Report to Congressional Requesters 

United States General Accounting Office

GAO

August 2002 NATIVE AMERICAN

HOUSING

VA Could Address

Some Barriers to

Participation in Direct

Loan Program

GAO-02-654
Page i GAO-02-654 Native American Housing

Letter 1

Results in Brief 2

Background 3

Several Factors May Explain Disparity in Number of Loans Made to

Different Groups 7

VA Has Conducted Various Outreach Activities but Has Taken

Limited Steps to Meet Assessment and Reporting Requirements 12

Conclusions 14

Recommendations for Executive Action 15

Agency Comments 15

Scope and Methodology 16

Appendix I Other Federal Homeownership Programs for

Native Americans on Trust Lands 18

Appendix II Comments from the Department of Veterans

Affairs 20

Appendix III Contacts and Staff Acknowledgments 24

GAO Contacts 24

Acknowledgments 24

Related GAO Products 25

Table

Table 1: Homeownership Assistance Programs for Native

Americans on Trust Lands, in 2002 19

Figures

Figure 1: VA’s Nine Regional Loan Centers and the States They

Serve 6

Contents
Page ii GAO-02-654 Native American Housing

Figure 2: Number of Loans Made by VA through Its Native

American Veterans Direct Home Loan Program to Native

American, Native Hawaiian, and Pacific Islander Veterans

(Calendar years 1994-2001) 8

Abbreviations

FHA Federal Housing Administration

HUD Department of Housing and Urban Development

VA Department of Veterans Affairs
Page 1 GAO-02-654 Native American Housing

August 23, 2002

The Honorable John D. Rockefeller IV

Chairman, Committee on Veterans’ Affairs

United States Senate

The Honorable Daniel K. Akaka

United States Senate

The homeownership rate among Native Americans1

 is one of the lowest in

the United States. While over 67 percent of Americans own their homes,

fewer than 33 percent of Native Americans own homes. For Native

Americans living on trust lands—lands held by the federal government for

the benefit of Native Americans—homeownership opportunities are more

limited, because lenders typically require that buyers own the land on

which their homes will be located.

Because private institutions have rarely supplied conventional home loans

to Native Americans on trust lands, several federal programs have been

developed to provide homeownership opportunities for Native Americans.2

For example, in 1992, the Congress directed the Department of Veterans

Affairs (VA) to create the Native American Veterans Direct Home Loan

Program to assist veterans in purchasing, constructing, and improving

homes. The program has a specific focus; it is intended to serve veterans

living on trust or equivalent lands3

 on the mainland and in Hawaii and the

Pacific. To obtain loans under this program, veterans must meet income,

 1

As defined in P.L. 102-547, Native American means an Indian, a Native Hawaiian, an Alaska

Native or a Pacific Islander. In this report, except when referring to the title of the program,

we use the term Native American more narrowly to refer to Indians and Alaska Natives, as

distinguished from Native Hawaiians and Pacific Islanders.

2

See app. I for additional programs serving this purpose and Native American Housing:

Homeownership Opportunities on Trust Lands Are Limited, GAO/RCED-98-49,

(Washington, D.C.: Feb. 24, 1998) for a summary of the involvement of the private sector

and federal government in housing programs for Native Americans on trust lands on the

mainland.

3

In this report, we use the term equivalent lands to refer to those included under P.L. 102-

547 that are held by individual Indians, individual Alaska Natives, or Alaskan regional or

village corporations and are subject to restrictions that may require the Secretary of the

Interior’s approval when ownership is transferred. Also included are the Hawaiian

homelands and lands on Pacific islands that have been communally owned by cultural

tradition.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-654 Native American Housing

credit, and other requirements; and VA must have memorandums of

understanding covering foreclosure and other issues with tribes or other

entities that have jurisdiction over the lands involved. The Congress

reauthorized the program in 1997 and 2001 and is considering making the

program permanent when it is up for reauthorization again in 2005.

To inform the Congress as it considers making this program permanent,

you requested that we analyze which veterans the program has served and

assess VA’s response to requirements specified in the program’s

authorizing legislation. Specifically, you asked us to determine

• if a disparity exists in participation in the program between Native

American veterans and Native Hawaiian and Pacific Islander veterans and

the reasons for any disparity; and

• what actions VA has taken to meet outreach, assessment, and reporting

requirements specified in the direct loan program’s authorizing legislation.

To determine if there was a disparity in participation, we analyzed data

from VA, the Census Bureau, and the Bureau of Indian Affairs. We also

interviewed VA program officials in Washington, D.C., and in the four VA

offices responsible for about 96 percent of all loans made under this

program. To determine the steps that VA took to meet program

requirements, we reviewed VA’s annual reports to the Congress; Census

data and data obtained by VA, at our request, from its nine regional loan

centers; and interviewed officials of selected federal agencies, Indian

tribes, and interest groups.

