In a traditional development project, a lender provides funds for a borrower to build or improve on their land. If the borrower becomes unable to repay that loan, the lender forecloses on the land in order to recoup its loss from the loan. However, since the land is held in trust, it can never leave tribal ownership. Without the ability to foreclose, most lenders have not been willing to risk loans to Native Americans. This cuts the AIAN population off from the most common form of funding for home improvement and development projects.
Remoteness also prevents commercial lenders from servicing the AIAN population.
Many tribes are located in isolated rural places where few banks exist. Of the lending institutions that can be found, most have limited assets for mortgage lending. Lack of information limits the interactions between Native Americans and potential lending institutions. Both parties need to be educated on issues like lending opportunities, risk, secondary market options, program requirements, fair housing, credit histories, and cultural issues. The character of the AIAN population and its housing problems vary from region to region, so the best strategy for meeting the shortage of decent affordable housing is difficult to ascertain.