Native American Direct Loan Native American Direct Loan ProgramProgram

The Department of Veterans AffairsThe Department of Veterans Affairs

Program Highlights

What is a Native American Direct Loan What is a Native American Direct Loan (NADL)(NADL)

Why we have a NADL programWhy we have a NADL program Who is EligibleWho is Eligible Loan PurposesLoan Purposes The Approval ProcessThe Approval Process

What Is A VA Direct Loan?

The Department of Veterans Affairs serves The Department of Veterans Affairs serves as the principal lender and directly lends as the principal lender and directly lends the funds to an eligible Native American the funds to an eligible Native American Veteran for the purpose of purchasing, Veteran for the purpose of purchasing, constructing or improving a home on trust constructing or improving a home on trust lands.lands.

Why we have a NADL Program?

Mortgage Lenders will not make loans on Mortgage Lenders will not make loans on Trust LandTrust Land Tribes are Sovereign NationsTribes are Sovereign Nations State Laws do not control Real Estate State Laws do not control Real Estate

Transactions on Federal Trust LandTransactions on Federal Trust Land Obtaining a Security Interest on Trust Obtaining a Security Interest on Trust

Lands is difficultLands is difficult

Bureau of Indian Affairs

The VA works directly with the following The VA works directly with the following entities to process a NADL loanentities to process a NADL loan Bureau of Indian AffairsBureau of Indian Affairs Indian Health ServiceIndian Health Service Tribal Housing DivisionTribal Housing Division

Determining Eligibility

Native American Veterans with sufficient Native American Veterans with sufficient entitlement.entitlement.

The tribal organization has aThe tribal organization has a standing Memorandum of Understanding with the with the Secretary of Veterans Affairs.Secretary of Veterans Affairs.

The home is on trust/lease/allotted land.The home is on trust/lease/allotted land. The Veteran is a member of the tribe.The Veteran is a member of the tribe.

Memorandum of Understanding (MOU) Tribe must adopt foreclosure, eviction , priority of lien Tribe must adopt foreclosure, eviction , priority of lien

procedures, and leasing proceduresprocedures, and leasing procedures Tribal court must acknowledge that the tribe has enacted Tribal court must acknowledge that the tribe has enacted

the required legal procedures and that it will enforce the required legal procedures and that it will enforce these proceduresthese procedures

Must provide for the acquisition by the veteran of a Must provide for the acquisition by the veteran of a meaningful interest in the lot and/or dwelling on trust meaningful interest in the lot and/or dwelling on trust landland

Must provide for conveyance of the veteran’s meaningful Must provide for conveyance of the veteran’s meaningful interest as security for the loaninterest as security for the loan

Three existing MOU’s for the Houston Regional Loan Three existing MOU’s for the Houston Regional Loan CenterCenter

MOU Procedures

MOU is submitted by the tribe to the Houston MOU is submitted by the tribe to the Houston Regional Loan Center (RLC) Regional Loan Center (RLC)

Regional Loan Center submits MOU to Regional Regional Loan Center submits MOU to Regional CounselCounsel

Regional Counsel reviews and forwards MOU to Regional Counsel reviews and forwards MOU to General Counsel at VA Central Office for final General Counsel at VA Central Office for final approval and signaturesapproval and signatures

Regional Council begins taking NADL loan Regional Council begins taking NADL loan applicationsapplications

Eligible Loan Purposes

To purchase, construct, To purchase, construct, or improve a home on or improve a home on Native American trust Native American trust land. land.

To simultaneously To simultaneously purchase and improve a purchase and improve a home. home.

To refinance another To refinance another NADL direct loan and NADL direct loan and lower the interest ratelower the interest rate..

Requirements For Loan Approval Loan approval requires the Veteran to Loan approval requires the Veteran to

meet the following requirements:meet the following requirements: The loan must be for an eligible The loan must be for an eligible

purpose.purpose. The Veteran intends to occupy the The Veteran intends to occupy the

home as his/her primary residence. home as his/her primary residence. Rentals and/or investments are not Rentals and/or investments are not allowed.allowed.

