Section 184 Program and Title Status Report Delays
As the Section 184 Guaranteed Loan program continues to grow and provide homeownership opportunities, Indian housing leaders are now looking toward the future to see how it can benefit Indian Country beyond housing.
“The growth of the 184 program is showing a dramatic impact in numbers alone," Rodger Boyd said. Boyd (Navajo) is the Deputy Assistant Secretary for Indian Housing in the Housing and Urban Development (HUD) Department’s Office of Native American Programs (ONAP). HUD offers a 100% guarantee on home loans distributed to Native Americans through the 184 program.
Since its inception in 2003, the 184 program has grown from guaranteeing $39,261,135 in loans to $235,073,525 in 2007. The number of loans guaranteed has increased from 271 in 2003 to 1173 in 2007.
That growth is good not only in the sense that HUD is offering an opportunity to increase homeownership for Native Americans to build equity, “it also sends a very strong and affirmative message to lenders that this is a good product. It is very encouraging for lenders to look at reservation investments, like mortgages, as a newfound market within the country," Boyd said.
The spin-off of that newfound interest from lenders could broaden the economies in Indian Country, including investments in economic development, manufacturing and natural resources.
Are Delays in Title Status Reports Hurting the 184 Program?
While the success of the 184 program is well documented, there is some concern that delays in processing Title Status Reports (TSRs) may be causing problems for the program. The Bureau of Indian Affairs (BIA) Land Title Recordation Offices (LTROs) are responsible for processing Title Status Reports (TSRs) in Indian Country. There have been many documented incidents of slow processing in some BIA regions and people waiting months and even years for their TSRs. Numerous Congressional hearings have been held to find the root of the problem, including two field hearings in Indian Country held by the House Financial Services committee.
At an Arizona hearing in June 2006 Chairman Marty Shuravloff testified that NAIHC had been alerted that some major banking institutions are abandoning the 184 program, possibly because of frustrations with obtaining Title Status Reports (TSR). Washington Mutual, once a major supporter of the program, recently pulled out, although it did not specifically identify TSR issues as a cause.
While the title delays are not ideal, they are not a major threat to the 184 program, Boyd said. It does slow down the process; however, HUD is pleased to see BIA taking actions to remedy the problem, Boyd said. A Memorandum of Understanding (MOU) with BIA, the U.S. Department of Agriculture Rural Development (USDA-RD) and HUD was signed in September 2004, to improve the TSR process. BIA is responding very well to the memo, Boyd said. While they are “not out of the woods completely" things are improving.
HUD developed a training module with BIA and the trainings of their Realty Divisions are happening on a timely basis, Boyd said. Trainings are planned to continue through the year, to create a documentation process that is unified and consistent throughout BIA. Training sessions are also used to train participants on a new option called Endorsement to a Certified TSR.
In lieu of a subsequent certified TSR requested by a lender, in certain situations, a realtor can get the Endorsement, which certifies that from the date of the last certified TSR, recorded title documents have been applied to the title. A revised Endorsement form was sent to all BIA Regional Offices in July 2006.
The workshop training series are also being sponsored by the Federal Reserve Bank of San Francisco and Stewart Title Guaranty Company (STGC). “The idea was specifically to help educate both tribal members and BIA staff about the Endorsement certified TSRs," said STGC Underwriting Counselor Ed Hellewell.
Typically to complete a TSR an LTRO would have to go back to the founding of a reservation, possibly more than a hundred years. The new Endorsement process would be quicker in theory; however, the offices are not accustom to it and are sometimes reluctant to use it due to liability issues, Hellewell said. That is why the seminar was created.
Improving the time frame for lending is important as the delays in TSR approvals can act as a hurdle for lending institutions, Hellewell said. If lenders do not get TSR certifications within three years, they have to buy back the loan and this can be a disincentive if lenders lose profit, he added. Additionally, the longer an application stays open, the more chances are for a change in the borrower’s credit status, which could raise their interest rates or threaten their chances of getting a loan, Hellewell said.
While the improvements that BIA is making may help, “whether or not you can change the culture of the BIA that quickly remains to be seen," Hellewell said. The people working at BIA are concerned people who want to do more, but face hurdles like staffing vacancies." Tribes Taking Charge of TSRs
The Tribal LTRO Study, a research partnership between First Nations Development Institute and the National Congress of American Indians’ (NCAI) Policy Research Center, is currently underway. It is funded primarily through a grant from NeighborWorks America. STGC also provided funding and served on the study committee, which also includes NAIHC. One thing the study hopes to show is the benefits and challenges of tribes running their own Title Status Plants.
“For years tribes have thought that there ought to be a better way [to handle TSRs] and 638 compacting is one way," Hellewell said. The study hopes to outline ways that tribes can best run such a program. Tribes will have access to real facts and success stories and would not be reinventing the wheel every time they seek to start a title plant.
Tribal title plants could also be a win-win for BIA. Tribes taking over would potentially make the process faster and free up staff and time for the LTROs, while hopefully not decreasing congressional appropriations for LTRO, Hellewell said.
Tribes starting their own processing plants could be a positive step, Boyd said. “It is important in the future that tribes as sovereign entities have their own title office, and I think that is going to evolve with the cooperation of the BIA," Boyd said. Development of Title offices under tribal supervision is a natural evolution to increasing homeownership market in Indian Country and overall sustainable economies, he added.
Overall the outlook for improving the TSR process is positive, Boyd said. “BIA has been very receptive and I am very encouraged that in the coming years working in coordination with USDA too, the process is only going to improve." Boyd said. He hopes that the standard time for processing TSRs will be 30 days; however, some agencies have been able to do them in as little as a couple of days.
184 Program Looks Forward to Economic Development Possibilities
With more than 5,000 mortgages guaranteed so far and that number rising rapidly, HUD ONAP could conceivably reach the billion-dollar mark with loan guarantees in the near future, Boyd said. That in turn means even further economic development in Indian Country.
“Housing is such a great economic development indicator in the country, and it certainly can have the same impact on a reservation," Boyd said. “Once people have equity in community, once they live in the community where they work, they spend more money in the community. This fosters individual tribal members, community business, new manufacturing, and houses and homeownership opportunities will be there as well."
“I am greatly impressed with the program and what it has been able to do," Boyd concluded. “Native families are fulfilling a dream that everyone has towards homeownership. Young Native American couples are elated that they have this opportunity, personally it is very fulfilling to see this happen and to see this evolution."
By Kimberly Hayes
Contact: HUD Office of Native American Programs, (202) 708-1112; Web: http://www.hud.gov/offices/pih/ih/codetalk/onap/