In April 2002, we briefed your office on our key findings. As you requested

at our briefing, we are also providing information on other federal

programs that provide homeownership assistance to Native Americans.

We did not analyze this information to determine if these other programs

affected participation in VA’s direct loan program. See appendix I for

additional information.

The Native American Veterans Direct Home Loan Program has been

characterized by differences in the numbers served, with Native Hawaiians

and Pacific Islanders together receiving almost five times as many loans as

Native Americans since the program was enacted. Several factors that

apply to Native Americans, but not to Native Hawaiians and Pacific

Islanders, may explain this difference—some that VA cannot address and

others that VA can address. The former involve long-standing barriers to

lending on Native American trust lands, such as insufficient income and

Results in Brief
Page 3 GAO-02-654 Native American Housing

credit history and lack of meaningful interest in land among many Native

Americans, as well as insufficient infrastructure on trust lands. Other

factors that VA can address include program loan limits that may be lower

than housing costs for some trust lands and potential applicants

inexperience with the mortgage lending process. Although some barriers

to lending will remain, we are recommending that VA seek to increase

Native American participation in the program by addressing those barriers

it can change.

VA has conducted outreach but has taken limited steps to meet the

assessment and reporting requirements specified in the program’s

authorizing legislation. VA attends housing conferences, distributes

promotional materials, and responds to inquiries about the program to

meet outreach requirements specified in its authorizing legislation. The

legislation also requires VA to assess its outreach efforts and identify the

pool of veterans eligible for the program in annual reports to the Congress.

VA has reported that it has made extensive outreach efforts but has not

provided an assessment of the effectiveness of its outreach activities. VA

has reported the number of Native American and Pacific Islander veterans

who identified themselves as such in the 1990 census but has not identified

how many of these individuals would be eligible for the program. VA plans

to utilize the more detailed 2000 census data to develop a more accurate

count of eligible veterans. We are recommending that VA comply with

requirements to assess its outreach efforts.

VA’s comments on a draft of this report are reprinted in appendix II. VA

concurred with our recommendations; and also provided technical

clarifications to the report, which we incorporated where appropriate.

Financing homes on trust lands presents unique difficulties. Because

individuals do not hold unrestricted title to these lands, they cannot

convey the title to lenders to secure financing. To help overcome these

difficulties and promote homeownership among Native American, Native

Hawaiian, and Pacific Islander veterans, the Congress established the

Native American Veterans Direct Home Loan Program in 1992.4

 Begun as a

5-year pilot, the program has been extended twice and is currently

authorized through 2005.

 4

P.L. 102-547.

Background
Page 4 GAO-02-654 Native American Housing

To support loans under the program, the Congress provided an

appropriation of $4.5 million in 1993 that continues to be available for the

lifetime of the program. This amount is sufficient to allow VA to make

more than $58 million in home loans, and $26 million had been obligated

for loans through February 2002.5

 VA receives an additional $0.5 million

each year for administration and outreach activities, including travel to

meet with tribes and individuals on the mainland and in the Pacific.

The program is intended to assist eligible veterans living on trust or

equivalent lands to obtain loans at market rates to purchase, construct, or

rehabilitate homes. On the mainland, most trust land is located on or near

reservations, with about 55 million acres held in trust by the U.S.

government for Indian tribes and individuals. In the Pacific, communally

owned lands in American Samoa, Guam, and the Northern Marianas and

200,600 acres of Hawaiian homelands6

 are also covered by this program.

Under the program, individual loans are limited by law to the cost of the

home or $80,000, whichever is less. However, the law permits VA to make

exceptions to the loan limit if VA determines that the costs in an area are

significantly higher than average housing costs nationwide. Loans are

available only for single-family homes that the owner occupies, not for

multifamily dwellings, rentals, or investment properties.

To be eligible for a loan under this program, veterans must meet certain

statutory requirements. Veterans must demonstrate that they are

• honorably released from active military duty or members of the Selected

Reserve, including the National Guard, and have served the required

length of time;

• creditworthy, that is, they are a satisfactory credit risk with stable and

sufficient income to meet mortgage payments;

• holders of a meaningful interest in the trust or equivalent land on which

their homes will be located that entitles them to use and occupy the land;

and

 5

The appropriation is for the subsidy cost of the loans, that is, the portion of the loans’

value that the government does not expect to be repaid.

6

The Hawaiian Homelands were created by P.L. 67-34 in 1921. Hawaii, upon statehood in

1959, assumed responsibility for managing the homelands through the Department of

Hawaiian Homelands.
Page 5 GAO-02-654 Native American Housing

• members of a federally recognized tribe or the equivalent7 that has signed

a memorandum of understanding with VA.

