Native American Direct Loan Program

1. The Department of Veterans Affairs Native American Direct Loan Program

2. Program Highlights • What is a Native American Direct Loan (NADL) • Why we have a NADL program • Who is Eligible • Loan Purposes • The Approval Process

3. What Is A VA Direct Loan? • The Department of Veterans Affairs serves as the principal lender and directly lends the funds to an eligible Native American Veteran for the purpose of purchasing, constructing or improving a home on trust lands.

4. Why we have a NADL Program? • Mortgage Lenders will not make loans on Trust Land • Tribes are Sovereign Nations • State Laws do not control Real Estate Transactions on Federal Trust Land • Obtaining a Security Interest on Trust Lands is difficult

5. Bureau of Indian Affairs • The VA works directly with the following entities to process a NADL loan • Bureau of Indian Affairs • Indian Health Service • Tribal Housing Division

6. Determining Eligibility • Native American Veterans with sufficient entitlement. • The tribal organization has astanding Memorandum of Understandingwith the Secretary of Veterans Affairs. • The home is on trust/lease/allotted land. • The Veteran is a member of the tribe.

7. Memorandum of Understanding (MOU) • Tribe must adopt foreclosure, eviction , priority of lien procedures, and leasing procedures • Tribal court must acknowledge that the tribe has enacted the required legal procedures and that it will enforce these procedures • Must provide for the acquisition by the veteran of a meaningful interest in the lot and/or dwelling on trust land • Must provide for conveyance of the veteran’s meaningful interest as security for the loan • Three existing MOU’s for the Houston Regional Loan Center

8. MOU Procedures • MOU is submitted by the tribe to the Houston Regional Loan Center (RLC) • Regional Loan Center submits MOU to Regional Counsel • Regional Counsel reviews and forwards MOU to General Counsel at VA Central Office for final approval and signatures • Regional Council begins taking NADL loan applications

9. Eligible Loan Purposes • To purchase, construct, or improve a home on Native American trust land. • To simultaneously purchase and improve a home. • To refinance another NADL direct loan and lower the interest rate.

10. Requirements For Loan Approval • Loan approval requires the Veteran to meet the following requirements: • The loan must be for an eligible purpose. • The Veteran intends to occupy the home as his/her primary residence. Rentals and/or investments are not allowed.

11. Continued… • The Veteran and, if applicable, the spouse are satisfactory credit risks. • The Veteran and, if applicable, the spouse have stable and reliable income that is sufficient to meet payment obligations and provide enough left over for family support.

12. Additional Underwriting Considerations • Tribal Alternative Credit (tribal liens, tribal rentals, etc.) • Tribal Health Services • Good and services offered by tribal organizations • Exemption from sales tax, county tax, other taxes • Trust incomes • Tribal distributions • Tribal down-payment assistance programs

13. Direct Loan Benefits • No down payment. • No private mortgage insurance. • Minimal closing costs. • Freddie Mac single-family conventional conforming loan limit (currently $417,000) • Interest rate may be lower than conventional mortgages. • Current interest rate is 3.5%.

14. Costs Continued… • VA appraisal • Credit report • Loan Processing Fee • Title search, title insurance, or other title review fees. • State and/or local transfer taxes, if applicable • Recording fees • Survey • Hazard insurance premium

15. Costs • Funding fee—which may be included in the loan amount—must be paid to VA. • Active duty = 1.25% of the loan amount • Guards/Reserves = 2.00% of the loan amount Veterans in receipt of service-connected disability pay are exempt from the funding fee.

16. Tribal Documents • Title Status Report • Lease Agreement (heirs must approve) • Proof of Tribal Membership • HIS/Water/Sewer Report • Environmental/Archeological Survey

17. Differences in the Appraisal Process • Must recognize Native American cultural/traditional preferences in housings (for example: Hogan or pueblo based designs) • Rural scattered sites • VA fee appraisers may not be available • Traditional appraisal practices and techniques may not be applicable • Minimum property requirements may be questionable

18. Obtaining A VA Loan • Determine if the tribal organization or appropriate Native American group has a standingMemorandum of Understanding (MOU)with the Secretary of Veterans Affairs and participates in the VA direct loan program. The MOU spells out the conditions under which the program will operate on tribal trust lands. • The Veteran will need to submit or apply for a Certificate of Eligibility (COE). If the Veteran does not have a COE, then they may apply by completing and submitting VA Form 26-1880 (Request for Determination of Eligibility) to the local VA office.

19. Continued… • Contact the Houston Regional Loan Center and apply for the loan, which will require the submission of a variety of documents in order to process the loan. • Find a home to buy and sign a purchase agreement and/or a construction contract with the builder to build the home. • If approved, close the loan and move into the new home.

20. Contact Information Laura Rodriguez Native American Direct Loan Coordinator VA Houston Regional Loan Center • 6900 Almeda Road, Houston, TX 77030 • laura.rodriguez2@va.gov or houstonlgy@va.gov • Toll-free 1-888-232-2571, ext. 1808 • Direct number: 713-383-1808

21. NADL (On-line Version) • Native American Direct Loans (On-line version) http://www.benefits.va.gov/homeloans/VAP26-93-1.asp • VA-Guaranteed Home Loan Program http://www.benefits.va.gov/homeloans/