Mortgage Lending on Native American Tribal Land

Does anyone have a good policy statement/written substantiation as to why their institution does not lend on Native American Tribal Land or lend on leasehold property?

Does anyone do second mortgages on these type of properties?

Thank you so much.

We aren't currently doing any mortgage lending on tribal land. However, are you aware of the OCC's guidance on this topic? You can find it on their website.

Why on earth would you need a policy like that? Lending on Native lands isn't that big of a deal. There are easy ways to collateralize your loan, so why discriminate?

And to your second question, we provide all types of loans to Natives. This would include first and second mortgages, business loans, consumer, etc. Our default rates are no higher on these loans than any other group. As with ALL loans, we do sound underwriting and collateralize as necessary given the legal requirements of the loan. If anything, we make an effort to chase these deals because it's a growing market that many banks operating in the ice ages ignore.

Original anon - glad you posted without anything traceable. An examiner would love to have documented disparate impact/treatment, and as such a statement, it appears that it represents the feelings of management and directorate.

Like Dawnie mentioned, with todays market, banks should be looking for ways to make good loans and serve the entire community. Especially for underserved markets, if you treat one person good and fairly, they're going to tell their friends and you get word of mouth referrals.

Whoa - tough crowd. First, I am not a bank, do not have branches and am not required to manage a CRA program. If that puts me in the ice ages, so be it...(I know for a fact that many do not lend on trust land and leaseholds.) It has nothing to do with a disparate treatment issue...

Normally it has to do with ice age views of sovereign immunity, but all in all that does lead down a slippery path to disparate treatment issues. I know there are financial institutions out there with similar issues, but normally education on a senior management level clears up those problems.

You say you're not a bank, but you want a bank policy in regards to this. The thing is, even the banks who do not educate themselves enough about lending on native lands, are educated enough to know that a stated policy of this nature will land them in trouble, so I doubt you'll find anything from a source you'd like to copy.

And just an FYI We do not lend to natives, or on native land because of CRA. We are an extremely profitable financial institution, as well as extremely safe (read conservative sometimes LOL). We lend to these clients because it's profitable. In fact, it's often MORE profitable (and safe) to use some of the programs out there to lend on native land than it is to your standard 50 year old white guy. Again, it's all about perception and education

Anon - at the very large bank I used to work for, we would do first mortgages on tribal leasehold land but not seconds or commercial loans. Apparently, we were having difficulty with foreclosures on 2nds, etc. and therefore changed the policy. First mortgages only on ANY leasehold land, tribal or otherwise. I am sorry to say that I did not keep a copy of the policy that we had at that time. Hope this helps.

We do Section 184 programs (see Hud.gov for that), also we make loans to tribal corporations (set up according to the tribal constitution). See Section 25 of the US code. We make the tribe sign a guarantee which includes a specific waiver of sovereign immunity. So it can (and is) being done.