A meaningful interest in the land may take the form of a long-term lease,

allotment or other interest conveyed by the tribe or entity with jurisdiction

over the land. For example, this generally takes the form of 99-year leases

on Hawaiian homelands. The meaningful interest serves as security for the

loan and must be transferable in the event of foreclosure. The tribe or

other responsible entity must enter into a memorandum of understanding

with VA to cover standards and procedures for foreclosure and related

issues before any loans can be made under this program to an eligible

veteran of that tribe. Lands held in trust for tribes are generally leased and

at foreclosure, cannot be taken out of trust status. Lands held in trust for

individuals can be inherited and can lose their trust status at foreclosure.

VA administers the program through nine regional loan centers and its

Honolulu Regional Office in Hawaii, shown on the map in figure 1 below.

The five regional loan centers in the East, however, have a limited role in

the program’s operation, because many of the states they serve have few

or no federally recognized tribes.8

 However, the regional loan centers in

Denver and St. Paul each serve eight states with federally recognized

tribes, and the center in Phoenix serves three states with some of the

largest concentrations of Native Americans in the country. In addition,

Denver oversees loan activities conducted out of VA’s Anchorage office in

Alaska. The Honolulu Regional Office administers the program in the

South Pacific.

 7

In the Pacific, veterans eligible for loans in Hawaii must be Native Hawaiians, and

elsewhere they must be Pacific Islanders. The state or territorial governments are

considered the equivalents of tribal organizations and must have signed memorandums of

understanding with VA for the program to provide loans on lands in these locations.

8

The states on the mainland without federally recognized tribes are Arkansas, Delaware,

Georgia, Illinois, Indiana, Kentucky, Maryland, Missouri, New Hampshire, New Jersey,

Ohio, Pennsylvania, Tennessee, Vermont, Virginia and West Virginia. The District of

Columbia has no federally recognized tribes. Tribes with land in two or more states are

considered to be located in the state with the greatest share of the tribes’ membership in

order to avoid double counting of tribes for the purposes of this report.
Page 6 GAO-02-654 Native American Housing

Figure 1: VA’s Nine Regional Loan Centers and the States They Serve

Source: GAO map based on data provided by VA.
Page 7 GAO-02-654 Native American Housing

Native Hawaiian and Pacific Islander veterans have received more loans

than Native American veterans during the lifetime of the program, and

several factors may explain this difference.9 VA cannot address some of

these factors, such as applicants’ income levels and credit history, or their

lack of a meaningful interest in the land; VA also cannot address the

availability of infrastructure on trust lands. Other factors that VA can

address are program-related, such as loan limits and assistance with the

mortgage process.

Four out of every five loans made under the program’s auspices have been

provided to Native Hawaiian or Pacific Islander veterans. Of 227 total

loans, 143 have been made to Native Hawaiians and 46 to Pacific Islanders.

Combined, the 189 loans made to these two groups greatly exceed the 38

loans made to Native American veterans.10 The year-by-year analysis in

figure 2 indicates that the number of loans made to Native Americans has

been relatively constant. While the number of loans for Native Hawaiians

and Pacific Islanders combined has varied, it has consistently exceeded

the number of loans made to Native Americans, averaging twice as many

loans since 1998.

 9

Data was not available to determine how the distribution of borrowers among groups

compares with the distribution of veterans among the groups.

10No loans under this program have been made to Alaska Natives. VA officials explained

that Alaska Natives have not responded to their outreach efforts and are utilizing other

loan programs.

Several Factors May

Explain Disparity in

Number of Loans

Made to Different

Groups

Number of Loans to Native

Hawaiian Veterans and

Pacific Islander Veterans Is

Almost Five Times That of

Native American Veterans
Page 8 GAO-02-654 Native American Housing

Figure 2: Number of Loans Made by VA through Its Native American Veterans Direct

Home Loan Program to Native American, Native Hawaiian, and Pacific Islander

Veterans (Calendar years 1994-2001)

Source: GAO’s analysis of VA loan data.

In the first 5 years of the program, Native Hawaiians received most of the

loans. VA officials in the Honolulu office explained that the number of

loans made to Native Hawaiians peaked in 1995 and 1996 because the

officials were able to grant 60 loans to veterans purchasing homes in two

housing subdivisions. VA officials said that loans to Pacific Islanders rose

in 1996 and 1997 because they made a conscious decision to launch the

program in stages—focusing initially on the nearest and easiest to serve

areas of Hawaii and later moving on to promote the program in American

Samoa, the Northern Marianas, and Guam.11 Although the number of loans

completed in Hawaii in recent years has declined, VA officials anticipate

an increase in the future as other eligible veterans obtain leases on

Hawaiian homelands.

