Native American Direct Loan Improvement Act of 2023

To amend title 38, United States Code, to improve the program for direct housing loans made to Native American veterans, and for other purposes. 1. Short title This Act may be cited as the Native American Direct Loan Improvement Act of 2023 2. Improvements to program for direct housing loans made to Native American veterans by the Secretary of Veterans Affairs (a) General authorities and requirements (1) Direct housing loans to Native American veterans Section 3762(a) of title 38, United States Code, is amended to read as follows: (a) The Secretary may make a direct housing loan to a Native American veteran under this subchapter if the Secretary ensures the following: (1) That each Native American veteran to whom the Secretary makes a direct housing loan under this subchapter— (A) holds, possesses, or purchases using the proceeds of the loan a meaningful interest in a lot or dwelling (or both) that is located on trust land; and (B) will purchase, construct, or improve (as the case may be) a dwelling on the lot using the proceeds of the loan. (2) That each such Native American veteran will convey to the Secretary by an appropriate instrument the interest referred to in paragraph (1)(A) as security for a direct housing loan under this subchapter. (3) That the Secretary, including the Secretary’s employees or agents, may enter upon the trust land for the purposes of carrying out such actions as the Secretary determines are necessary, including— (A) to evaluate the advisability of the loan; (B) to monitor any purchase, construction, or improvements carried out using the proceeds of the loan; and (C) to manage any servicing or post-foreclosure activities, including acquisition, property inspections, and property management. (4) That there are established standards and procedures that apply to the foreclosure of the interest conveyed by a Native American veteran pursuant to paragraph (2), including— (A) procedures for foreclosing the interest; and (B) procedures for the resale of the lot or dwelling (or both) purchased, constructed, or improved using the proceeds of the loan. (5) That the loan is made in a responsible and prudent manner, subject to standards and procedures as are necessary for the reasonable protection of the financial interests of the United States. . (2) Memorandums of understanding, agreements, and determinations Section 3762(b) of such title is amended to read as follows: (b) (1) To carry out the purpose of subsection (a), the Secretary may— (A) enter into a memorandum of understanding with a tribal organization, other entity, or individual; (B) rely on agreements or determinations of other Federal agencies to guarantee, insure, or make loans on trust land; and (C) enter into other agreements or take such other actions as the Secretary determines necessary. (2) If the Secretary determines that the requirements under subsection (a) are not being enforced by a tribal organization, other entity, or individual that is a party to any memorandum of understanding, agreement, or determination described in paragraph (1), the Secretary may cease making new direct housing loans to Native American veterans under this subchapter within the area of the authority of the tribal organization, other entity, or individual (as the case may be). . (b) Direct loans to Native American veterans To refinance existing mortgage loans Section 3762(h) of such title is amended to read as follows: (h) The Secretary may make direct loans to Native American veterans in order to enable such veterans to refinance existing mortgage loans for any of the following purposes: (1) To refinance an existing loan made under this section, if the loan— (A) meets the requirements set forth in subparagraphs (B), (C), and (E) of paragraph (1) of section 3710(e) of this title; (B) will bear an interest rate at least one percentage point less than the interest rate borne by the loan being refinanced; and (C) complies with paragraphs (2) and (3) of section 3710(e) of this title, except that for the purposes of this subsection the reference to subsection (a)(8) of section 3710 of this title in such paragraphs (2) and (3) shall be deemed to be a reference to this subsection. (2) To refinance an existing mortgage loan not made under this section on a dwelling owned and occupied by the veteran as the veteran’s home, if all of the following requirements are met: (A) The loan will be secured by the same dwelling as was the loan being refinanced. (B) The loan will provide the veteran with a net tangible benefit. (C) The nature and condition of the property is such as to be suitable for dwelling purposes. (D) The amount of the loan does not exceed either of the following: (i) 100 percent of the reasonable value of the dwelling, with such reasonable value determined under the procedures established by the Secretary under subsection (d)(2). (ii) An amount equal to the sum of the balance of the loan being refinanced and such closing costs (including any discount points) as may be authorized by the