Continued…

The Veteran and, if applicable, the spouse The Veteran and, if applicable, the spouse are satisfactory credit risks.are satisfactory credit risks.

The Veteran and, if applicable, the spouse The Veteran and, if applicable, the spouse have stable and reliable income that is have stable and reliable income that is sufficient to meet payment obligations sufficient to meet payment obligations and provide enough left over for family and provide enough left over for family support.support.

Additional Underwriting Considerations Tribal Alternative Credit (tribal liens, tribal Tribal Alternative Credit (tribal liens, tribal

rentals, etc.)rentals, etc.) Tribal Health ServicesTribal Health Services Good and services offered by tribal organizationsGood and services offered by tribal organizations Exemption from sales tax, county tax, other Exemption from sales tax, county tax, other

taxestaxes Trust incomesTrust incomes Tribal distributions Tribal distributions Tribal down-payment assistance programsTribal down-payment assistance programs

Direct Loan Benefits No down payment. No down payment. No private mortgage insurance. No private mortgage insurance. Minimal closing costs. Minimal closing costs. Freddie Mac single-family conventional Freddie Mac single-family conventional

conforming loan limit (currently $417,000) conforming loan limit (currently $417,000) Interest rate may be lower than Interest rate may be lower than

conventional mortgages. conventional mortgages. Current interest rate is 3.5%.

Costs Continued…

VA appraisal VA appraisal Credit reportCredit report Loan Processing FeeLoan Processing Fee Title search, title Title search, title

insurance, or other title insurance, or other title review fees. review fees.

State and/or local State and/or local transfer taxes, if transfer taxes, if applicableapplicable

Recording feesRecording fees Survey Survey Hazard insurance Hazard insurance

premiumpremium

Costs

Funding fee—which may be included in the Funding fee—which may be included in the loan amount—must be paid to VA.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.

Tribal Documents

Title Status ReportTitle Status Report Lease Agreement (heirs must approve) Lease Agreement (heirs must approve) Proof of Tribal MembershipProof of Tribal Membership HIS/Water/Sewer ReportHIS/Water/Sewer Report Environmental/Archeological SurveyEnvironmental/Archeological Survey

Differences in the Appraisal Process Must recognize Native American Must recognize Native American

cultural/traditional preferences in housings cultural/traditional preferences in housings (for example: Hogan or pueblo based (for example: Hogan or pueblo based designs)designs)

Rural scattered sitesRural scattered sites VA fee appraisers may not be available VA fee appraisers may not be available Traditional appraisal practices and Traditional appraisal practices and

techniques may not be applicabletechniques may not be applicable Minimum property requirements may be Minimum property requirements may be

questionablequestionable

Obtaining A VA Loan Determine if the tribal organization or appropriate

Native American group has a standing Memorandum 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.

Continued…

Contact the Houston Regional Loan Center and Contact the Houston Regional Loan Center and apply for the loan, which will require the apply for the loan, which will require the submission of a variety of documents in order to submission of a variety of documents in order to process the loan. process the loan.

FindFind a home to buy and sign a purchase a home to buy and sign a purchase agreement and/or a construction contract with agreement and/or a construction contract with the builder to build the home.the builder to build the home.

If approved, cIf approved, close the loan and move into the lose the loan and move into the new homenew home..

Contact Information

Laura Rodriguez Native American Direct Loan Coordinator

VA Houston Regional Loan Center

6900 Almeda Road, Houston, TX 770306900 Almeda Road, Houston, TX 77030 laura.rodriguez2@va.gov or or

houstonlgy@va.govhoustonlgy@va.gov Toll-free 1-888-232-2571, ext. 1808Toll-free 1-888-232-2571, ext. 1808 Direct number: 713-383-1808Direct number: 713-383-1808

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 Programhttp://www.benefits.va.gov/homeloans/