 11Of the loans completed in these Pacific Islands, 29 have been in American Samoa, 16 in

the Northern Marianas, and 1 in Guam.
Page 9 GAO-02-654 Native American Housing

Among the factors that VA cannot address that may contribute to lower

participation of Native American veterans are low-income levels and

unacceptable credit histories of potential applicants. To implement the

statutory creditworthiness requirement, VA requires that an individual

have sufficient income to qualify for a program loan. Based on 1990 census

data, Native Americans had an average annual income of $16,800 while the

average annual income of Native Hawaiians was $26,600. VA officials said

that while they make every effort to assist applicants in qualifying for a

loan, insufficient income and unacceptable credit history are still major

barriers to loan approval for Native Americans who are found not to be

creditworthy. Specifically, 23 of the 39 Native American loan applications

in the St. Paul, Minnesota VA region were denied because of applicants’

insufficient income and unacceptable credit history. The remaining 16

were denied because of problems with land ownership. Officials at the

Denver, Colorado, VA regional office also said that insufficient income and

unacceptable credit history were the reasons for denying three of seven

Native American veterans’ loan applications received in the region since

the program’s inception. VA’s Honolulu field office stated that while

insufficient income and unacceptable credit history have been a barrier for

some veterans in American Samoa, other Native Hawaiian and Pacific

Islanders have less difficulty meeting this eligibility requirement because

of their higher income.

Problems with establishing a meaningful interest in trust lands have also

precluded some Native American veterans from obtaining a mortgage loan

under this program. To obtain a mortgage loan, VA requires that veterans

have a meaningful interest in the trust land on which their homes will be

located. However, ownership of some Native American trust land has

become fractionated12 as the ownership interests passed through several

generations of multiple heirs, with an increasing number of people owning

smaller shares of land over time. This land fractionation has increased at a

rapid pace.13 Under such circumstances, a loan applicant would need to

obtain the approval of everyone with shares in the land in order to

mortgage it. For example, one applicant for a VA mortgage loan in the St.

 12Lands held in trust for individuals are those most affected by fractionation, because these

are the lands where ownership can be inherited and passed down through succeeding

generations. About 10 million out of the total 55 million acres on the mainland are held in

trust for individuals rather than tribes.

13Indian Programs: Profile of Land Ownership at 12 Reservations (GAO/RCED-92-96BR,

Feb 10, 1992).

Factors That VA Cannot

Address May Contribute to

Lower Participation of

Native American Veterans
Page 10 GAO-02-654 Native American Housing

Paul region was unable to obtain a loan because he owned a 192nd interest

in the trust land where he wanted to locate his home. This veteran would

have had to obtain the approval of other co-owners to mortgage the land.

In addition, all four federally recognized tribes in Kansas informed VA that

they were not interested in participating in the VA direct loan program

because of the extent of fractionated land interests within their

reservation boundaries. In VA’s St. Paul region, 12 of the 39 loans, which

have been denied since the program’s inception, were denied because the

applicant had a fractionated interest in the land. This unique land

ownership problem does not exist on the Hawaiian homelands because

the land is leased.

Another barrier for Native American veterans that VA cannot address is

the lack of infrastructure that is needed for housing development on trust

lands. The remoteness of some tribal lands has been an ongoing problem

for housing development on Native American trust lands.14 In contrast to

metropolitan areas, where basic infrastructure systems (such as sewers,

electricity, and water supply) are already in place, building in remote trust

lands requires the tribe or homeowner to install infrastructure to support

new housing, or self-contained housing must be built. For example, much

of the housing constructed on Navajo and Sioux trust lands is scattered

across remote sites. A builder on Navajo lands told us that the cost to

provide infrastructure to remote home sites is often too expensive for the

tribe or homeowners and can cost over $20,000 per home. For Hawaiian

veterans, infrastructure costs do not present such a barrier. The state of

Hawaii, as part of its homeland development program, provides eligible

Native Hawaiians (veterans and nonveterans) with infrastructure funding.

For example, in a remote housing development containing homes

purchased by Native Hawaiian veterans with VA loans, the Department of

Hawaiian Homelands provided as much as $50,000 per lot for sewer,

water, and electrical services.

One program-related factor that VA can address that may have affected

participation of Native American veterans is the $80,000 loan limit,

established by the Congress when it created the program in 1992. VA has

the authority to raise the loan limit for a geographic area if VA determines

that the average housing cost in the area is significantly higher than the

national average. Using this authority, VA officials said that the loan limit

 14GAO/RCED-98-49.

VA Can Address Some

Factors That May

Contribute to Lower

Participation of Native

American Veterans
Page 11 GAO-02-654 Native American Housing

was raised to $120,000 for Hawaii, the Pacific Islands, and the state of

Washington—and to $100,000 for one tribe in New Mexico, to more closely

approximate the housing costs in those areas. However, VA has not

attempted to determine if the maximum loan limit should be raised for

other Native American tribes. VA reported that they have not initiated

increases for other areas because neither the VA regional loan centers nor

the tribes have requested a change. Officials at the Denver Regional Loan

Center said that the $80,000 loan limit may prevent some veterans from

participating in this program. One tribal housing specialist with the

nation’s largest tribe, the Navajo, has directed veterans who wanted to

purchase homes costing about $100,000 to other loan programs because he

was not aware that VA could make exceptions to the $80,000 loan limit. In

comparison, other federal programs that provide homeownership

assistance to Native Americans on trust lands15 have loan limits between

$144,000 and $278,000 (depending on the geographic region) and during

2001, guaranteed loans averaging $102,000.