Secretary to be included in the loan. (E) Notwithstanding subparagraph (D), if a loan is made for both the purpose of this paragraph and to make energy efficiency improvements, the loan must not exceed either of the following: (i) 100 percent of the reasonable value of the dwelling as improved for energy efficiency, with such reasonable value determined under the procedures established by the Secretary under subsection (d)(2). (ii) The amount referred to under subparagraph (D)(ii), plus the applicable amount specified under section 3710(d)(2) of this title. (F) The loan meets all other requirements the Secretary may establish under this subchapter. (G) The existing mortgage being refinanced is a first lien on the property and secured of record. (3) To refinance an existing mortgage loan to repair, alter, or improve a dwelling owned by the veteran and occupied by the veteran as the veteran’s home, if all of the following requirements are met: (A) The loan will be secured by the same dwelling as was the loan being refinanced. (B) The nature and condition of the property is such as to be suitable for dwelling purposes, and the repair, alteration, or improvement substantially protects or improves the basic livability or utility of such property. (C) The amount of the loan, including the costs of repairs, alterations, and improvements, does not exceed either of the following: (i) 100 percent of the reasonable value of the dwelling as repaired, altered, or improved, with such reasonable value determined under the procedures established by the Secretary under subsection (d)(2). (ii) An amount equal to the sum of— (I) the balance of the loan being refinanced; (II) the actual cost of repairs, alterations, or improvements; and (III) such closing costs (including any discount points) as may be authorized by the Secretary to be included in the loan. (D) The loan meets all other requirements the Secretary may establish under this subchapter. (E) The existing mortgage loan being refinanced is a first lien on the property and secured of record. . (c) Expansion of outreach program on availability of direct housing loans for Native American veterans Section 3762(i)(2) of such title is amended by adding at the end the following new subparagraph: (G) Pursuant to subsection (g)(4), assisting Native American veterans in qualifying for mortgage financing by— (i) partnering with local service providers, such as tribal organizations, tribally designated housing entities, Native community development financial institutions, and nonprofit organizations, for conducting outreach, homebuyer education, housing counseling, and post-purchase education; and (ii) providing other technical assistance as needed. (H) Attending conferences and conventions conducted by the network of Native community development financial institutions and other Native American homeownership organizations to provide information and training to Native community development financial institutions about the availability of the relending program under section 3762A of this title. . (d) Adequate personnel Section 3762 of such title is amended by adding at the end the following new subsection: (k) The Secretary shall assign a sufficient number of personnel of the Department dedicated to carrying out the authority of the Secretary under this subchapter, including construction and valuation specialists to assist with issues unique to new construction and renovations on trust land. . (e) Definitions Section 3765 of such title is amended— (1) in paragraph (1)— (A) by amending subparagraph (C) to read as follows: (C) is located in the State of Alaska within a region established under section 7(a) of the Alaska Native Claims Settlement Act ( 43 U.S.C. 1606(a) ; (B) in subparagraph (D), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following new subparagraphs: (E) is defined by the Secretary of the Interior and recognized by the United States as land over which an Indian Tribe has governmental dominion; or (F) is on any land that the Secretary determines is provided to Native American veterans because of their status as Native Americans. ; and (2) by adding at the end the following new paragraphs: (6) The term community development financial institution 12 U.S.C. 4702 (7) The term Indian Tribe 43 U.S.C. 1601 et seq. (8) The term Native community development financial institution (A) that has been certified as a community development financial institution by the Secretary of the Treasury; (B) that is not less than 51 percent owned or controlled by Native Americans; and (C) for which not less than 51 percent of the activities of the entity serve Native Americans. (9) The term net tangible benefit (10) The term other technical assistance (11) The term tribally designated housing entity 25 U.S.C. 4103 . (f) Interest rate reduction financing loan Section 3729(b)(4)(F) of such title is amended by striking 3762(h) 3762(h)(1) (g) Regulations Section 3761 of such title is amended by adding at the end the following new subsection: (c) The Secretary shall prescribe such regulations as may be necessary to carry out this subchapter. . 