Minnesota home improvement loan

ANETH, UTAH--(BUSINESS WIRE)--Sept. 25, 1995--Cooperation and perseverance were the themes expressed today at a gathering of officials from the Federal Home Loan Bank System, the Navajo Nation, financial institutions and non-profit organizations who are working to expand Native Americans' access to banking services and home mortgage credit.

Held at the Aneth Chapter House on the Navajo Nation, the day-long meeting culminated with 10 participants signing a formal agreement, pledging to undertake more than 50 action items in the coming year to benefit Native Americans and the Navajo Nation.

The day-long meeting was sponsored by the Federal Home Loan Bank of Seattle, a private, wholesale bank that provides low-cost funding and other services to support the home mortgage and economic development lending of financial institutions in eight states, including Utah. Discussions focused on public- and private-sector initiatives underway to provide banking and credit services -- the primary tools of economic development -- to members of the Navajo Nation, the country's largest tribe.

Among the major announcements made and agreements undertaken at the meeting were:

--Zions First National Bank, Salt Lake City, Utah will open a branch in Montezuma Creek. This will be the first time a bank has ever operated on the Utah portion of the Navajo Reservation.

--The Navajo Nation announced that the tribal government has approved the legislation necessary to participate in the Department of Housing and Urban Development's Section 184 program, which provides guarantees on mortgage loans originated by financial institutions. Navajo Nation President Albert Hale is expected to approve the measure, opening the door to a new source of residential housing finance for Navajo families.

--The Federal National Mortgage Association (Fannie Mae), Zions First National Bank, the Navajo Nation and the Federal Home Loan Bank of Seattle are in the final stages of development of a pilot program to permit the origination and purchase of conventional loans for homes on tribal trust lands.

"The Navajo Nation today faces cuts in funding from the U.S. government," reported Ken Peterson, executive staff assistant to President Hale. "It is only natural that we seek access to private credit from banks and organizations such as the Federal Home Loan Banks and Fannie Mae, to spur greater economic development on our lands and to provide our people with a better quality of life," he said.

The event followed a similar gathering held in June 1994, where the participants pledged to work in the coming year towards four specific objectives: increasing the availability of banking services; expanding access to home mortgage credit; facilitating improved access to the Federal Home Loan Bank funding and resources; and broadening the housing and community development capacity on the Navajo Nation.

"The dialogue started here last year has produced measurable results," said Stephen M. Studdert of Salt Lake City. "Now our task is to ensure that the dollars pledged, the plans developed and the new relationships established translate into tangible benefits for the Navajo Nation and all Native Americans," challenged Studdert, a Federal Home Loan Bank of Seattle director and chair of the board's housing and community development committee.

Studdert led the meeting, which was attended by more than 50 bankers, Navajo representatives, non-profit housing developers, and state and federal government officials.

Many of the initiatives and action items discussed during the summit are designed to increase the flow of private mortgage credit to Native American lands. The trust relationship between the U.S. government and Native American tribes impedes the use of property as collateral, so home lending on tribal trust lands is very limited and most is funded or insured by the U.S. government.

Extensive housing needs exist on the Navajo Nation, including renovation, new construction and infrastructure development. Studdert reported that 14,000 Navajo families are homeless, 70 percent of Navajo homes lack running water and 50 percent do not have electricity.

The action items agreed to at the meeting include providing financial, technical, educational and regulatory assistance to support the housing strategies developed by the Navajo Nation. The action items include grant and loan programs, homeownership counseling, expedited government loan processing, training programs, and assistance in the development of non-profit community development organizations.

(For a copy of the full agreement, please call Mary Grace Helsper, Federal Home Loan Bank of Seattle, at 206/ 340-8704.)

"There is growing momentum in the drive to bring the benefits of homeownership to Native American families and Native lands," reported Nicolas P. Retsinas, undersecretary for housing, U.S. Department of Housing and Urban Development, who said the activities presented at the meeting will add to other elements of the Clinton Administration's National Homeownership Strategy.

Federal Home Loan Bank System initiatives include encouraging Indian housing authorities to become "non-member" borrowers of the regional Home Loan Banks. The Federal Housing Finance Board recently approved the Minnesota Chippewa Tribal Housing Corp. as a non-member borrower. Studdert reported that the Federal Home Loan Banks' concentrated efforts to link tribal organizations with lenders will continue, with the Federal Home Loan Banks offering technical and financial assistance to facilitate partnerships.

In addition, in the last year the Federal Home Loan Banks committed more than $1.6 million in Affordable Housing Program grants to six housing initiatives on the Navajo Nation. The participating lenders on these grants were Zions First National Bank, Norwest Bank, Arizona and First National Bank of Farmington, all of which are actively addressing the banking and credit needs of Native Americans in their markets. The Federal Home Loan Banks of Dallas, San Francisco and Seattle, which each serve a portion of Navajo lands, pledged to provide assistance to generate additional qualified grant proposals.

Jack Gallagher, vice president for public finance at Fannie Mae, highlighted his organization's efforts to design loan products to address Native American needs and share its highly successful homeownership education program with the Navajo Nation. Currently, Fannie Mae is the lead partner in the development of a pilot program for the origination and purchase of mortgages for homes on the Navajo Nation's tribal trust lands.

One major outcome of the meeting is the proposal by the Federal Home Loan Bank of Seattle and Zions First National Bank that the Seattle Bank's Affordable Housing Program provide the credit enhancement that is critical to the pilot program. An Affordable Housing Program application requesting funds for this purpose is expected in mid-October.

The Navajo Nation is preparing to take advantage of new sources of financing by developing nonprofit housing and community development corporations, according to Peterson. DNA-People's Legal Services Inc. is currently assisting in the formation of five organizations. In addition, the Neighborhood Reinvestment Corporation is working to create a non-profit partnership entity that will, among other activities, counsel Navajo families on the responsibilities and financial requirements of homeownership.

With $18 billion in assets, the Federal Home Loan Bank of Seattle supports the home mortgage lending and economic development lending of more than 250 financial institutions. The Seattle Bank is one of 12 Federal Home Loan Banks in the nation, and serves lenders in Alaska, Guam, Hawaii, Idaho, Montana, Oregon, Utah, Washington and Wyoming.

CONTACT: Federal Home Loan Bank

Mary Grace Helsper or Darcy Minter,

206/340-8704 or 340-8703