Finally, recent reports16 on mortgage lending concluded that Native

Americans could benefit from homebuyer counseling and education. One

report stated that Native Hawaiians could also benefit from homebuyer

counseling and education. These two groups were found to have little

experience with the mortgage lending process and the necessary steps

required to obtain a mortgage loan. To overcome this barrier, the Director

of VA’s Honolulu field office said that local housing authorities and other

organizations in Hawaii and the Pacific Islands provide mortgage

counseling and homebuyer education that assist Native Hawaiians and

Pacific Islanders to negotiate the homebuying and mortgage process.

Officials at VA’s Honolulu regional loan center said they help ensure that

veterans receive the services and assistance of these organizations by

actively communicating and partnering with them. VA’s mainland regional

loan centers have not established similar relationships with organizations

to provide the same types of services for Native American veterans.

 15See appendix I for details on other Native American homeownership assistance programs

and their loan limits.

16One-Stop Mortgage Center Initiative in Indian Country, the Department of Housing and

Urban Development and the Department of the Treasury, October 2000; The Report of the

Native American Lending Study, Community Development Financial Institutions Fund,

the Department of the Treasury, November 2001.
Page 12 GAO-02-654 Native American Housing

For example, VA regional loan centers have not partnered with other

organizations that focus on mortgage lending on trust lands, such as the

One-Stop Mortgage Centers17 located on the Navajo reservation in New

Mexico and Arizona, and the Oglala Sioux reservation in South Dakota.

The centers are nonprofit organizations that specialize in mortgage lending

and credit counseling, guiding potential Native American borrowers

through the homebuying process, simplifying procedures, and educating

potential borrowers about the types of home loans available on trust

lands. We found that VA regional offices in Phoenix and St. Paul have had

little contact with these centers and have not used them to identify,

educate, and assist prospective borrowers. For example, a One-Stop

Mortgage Center official in Arizona estimated that as many as 200 Navajo

veterans who had visited the center and expressed an interest in

homeownership did not receive complete information about the VA

program because the One-Stop Mortgage Center’s staff was not familiar

with it.

VA has conducted outreach but has taken limited steps to meet

assessment and reporting requirements as specified in the program’s

authorizing legislation. Outreach requirements specified in the program’s

authorizing legislation state that VA, among other things, is to attend

housing conferences, and provide information to veterans, tribal

governments and organizations. VA has performed many of these

activities. Other program requirements state that VA should annually

assess and report to the Congress on the effectiveness of its outreach

activities and annually report on the pool of eligible Native American,

Native Hawaiian, and Pacific Islander veterans. VA has reported that it has

undertaken extensive outreach activities but has not reported on how

effective its outreach has been. VA’s annual report has included

information on how many Native American and Pacific Islander veterans

identified themselves as such on the 1990 census but has not indicated the

number of these individuals who would meet the program’s eligibility

requirements. However, VA said it will use new data available from the

2000 census to provide a more accurate count.

 17An Executive Memorandum established the One-Stop Mortgage Center Initiative in 1998.

It directed HUD and the Department of Treasury to develop recommendations to

streamline mortgage lending on trust lands.

VA Has Conducted

Various Outreach

Activities but Has

Taken Limited Steps

to Meet Assessment

and Reporting

Requirements
Page 13 GAO-02-654 Native American Housing

The direct loan program’s authorizing legislation states that VA must,

among other things, attend housing conferences and conventions; and

produce and disseminate information to tribal governments, tribal

veterans service organizations, and tribal organizations regarding the

availability of such benefits. VA’s regional loan center staff have attended

and made presentations at housing conferences sponsored by the

Department of Housing and Urban Development’s Office of Native

American Programs, the Department of Hawaiian Homelands, other Native

American housing organizations, and Native American veterans forums.

For example, the Phoenix regional loan center made a presentation on the

direct loan program at the National Native American Veterans Symposium

in February 2001.

In addition, VA produced a video called “Coming Home: Native American

Veteran Home Loans” that has been distributed to tribal officials and

organizations. This video shows Native American veterans and tribal

officials how the direct loan program may be used to help them achieve

their homeownership goals. VA has also distributed information pamphlets

and applications to interested veterans and organizations.

VA’s regional loan center staff has also traveled to tribal trust lands to

meet and talk with tribal representatives and veteran liaison

representatives to solicit their assistance in reaching tribal members who

are veterans. For example, the Phoenix and St. Paul regional loan centers

sent representatives to talk to tribes in those areas about the program.

