Focusing on Native American homeownership under Duty to Serve
Fannie Mae plays an important role in helping families buy homes nationwide. But in certain underserved markets, housing options are affected by persistent and pervasive poverty more so than in other areas.
Guidance under the Federal Housing Finance Agency’s (FHFA) Duty to Serve (DTS) Rule will expand lending to underserved rural markets and better serve affected high-need populations living there, including Native Americans. These efforts reach across our entire company, involving teams from both Single-Family and Multifamily.
We asked Kellie Coffey, who leads Fannie Mae’s Single-Family DTS rural efforts for an update on the program and financing options for Native Americans. Here’s what we found out.
The Home Story: How does support of Native Americans living on tribal lands differ than from other rural areas?
Kellie Coffey: Native American lands are dispersed widely throughout the U.S., predominantly in rural areas and the typical housing market often doesn’t support the unique needs and circumstances of this population. Proving access to affordable mortgage capital to Native American lands can be a very challenging and complex undertaking because there are individual cultural and legal challenges associated with each tribe.
THS: What are the legal challenges?
KC: There are 567 federally recognized tribes today and each has a unique structure of governance, culture, history, and identity. In addition, reservation land is held “in trust” for Native American Indians by the federal government. The goal of this policy was to originally keep Indians contained to certain lands. Now, it has shifted to preserving these lands for their people.
For instance, the Red Cliff Reservation was created through a series of treaties between the U.S. Government and the Red Cliff Band of Lake Superior Chippewa Indians (Red Cliff Band), the most recent being the treaty of 1854. Or, in the case of the Blackfeet Tribe in Montana, they have occupied the Rocky Mountain region for more than 10,000 years. About 86 percent of the residents of the reservation are Native Americans but over time, their land has been greatly reduced in size from the historical dimensions. The Blackfeet tribe is the 13th largest reservation in the U.S. at approximately 1.5 million acres in size. Individual Native Americans cannot own their land and as a result cannot build equity. This prevents them from capitalizing from a numerous of homeownership benefits that others enjoy.
Given these complexities, some lenders may be reluctant to issue mortgages for homes on tribal trust land. To ease concerns, Fannie Mae will work with tribes to review their ordinances as they relate to mortgage lending and work to execute a memorandum of understanding (MOU), which is an agreement to do business and evidence approval that the tribe’s laws and ordinances are acceptable for conventional lending. Fannie Mae wants to continue to work with financial institutions already doing some lending in these rural communities to understand their goals and seek opportunities to work together in Indian Country.
THS: Can you provide some insight into the cultural challenges?
KC: Members of many tribes suffer from high levels of poverty, often even much higher than poverty levels in other rural areas. Many of the members lack a formal education and some have never worked or traveled off their reservation. As a result, they may not understand current practices of mortgage financing, banks, or credit.
At the same time, many are working hard to preserve their culture. Red Cliff has only one remaining tribal member who is a native speaker of Ojibwe. They hold language classes to teach children and adults the language so it does not die out within their community.
There are also geographic challenges. Many tribes live in remote areas making economic development such as access to employment challenging. In addition, some parts of Montana and North and South Dakota may not be reachable during the winter months.
Education is key for these native families, who may not understand who Fannie Mae is and what we can offer, which is a barrier to gaining their trust.
THS: How can Fannie Mae support these populations?
KC: Fannie Mae has been recognized as a long standing partner in the development of Native American programs. In prior years, HUD recognized Fannie Mae’s involvement in the development of the HUD 184 program and the use of our MOUs and expertise in tribal lending. Under our three-year DTS plan, we will provide renewed support with an expectation of leadership and influence on lending in Indian Country. To be successful, we have to establish strong relationships and partnerships with the tribes and Indian Country leaders who are doing work this work and Fannie Mae must be present on the ground. We’ve spent time in the field talking with Native American leaders, and hosting roundtable events with their local housing agencies. We also have an advisory council that meets twice a year to help guide future efforts and provide feedback to what is needed in these communities. Overcoming barriers to tribal development requires a learning that addresses unique tribal history, traditions and culture. As a result, we will offer our staff a formal training that will address topics such as Native American culture, sovereignty, lands and government. This will allow us to be better partners as we focus on Native American lending now and in the future.
Read more: My Home Story: A Native American Finds Help
THS: What is the greatest need among the tribes?
KC: I would say one of the greatest needs is access to affordable capital. Native Americans are familiar and have relied on HUD’s Section 184 Indian Home Loan Guarantee Program and other government programs to provide mortgage capital. But lending in Indian country should not solely be limited to government products. Given Fannie Mae’s mission to provide access to reliable, affordable mortgage financing in all markets at all times, conventional capital should be present especially to address the lack the hurdles on tribal trust land.
In 2018, we’ve committed to foundational research to better understand the home buying nuances among the Native American population. Armed with this information, it is our goal to develop a mortgage product specific to the needs of the Native American population. That’s where we feel we can be competitive. As part of that product, it is imperative that we support financial literacy and homebuyer education with a culturally based curriculum.
This approach of educating lenders as well as potential homebuyers has been successful with our HomeReady® mortgage or our products offered by our state housing finance agency business partners, products that help low- to moderate-income buyers, and we believe it will go a long way in helping more Native Americans achieve success with homeownership.
For more information on Fannie Mae’s rural housing activities, read our Duty to Serve Underserved Markets plan.