Spokane, Wash. – On his way to a traditional American Indian dance competition a few weeks ago, Rodney Abrahamson, a police officer with the Bureau of Indian Affairs, stopped off at a title company to sign the papers refinancing his home mortgage. It was a satisfying stroke of the pen.
“I’ve tried to refinance through eight different places in five years,” said Abrahamson, who is 34 and lives with his wife and three children on the Spokane Indian Reservation, about an hour’s drive through rolling wheat fields from downtown.
“I explain to people the land is in trust, and the first thing out of their mouth is, ‘Yes, we’ll do it.’ A week later they call back and say, ‘What is trust land?”‘
Because most of the land on American Indian reservations throughout the country is held in trust, residents generally do not own their land individually, which means that banks have been hesitant to extend loans because they are unable to foreclose on tribal property.
That is one reason the home ownership rate for American Indians is the lowest among all ethnic groups – 33 percent – and less than half the rate for the general U.S. population.
The other is income; more than half of all American Indians on reservations live in poverty, more than four times the national average.
“The tribes didn’t want to lose trust land, and the banks didn’t know how to foreclose if they had to,” said Heidi Cleveland, marketing director with AmericanWest Bank in Spokane. “It was complicated, and they didn’t want to go down that path.”
The situation has begun to change, in part because of a federal program that increases access to bank financing by guaranteeing home loans made to American Indians on and off tribal lands. The Department of Housing and Urban Development’s Section 184 program, now available in 18 states, including Colorado, provides a 100 percent guarantee in the event of a foreclosure to lenders to American Indians buying either on or off reservations.
Should a borrower living on a reservation default, the bank cannot sell the property to anyone but an enrolled tribal member.
Begun in 1995, the loan program has expanded rapidly over the past two years. Until last year, however, tribal members who sought private financing to buy homes were limited to one or two lenders and dealers of manufactured housing who tended to charge very high interest rates.