Furthermore, the Honolulu field office has expanded on these outreach

activities to promote the program to Native Hawaiian veterans. Officials at

the Honolulu office said they use local media, including radio, television,

and newspaper to promote the program. In addition, officials said they use

local housing organizations to inform veterans of the program.

The program’s authorizing legislation requires, among other things, that

VA assess the effectiveness of outreach efforts it undertakes in connection

with the direct loan program and report this assessment to the Congress

annually. In its reports, VA states that the low level of program

participation is not due to a lack of outreach on its part. However,

program officials said that VA has not assessed the effectiveness of its

outreach efforts. VA notified us that it plans to evaluate the Native

American Veterans Direct Home Loan program as part of a larger study

that it expects to complete in 2003, but an assessment of outreach

effectiveness is not part of the planned work.

VA Has Conducted Various

Outreach Activities

VA Has Taken Limited

Steps to Meet Assessment

and Reporting

Requirements
Page 14 GAO-02-654 Native American Housing

The program’s authorizing legislation directs VA to report annually on the

pool of eligible veterans. To meet this requirement, VA reported that about

436,000 individuals had identified themselves as Native American and

Pacific Islander veterans in the 1990 census. VA also acknowledged that

the number of veterans obtained from census data did not wholly correlate

to eligible veterans because the tally included veterans who were living in

cities and who may not have been members of tribes—thus, included were

some veterans not eligible for leases or ownership of trust lands. Also, VA

officials stated that they could not definitively quantify the pool of

veterans who might be eligible for the program because they are

dependent on veterans volunteering to identify their race and ethnicity.

We analyzed the 1990 census data, however, and were able to distinguish

Native American veterans who were living in tribal areas with trust lands

from those living elsewhere. Our analysis revealed that there were

approximately 18,000 veterans living on trust lands associated with about

50 federally recognized tribes. Although, it is likely that there are eligible

veterans associated with the remaining federally recognized tribes, the

data were not readily available.

Further identification of eligible veterans might be possible with an

examination of 2000 census data. Population data for Native Hawaiians

who live on their equivalent of trust lands—Hawaiian homelands—were

not collected in the 1990 census but were collected in the 2000 census. The

more recent census will also identify Native American veterans living on

trust lands associated with nearly 90 federally recognized tribes. VA

program officials said they have asked VA’s Office of Policy and Planning

to analyze the 2000 census data and will use the data to provide a more

current, accurate count of veterans eligible for the program. This analysis

could allow VA to report to the Congress a more accurate count of the

eligible pool of program participants.

Although the program is designed to help Native American, Native

Hawaiian, and Pacific Islander veterans living on trust lands achieve

homeownership, our review suggests that certain elements of the program

may be barriers to participation for Native Americans. Some of these

barriers are difficult to overcome; for example, problems with establishing

meaningful interest in trust lands. But, VA can address some of the other

barriers. For example, the program loan limit of $80,000 may be limiting

the usefulness of the program to Native American veterans on some trust

lands. By not partnering with other organizations, VA may be missing

opportunities to get Native American veterans into the program and to

Conclusions
Page 15 GAO-02-654 Native American Housing

guide them through the mortgage process to buy a home. Furthermore, by

not assessing its outreach efforts, VA cannot be certain that it is effectively

reaching the population that the program was designed to serve. While VA

has not completely met requirements for reporting on the pool of eligible

veterans, we are not making a recommendation because VA plans to use

the 2000 census data to provide a more accurate count of eligible veterans.

Changes to VA’s loan program might improve the program’s contribution

to the federal effort to increase opportunities for Native American

homeownership on trust lands.

To increase opportunities for participation for all Native American, Native

Hawaiian, and Pacific Islander veterans, we recommend that the Secretary

of Veterans Affairs:

• Direct regional loan centers to obtain local housing cost data for trust

lands to determine the need for exceptions to the current loan limit.

Additional exceptions should be granted if the data support such

increases.

• Explore partnerships with local housing organizations, such as One-Stop

Mortgage Centers, that assist and support Native Americans on trust lands

with the mortgage lending process.

• Assess program outreach efforts to Native American, Native Hawaiian,

and Pacific Islander veterans and report on this assessment to the

Congress, as the program’s authorizing legislation directs.

We provided a draft of this report to VA for its review and comment. We

received written comments on the draft report (see app. II). VA agreed that

it could do more in delivering its benefits, and concurred with our

recommendations. In addition, VA provided technical clarifications to the

report, which we have incorporated into this report where appropriate.

As part of its comments, VA suggested that we use statistical data from its

National Survey of Veterans 2000 on veteran homeownership and income,

rather than the general population. VA did not provide a copy of this

unpublished survey, and we were unable to verify these data to determine

their validity. Therefore, we did not include them in this report.

