The U.S. homeownership rate continues to grow, with more than 67 percent of households owning their own home. But as homeownership increases among mainstream America, Native Americans face many obstacles to homeownership, including a lack of affordable housing, limited or bad credit, and tribal and governmental regulations that make obtaining a mortgage cumbersome. Therefore, less than 33 percent of Native Americans own their own home, according to the Native American Indian Housing Council.

Despite these odds, one homeownership program in southwest South Dakota is making a difference for members of the Rosebud Sioux Tribe, one tribal member at a time. The Sicangu Enterprise Center (SEC), a nonprofit organization founded in 1990, uses a combination of federal housing loan guarantee programs, loans from Wells Fargo Bank, and one-on-one counseling to help make homeownership for tribal members a reality.

With the help of SEC, a couple in their late 50s recently moved into their home. The couple is disabled and rented in a 750-square-foot apartment from the housing authority for 20 years. They always wanted to live in a bigger place that accommodated their disabilities. Moreover, the husband realized that owning a home would provide them with an inheritance for their children. The couple approached local banks several times about buying a home, but none of them were willing to take the risk. SEC helped the couple work through their credit issues, secure a loan from Wells Fargo, and receive assistance with closing costs through HUD's Section 184 program to purchase a home. In October 2001, the couple closed on a loan for their new 3-bedroom, 1,700-square-foot manufactured home.

Overcoming Obstacles. "Many of the people we serve don't even know that homeownership is possible," remarks Michael LaPointe, executive director for SEC and a tribal member. Most clients are not only first-time homebuyers but also the first in their families to buy a home. Few understand the benefits of homeownership and its responsibilities because it is not a part of tribal culture, says LaPointe. The main reason for this is that buying a home in Indian Country takes more time and patience than buying homes in other areas of the United States. On average it takes 6 to 9 months to close a loan. This long approval process, federal law, and differing regulations among autonomous tribes cause many lenders to avoid making mortgage loans on tribal lands.

Federal law prevents the transfer to and ownership of tribal land by individuals. Instead, the land is held in trust for all members of the tribe. As a result, those interested in purchasing a home do not have access to traditional mortgages that use land as collateral. To make homeownership possible, mortgages on tribal land are leasehold mortgages. Tribal land is leased for 50 years to members buying or building a home. The lease then becomes the bank's collateral, allowing a lender to find another qualified tribal member to assume the lease in the event of a foreclosure. Even with this policy in place, few lenders are willing to issue leasehold mortgages. The Bureau of Indian Affairs must approve all mortgages, adding time and expense to issuing the loan. Lenders also have to be familiar with individual tribal laws governing lending and foreclosure.

SEC has been successful in closing loans because it has reduced the risk to lenders. The staff prequalify residents for loans, provide needed credit and one-on-one homeownership counseling, and help keep lenders informed of tribal laws and federal programs that promote Native American homeownership. Qualifying residents have access to HUD's Section 184 program, which guarantees loans to Native Americans on trust lands; the U.S. Department of Agriculture's Section 502 Direct and Guaranteed Single Family Housing Loan programs; and the Department of Veterans Affairs' Native American Veteran Direct Loan Program. Wells Fargo Bank is SEC's main lending partner. With the help of its partners, SEC has made 18 loans in the last 2 years, and 60 residents are prequalified for mortgages. A recent grant from the Federal Home Loan Bank will help cover closing costs and utility expenses for 30 of the prequalified clients.

Improving Standards of Living. Poverty and lack of existing housing units and supporting utility infrastructure are also major barriers to homeownership on the Rosebud Indian Reservation. The tribe is located in one of the poorest counties in the nation. More than 46 percent of the tribe's population lives below the poverty level. The average tribal family income is $10,600, with most families depending on public assistance and receiving housing assistance from the public housing authority.

When private, affordable housing is available, it is substandard, and several generations of a family live together in crowded conditions. Even when the resources are available to build a home, there are few building contractors in the area, and the utility infrastructure is limited. Residents must request that the tribe extend water and sewer services to the property.

SEC's homeownership program is overcoming these obstacles through education and convincing residents that homeownership offers a better way of life. "Many tribal members make a $400 monthly rental or car payment, but they are afraid of the long-term commitment of a $400 mortgage payment," comments LaPointe.

The client's homeownership education begins when he or she first visits the center. A staff member first runs a credit report to determine if the resident qualifies for a loan. If the resident qualifies for a loan, the staff member runs an amortization table and discusses the responsibilities of homeownership with the client. Staff members encounter many individuals who do not know about loan interest or credit reports. "About 40 percent of our clients have credit problems, 30 percent have good credit but don't know about mortgages, and the other 30 percent have nothing on their credit report because they pay everything with cash," says LaPointe. Because the program is small and runs on a tight budget, most homeownership counseling is done individually. SEC hopes to implement long-term counseling in 2003 by using a new curriculum developed by Fannie Mae and First Nations Development Institute. LaPointe estimates that in addition to the 900 residents on the housing authority's waiting list, there are almost 3,000 residents who could benefit from long-term assistance.

SEC's loans average $65,000. Most clients use the funds to purchase a manufactured home, whereas others are able to buy an existing unit. The center has found a contractor to help the new homeowners pour the foundation before the manufactured home is brought in. Clients also receive assistance in getting mortgage approval from the Bureau of Indian Affairs and the extension of utilities. "Closing a loan is the best part of my job because you see how it is improving your client's and fellow tribe members' lives," says LaPointe.

For more information, see: "Homeownership in Indian Country: Taking on the Challenge," Bright Ideas, 2001. Web: www.nw.org/network/pubsAndMedia/publications/brightIdeas/pdf/bisummer2K1.pdf. Or Building Native Communities: Financial Skills for Families. Fannie Mae and First Nations Development Institute. Web: www.fanniemaefoundation.org/programs/native_american.shtml.

Or contact: Michael LaPointe, Executive Director, Sicangu Enterprise Center, Inc., P.O. Box 205516, Mission, SD 57555, (605) 855-2955, e-mail: sec@gwtc.net.