What Do We Need Tribal Leaders to Do?

Once we’ve made the case, sharing why homeownership is important and addressing potential concerns, we need tribal leaders to support homeownership in two ways. First, we need tribal leaders to set the tone and create an environment that supports homeownership. Second, we need tribal leaders to carry out specific governmental functions that only leadership has the authority to conduct. Here, it is important for leadership to provide certainty for lenders, homebuyers, and other stakeholders involved in the home-buying and mortgage processes. Often, this means addressing lenders’ concerns and putting pieces in place that make lenders more comfortable with the process in Indian Country. Let’s take a look at these two types of support.

How can tribal leaders set the tone, and create an environment that fosters a vibrant mortgage and residential construction market within their communities so there are more homeownership opportunities for tribal members?

• ◉Identify a lead entity.

• ◉Allocate financial resources for down payment assistance and other homeownership needs.

• ◉Pay living wages to tribal employees.

• ◉Model fiscally responsible behavior.

• ◉Support the homeownership application process for tribal employees and provide timely responses to requests for Verifications of Employment.

• ◉Provide support for financial and homebuyer education courses and participate in the classes.

• ◉Develop relationships with lenders.

• ◉Invest in a Native community development financial institution (CDFI) serving the community.

• ◉Recruit insurance providers, appraisers, inspectors, and contractors.

• ◉Encourage tribal citizens to become residential construction professionals.

• ◉Encourage the TDHE to develop a “culture of payment,” which includes reducing TARs (Tenant Account Receivables) and charging market-rate rents.

• ◉Encourage TDHEs to identify tenants who are bumping up against the 30% income limits for rental eligibility to explore homeownership.

• ◉Be proactive in tying homeownership and economic development.

How can tribal leaders address lenders’ concerns and put pieces in place that make lenders more comfortable? (Please note many of these will not apply to communities in Alaska.)

• ◉Enact legal codes. As sovereign nations, tribal governments may need to enact their own codes to govern the residential construction and mortgage processes on tribal land. This may include mortgage, foreclosure, and residential building codes. These laws must be institutionalized and should not change when a new tribal administration comes into office. Tribal communities may also elect to adapt such frameworks to account for cultural factors or lifeways. For example, a community could adopt the International Building Code, but adapt it to include traditional building methods and materials.

• ◉Identify a clear path for civil claims involving mortgage foreclosure and eviction. It is critical for tribal governments to have court systems in place, free from political interference, that provide a mechanism for laws to be enforced and a venue for all parties to seek legal remedies.

• ◉ Negotiate with federal and state agencies, private lenders, and investors to access government and conventional loan programs. To provide the authority for certain lenders to do business in a tribal jurisdiction, tribal governments may need to enter into agreements with those lenders. To make the full range of public and private mortgage loan products available to their citizens, tribal leaders should seek to enter into those agreements and negotiate terms that recognize the tribe’s sovereignty, consider the interests of the borrowers, and address the requirements and concerns of the lenders.

  For example, in order to offer conventional mortgage loans that can be sold on the secondary market, secondary market investors (Fannie Mae, Freddie Mac, and Ginnie Mae) require the tribe to enter into a Memorandum of Understanding (MOU). This MOU outlines the ordinances, codes, and systems that need to be in place in order for the investors to purchase loans made in that tribal jurisdiction.

• ◉Define the tribe’s role in the event of a mortgage delinquency, default, foreclosure, and/ or eviction. On trust land, addressing delinquencies, defaults, foreclosures, and evictions can become a lengthy, complicated, and costly process for lenders and borrowers. Some tribes are taking an active role in helping to minimize delinquencies and prevent defaults and foreclosures in their communities.

  • ◉ For example, tribes may negotiate a “right of first refusal” to purchase the property in the case of a default.

  • ◉ A tribe or its housing department may help to find another family member who meets the loan qualification requirements to move into the house and take over mortgage payments, so an outsider is not moving into the community.

  • ◉ If another qualified borrower is not identified, the tribe may decide to purchase the home to add to its own housing inventory, rather than allow the home to remain vacant and potentially become vandalized and the site of criminal activity.

• ◉Develop a land management program that supports the mortgage process. It is easier for individual homebuyers and other builders to construct new homeownership units when tribal leaders have undertaken comprehensive land-use planning that maps out residential, agricultural, and commercial zoning; transportation planning; and physical infrastructure, such as water, sewer, and other utilities. In addition, mortgage-based homeownership has become even more accessible where tribal land departments have implemented an expedited, streamlined leasing process.