Recommendations for

Executive Action

Agency Comments
Page 16 GAO-02-654 Native American Housing

To address the issues discussed in this report, we reviewed the statute,

regulations, annual reports, and informational materials on VA’s Native

American Veterans Direct Home Loan program as well as our other work

and related studies of Native American trust land issues. We also

interviewed numerous officials in Washington, D.C., and elsewhere with

responsibilities for the program or knowledge of Indian housing issues. To

gain a fuller perspective on Native American housing and trust land issues,

we interviewed HUD officials, who administer block grant and home-loan

programs for Native Americans. We also interviewed an official at the

Bureau of Indian Affairs, who is familiar with Native American tribes and

trust land issues. We gained some perspective on the views of Native

American veterans by interviewing officials from the National Congress of

American Indians, the National American Indian Housing Council, and the

Center for Minority Veterans as well as representatives of the Navajo Tribe

and the Oglala Sioux Tribe. We selected these tribes because they are

among the largest in the nation, have completed memorandums of

understanding with VA, and are served by the two VA regional loan centers

we visited.

To determine if there was a disparity in program participation, we used VA

data to calculate the number of loans made to Native Americans on the

mainland by each regional loan center in every year since 1992 and

compared the results with the number of loans made to Native Hawaiians

and Pacific Islanders during the same period. To identify the factors

contributing to the disparity, we interviewed program officials at VA

headquarters in Washington D.C., and at four VA centers: Honolulu,

Denver, St. Paul, and Phoenix. We selected these four centers because

they are responsible for about 96 percent of all loans made under the

program since its inception. During site visits to the St. Paul and Phoenix

centers, we reviewed case files to determine the reasons that loan

applications had been rejected and describe contacts with veterans and

tribes. To see how income and other program requirements may affect

eligibility for the program, we reviewed available census data on Native

Americans’ incomes, poverty levels, veteran status, and residency on or

near reservations. We also interviewed an official at the One-Stop

Mortgage Center in Window Rock, Arizona, to discuss the significance of

providing assistance with the mortgage process.

To determine the steps VA has taken to meet outreach, assessment, and

reporting requirements, we reviewed data provided at our request from all

nine VA regional loan centers. This data provided information on VA

program staffing, loan activity, and outreach efforts. We assessed the

availability of information that VA could use to better identify the pool of

Scope and

Methodology
Page 17 GAO-02-654 Native American Housing

eligible veterans by reviewing Census Bureau statistical reports and by

interviewing officials concerning the availability of 2000 census data on

Native Hawaiians and on Native Americans residing on trust lands. We

conducted our work from November 2001 through May 2002 in

accordance with generally accepted government auditing standards. We

checked data that we obtained from federal agencies for internal

consistency, but we did not independently verify the data.

As arranged with your offices, we will also send copies of this report to the

Secretary, Department of Veterans Affairs; the Ranking Minority Member

of the Committee on Veterans’ Affairs, U.S. Senate; and the Committee on

Veterans’ Affairs, U.S. House of Representatives. We will make copies

available to others on request. In addition, this report is also available on

GAO’s Web site for no charge at http://www.gao.gov. If you or your staff

have any questions about this report, please call me at (202) 512-2834. Key

contacts and major contributors to this report are listed in appendix III.

Stanley J. Czerwinski

Director, Physical Infrastructure Issues
Appendix I: Other Federal Homeownership

Programs for Native Americans on Trust

Lands

Page 18 GAO-02-654 Native American Housing

In addition to VA’s Native American Veterans Direct Home Loan program,

four other federal programs provide homeownership assistance to Native

American individuals or tribes on trust lands on the mainland. The

Department of Housing and Urban Development (HUD) administers two

programs,18 and the Department of Agriculture administers two programs

through its Rural Housing Service. Key aspects of each of these programs

are shown in table 2.

 18HUD also provides housing assistance to Native Americans on the mainland through a

block grant, enacted by the Native American Housing Assistance and Self-Determination

Act of 1996. In fiscal year 2002, HUD provided about $649 million in block grants to tribal

entities to use for housing.

Appendix I: Other Federal Homeownership

Programs for Native Americans on Trust

Lands
Appendix I: Other Federal Homeownership

Programs for Native Americans on Trust

Lands

Page 19 GAO-02-654 Native American Housing

Table 1: Homeownership Assistance Programs for Native Americans on Trust Lands, in 2002

Program feature

Indian Home Loan

Guarantee Program–

Housing and Urban

Development Dept.

