PROGRAM HIGHLIGHTS

NA = Not Applicable

SUMMARY OF BUDGET REQUEST

1. SUMMARY OF BUDGET REQUEST

The fiscal year 2001 Budget proposes an appropriation of $6 million in budget authority to support loan guarantees of $72 million, based on a subsidy rate of 8.13 percent. The requested funds are expected to guarantee approximately 450 home mortgages. Included in this request is $150,000 for administrative expenses, an amount that will be transferred and merged with the Department's appropriation for Salaries and Expenses. Administrative expenses provide funding for travel for program marketing, on-site monitoring, systems developments and other training.

Summary Of Program Strategic Goal/Objective

The Indian Housing Loan Guarantee Fund is essential to achieve HUD's Strategic Goal 1: Increase the availability of decent, safe, and affordable housing in Native American communities, and specifically Strategic Objective 1.1 - to increase homeownership--for Native Americans on tribal trust and allotted trust lands and on fee simple lands in Indian and Alaskan Native areas, and to provide eligible Indian tribes and Tribally Designated Housing Entities (TDHEs) the opportunity to provide additional housing to tribal members.

2. CHANGES FROM 1999 ESTIMATES INCLUDED IN THE 2000 BUDGET

The fiscal year 1999 appropriations provided $400,000 in administrative expenses as an addition to the requested $6 million in program budget authority.

Actual net outlays for 1999 were $1.8 million or $2.6 million lower than the 1999 estimate included in the fiscal year 2000 Budget. The reduction in the net outlay is a result of fewer loan guarantees than the 1999 budget estimate.

3. CHANGES FROM 2000 ESTIMATES INCLUDED IN THE 2000 BUDGET

The fiscal year 2000 current estimate reflects $13.3 million of unobligated credit subsidy with a $163.7 million loan guarantee limitation carryover from fiscal year 1999.

EXPLANATION OF INCREASES AND DECREASES

The increase in outlay projections is based on increased commitments expected as a result of initiatives to stimulate program activity.

Funding activity

To promote this program and the broad scope of private sector mortgage lending in Indian Country, the Department, in conjunction with the Treasury Department, Department of Agriculture, Veterans Affairs, and other Federal and private entities, began working in 1998 to streamline Federal lending programs to support the President's One-Stop Mortgage Initiative. The Navajo Nation and Pine Ridge Reservations became the first reservation based, "One-Stop Mortgage Centers." Such centers provide information, guidance and assistance to tribal members to become homeowners. The Center also provides a key service as a liaison between financial institutions and potential homebuyers to address lender concerns dealing with cultural and local customs. These centers at the Navajo Nation and Pine Ridge Reservations are models for Indian Country.

The One-Stop Mortgage initiative also produced a joint training effort by the Department's of Agriculture, HUD, Veterans Affairs and Interior to provide coordinated training to lenders and tribes on loan products that are available in Indian Country. This on-going effort will continue to bring new capital to reservations as well as provide much needed information to tribes and their members.

PROGRAM DESCRIPTION

This program is authorized by Section 184 of the Housing and Community Development Act of 1992, Public Law 102-550, enacted October 28, 1992, as amended by Section 701 of the Native American Housing Assistance and Self-Determination Act (NAHASDA) of 1996, Public Law 104-330, enacted October 26, 1996. Funding for this program provides loan guarantees for Native American families, Indian tribes, and tribally designated housing entities to purchase, construct and/or rehabilitate single-family homes on trust or restricted land and in designated Indian areas. It has served as a catalyst for private financing of home mortgages by private financial institutions which would otherwise not have been possible because of the unique legal status of Indian lands.

Private financing for the purchase of homes in Indian country was almost non-existent prior to the implementation of this program in September 1994. Since its inception, the Section 184 Indian Home Loan Guarantee Fund has guaranteed 599 home loans (as of October 31, 1999) for eligible families, tribes and tribally designated housing entities totaling more than $54.2 million.

This program has made homeownership available to Native Americans living on Indian lands, and enabled lending institutions to serve a new client group. Due to the unique legal status of Indian trust or restricted lands, lenders had previously been hesitant to assume the risk of providing home mortgage financing where legal title to the real property could not be used as collateral. In addition, many lenders were unwilling to take the risk of going into tribal courts in the event of default. As a direct result of this program, numerous banks are now lending in Indian Country, and many tribes have established legal procedures for processing foreclosures and evictions.

This program has also served as the vehicle to leverage private funds with Federal dollars in Indian Country in order to create housing opportunities where Federal subsidy programs historically provided 100 percent of the costs of new unit construction. Through this program, private financing is now used to cover construction costs while Federal dollars are used only to guarantee payment in the event of a default.

This program is not restricted to low-income families; rather, it provides opportunities for income-eligible families currently living in subsidized units to afford a market-rate home mortgage, thus freeing up assisted housing units for use by other lower-income families. This is the housing cycle that has been operative in non-Indian Country for decades.

In contrast to the Title VI Indian Federal Guarantees Program (funded as a set-aside in the Indian Housing Block Grant program), any Indian family, tribe, or tribally designated housing entity can apply for a Section 184 mortgage loan and be qualified on the basis of their income and other mortgage credit guidelines. The Title VI program provides loan guarantees only for Indian Housing Block Grant recipients who are unable to borrow from other sources. Future Indian Housing Block Grant funds are used by the borrower to provide collateral for the loan.

Fiscal Year 2001 Performance Measures

Performance Indicator:

Increase the number of home ownership units to be guaranteed for Native Americans for each year as follows: