is a very good program,” he told a session of the Housing Summit, which was sponsored by the New Mexico Mortgage Finance Authority (there were two sessions on the loan at the meeting). “It’s absolutely amazing we don’t get more.”
He said the major stumbling block to more Native volume was credit and income issues. Other panelists added other obstacles: a lack of understanding of how to get the loan process done, not enough outreach, the need for homeownership training, and the lack of local champions to drum up interest in the program.
Wilson said there is a lot of interest in this program back in the Washington D.C. Department of VA headquarters and said he’d like “to get beyond the stumbling points we’ve had.”
Marvin Ginn, who heads the Native Community Finance lending and education institute based on the Laguna Pueblo, said trainings could be set up in New Mexico staffed by local people who may be better suited for the job. His own territory is going to expand. “I’ll be with every tribe in New Mexico,” he said.
Another member of the Laguna community, Marvin Trujillo Jr., the tribe’s veterans program manager, said an effort is underway to assemble a team to help local vets. He said it is “mind-boggling” no loans are being done. “A lot of them may not understand how to get the process done,” he said. “There’s no outreach in getting information out.”
He told the session attendees, “I would love to get the loan going in Laguna. We have a lot of veterans in place.”
Wilson said the loan could be used to purchase or construct a single-family home or manufactured home on a permanent foundation. It can also be used to refinance an existing NADL mortgage. No multifamily units are allowed.
Veterans who have completed full terms of service with a discharge other than “dishonorable,” active duty service members on active duty for only 90 days or more, Reserve and National Guard members with at least six years of honorable service, and surviving spouses who have not remarried are eligible to apply.
The veteran must be a tribal member or a spouse of a tribal member, and must reside on trust land.
Loans of up to $417,000 can be extended, he said, and the current interest rate is 3.5 percent. The loan must be for an owner-occupied principal residence. Down payment assistance and grants are allowed, and vets have access to a number of VA grants for modifying their units.
No minimum credit score is necessary, but vets must pass credit requirements. They need to be at least two years out from any bankruptcy or foreclosure, have judgments paid off or a repayment plan in place, and have no late payments for the past 12 months.
Wilson noted there is credit flexibility under the plan, since DVA itself is making the loan direct to the veteran. The standard VA mortgage involves a guarantee of a loan made by a private lender (like Wells Fargo).
Income must be stable and reliable, anticipated to continue, and be enough to cover mortgage payments and living expenses (the living expenses criterion is a major reason DVA mortgages perform better than others on overdues, Wilson said).
Closing costs are inexpensive, Wilson said. An appraisal will cost between $450 and $500. Inspection fees are $100 to $200 a piece. The VA funding fee is 1.25 percent for active duty members and 2 percent for reservists. If a third-party loan packager is used, that will cost another $300.