Sec. 184a

Mortgage Insurance

Program-Federal

Housing Administration

Sec. 248b

Rural Housing

Guaranteed Loan

Program-Rural Housing

Service Sec. 502c

Rural Housing Direct

Loan Program-Rural

Housing Service

Sec. 502d

Year enacted 1992 1983 1990 1949

Number of loans

made since

inception

354 on trust land out of

948 total

760 on trust land Five on trust lands out of

396 total to Native

Americans in FY 2000 and

2001

153 on trust lands

out of 1937 total to Native

Americans since 1995

Value of loans

made since

inception

$28 million on trust land

out of $92.5 million total

$31 million on trust land $29.3 million to Native

Americans in FY 2000 and

2001

$78.4 million to Native

Americans since 1995

Type of funding

available

Home loan Home loan Home loan, with priority for

first-time buyer

Home loan with interest

subsidy available

Nature of program Loan guaranty for private

lenders

FHA insured loan Loan guaranty for private

lenders

Direct home loan

Loan purpose Purchase, construct, or

rehabilitate owneroccupied single-family

homes with up to four

dwelling units; tribes may

construct rental homes

Purchase, construct, or

rehabilitate owneroccupied single-family

homes with up to four

dwelling units

Purchase, construct, or

rehabilitate owneroccupied single-family

homes

Purchase, construct, or

rehabilitate owneroccupied single-family

homes

Loan limits Lesser of 150 percent of

local FHA limitse

 or home

value

Lesser of FHA limitse

 or

home value

None, based upon

appraisal and repayment

ability

HUD’s 203b limit as of

9/30/98

Lands covered by

loans

Trust lands held for

individuals or tribes or fee

simple land in Indian areas

Trust lands held for

individuals or tribes

Trust lands held for

individuals or tribes and

other rural properties

Trust lands held for

individuals or tribes and

other rural properties

Entities eligible for

loans

Families/individuals, tribes

or Indian housing

authorities

Families/individuals or

tribes

Families/individuals with

low or moderate incomes

Families/individuals with

low or very low incomes

Agency

requirements

Tribal resolutions and

letters certifying

procedures for

foreclosures, evictions,

and priority of liens

Tribal ordinances and

documentation certifying

procedures for

foreclosures and evictions

Interagency

memorandums of

understanding developed

for One-Stop Mortgage

Initiative

For tribal trust lands an

approved lease is

required

a

Section 184 of the Housing and Community Development Act of 1992; 12 U.S.C. 1715 z-13a.

b

Section 248 of National Housing Act, as amended; 12 U.S.C. 1715 z-13.

c

Section 502 of Housing Act of 1949, as amended; 42 U.S.C. 1472 (h).

d

Section 502 of Housing Act of 1949, as amended; 42 U.S.C. 1472.

e

The Federal Housing Administration (FHA) loan limits are $144,000 -$278,000 or $262,000-$503,000

in high cost areas.

Sources: GAO analysis of HUD and Rural Housing Service data.
Appendix II: Comments from the Department of Veterans Affairs

Page 20 GAO-02-654 Native American Housing

Appendix II: Comments from the Department

of Veterans Affairs
Appendix II: Comments from the Department of Veterans Affairs

Page 21 GAO-02-654 Native American Housing
Appendix II: Comments from the Department of Veterans Affairs

Page 22 GAO-02-654 Native American Housing
Appendix II: Comments from the Department of Veterans Affairs

Page 23 GAO-02-654 Native American Housing
Appendix III: Contacts and Staff Acknowledgments

Page 24 GAO-02-654 Native American Housing

Carol Anderson-Guthrie, (214) 777-5600

Dwayne Curry, Shelia Drake, Patricia Elston, Colin Fallon, John McGrail,

Michael Mgebroff, and William Sparling made key contributions to this

report.

Appendix III: Contacts and Staff

Acknowledgments

GAO Contacts

Acknowledgments
Related GAO Products

Page 25 GAO-02-654 Native American Housing

Welfare Reform: Tribes Are Using TANF Flexibility To Establish Their

Own Programs. GAO-02-768. Washington, D.C.: July 5, 2002.

Economic Development: Federal Assistance Programs for American

Indians and Alaska Natives. GAO-02-193. Washington, D.C.: December 21,

2001.

Indian Issues: Improvements Needed in Tribal Recognition Process.

GAO-02-49. Washington, D.C.: November 2, 2001.

Rural Housing: Options for Optimizing the Federal Role in Rural

Housing Development. GAO/RCED-00-241. Washington, D.C.: September

15, 2000.

Native American Housing: Information on HUD’s Funding of Indian

Housing Programs. GAO/RCED-99-16. Washington, D.C.: November 30,

1998.

Native American Housing: Homeownership Opportunities on Trust

Lands Are Limited. GAO/RCED-98-49. Washington, D.C.: February 24,

1998.

Hawaiian Homelands: Hawaii’s Efforts to Address Land Use Issues.

GAO/RCED-94-24. Washington, D.C.: May 26, 1994.

Veterans’ Benefits: Availability of Benefits in American Samoa.

GAO/HRD-93-16. Washington, D.C.: November 18, 1992.

Indian Programs: Profile of Land Ownership at 12 Reservations.

GAO/RCED-92-96BR. Washington, D.C.: February 10, 1992.

Related GAO Products

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