3. Native community development financial institution relending program (a) In general Subchapter V of chapter 37 section 3762 3762A. Native community development financial institution relending program (a) Purpose The Secretary may make a loan to a Native community development financial institution for the purpose of allowing the institution to relend loan amounts to qualified Native American veterans, subject to the requirements of this section. (b) Standards (1) In general The Secretary shall establish standards to be used in evaluating whether to make a loan to a Native community development financial institution under this section. (2) Requirements In establishing standards under paragraph (1), the Secretary shall ensure that a Native community development financial institution— (A) is able to originate and service loans for single-family homes; (B) is able to operate the relending program in a manner consistent with the mission of the Department to serve veterans; and (C) uses loan amounts received under this section only for the purpose of relending, as described in subsection (c), to Native American veterans. (c) Relending requirements (1) In general A Native community development financial institution that receives a loan under this section shall use the loan amounts to make loans to Native American veterans residing on trust land. (2) Requirements A loan to a Native American veteran made by a Native community development financial institution under paragraph (1) shall— (A) be limited either to the purpose of purchase, construction, or improvement of a dwelling located on trust land or to the refinance of an existing mortgage loan for a dwelling on trust land, consistent with the requirements of section 3762(h) of this title; and (B) comply with such terms and conditions as the Secretary determines are necessary to protect against predatory lending, including the interest rate charged on a loan to a Native American veteran. (d) Repayment A loan made to a Native community development financial institution under this section shall— (1) be payable to the Secretary upon such terms and conditions as are prescribed in regulations pursuant to this subchapter; and (2) bear interest at a rate of one percent. (e) Oversight Subject to notice and opportunity for a hearing, whenever the Secretary finds with respect to loans made under subsection (a) or (c) that any Native community development financial institution has failed to maintain adequate loan accounting records, to demonstrate proper ability to service loans adequately, or to exercise proper credit judgment, or that such Native community development financial institution has willfully or negligently engaged in practices otherwise detrimental to the interest of veterans or of the Government, the Secretary may take such actions as the Secretary determines necessary to protect veterans or the Government, such as requiring immediate repayment of any loans made under subsection (a) and the assignment to the Secretary of loans made under subsection (c). . (b) Clerical amendment The table of sections at the beginning of chapter 37 of such title is amended by inserting after the item relating to section 3762 the following new item: 3762A. Native community development financial institution relending program. (c) Native American veteran housing loan program account Section 3763 of such title is amended by adding at the end the following new subsection: (c) Of amounts available in the Account, the Secretary may use for loans made under section 3762A of this title— (1) in fiscal year 2024, not more than $5,000,000; and (2) in any fiscal year after fiscal year 2024, an amount as determined necessary by the Secretary to meet the demand for such loans. .

Summary: Native American Direct Loan Improvement Act of 2023 This bill revises the Native American Direct Loan (NADL) program, which is administered by the Department of Veterans Affairs (VA). Under the NADL program, the VA makes loans directly to Native American veterans to purchase, construct, improve, or refinance their homes located on federal trust land. Specifically, the bill expands the NADL program by allowing Native American veterans to refinance other existing mortgage loans on the same property if certain conditions are met. Additionally, the bill requires the VA to conduct additional program outreach by partnering with local service providers (e.g., tribal organizations and nonprofit organizations) to conduct outreach, homebuyer education, housing counseling, and post-purchase education. The bill directs the VA to assign a sufficient number of personnel to carry out the NADL program, including construction and valuation specialists to assist with issues unique to new construction and renovations on trust land. The bill also authorizes the VA to make a loan with a 1% interest rate to a Native community development financial institution to allow the institution to relend loan amounts to qualified Native American veterans residing on federal trust land.