The year 2013 presented a stark reality for many Native Americans seeking to achieve the dream of homeownership. Federal data revealed a significant disparity in mortgage approval rates, highlighting systemic challenges faced by this demographic. This article delves into the details of the Home Mortgage Disclosure Act (HMDA) data, shedding light on the approval rates, denial rates, and lending patterns that impacted Native American and Native Hawaiian mortgage applicants during that year. The data paints a picture of a housing market where access to credit was not equally distributed, with Half of Native Mortgage Applicants Were Denied in 2013.
A Disparity in Approval Rates
The HMDA data, meticulously analyzed by ComplianceTech, a firm based in Arlington, Virginia, exposed a troubling trend. In 2013, Native Americans (encompassing both American Indians and Alaska Natives) experienced a mortgage approval rate of just 50.85 percent. This meant that roughly half of all Native American applicants were denied the opportunity to secure a home loan. In contrast, 30 percent of applications were explicitly denied, while another 19 percent were either withdrawn by the applicant or left incomplete. This high percentage of withdrawals and incomplete applications suggests potential discouragement or difficulties navigating the complex mortgage application process.
While the situation for Native Americans was concerning, Native Hawaiians (including Native Hawaiians and Natives from Pacific islands such as Guam and American Samoa) fared slightly better. They achieved an approval rate of 56.6 percent. However, this figure still indicates a substantial portion of Native Hawaiian applicants facing challenges in securing mortgage financing.
The sheer number of impacted individuals underscores the magnitude of the problem. Approximately 26,000 Native Americans were approved for mortgages in 2013, while 24,000 Native Hawaiians also achieved homeownership. However, a staggering 43,800 Native Americans and Native Hawaiians were either denied loans or saw their applications fall through. This significant number highlights the urgent need to address the barriers preventing these communities from accessing fair and equitable housing opportunities.
A Closer Look at New Mexico
To gain a more granular understanding of the issue, the data from New Mexico, a state with a significant Native American population (exceeding 10 percent), provides valuable insights. The situation in New Mexico was particularly dire, with only 35.6 percent of mortgage applications from Native Americans being approved. This figure is significantly lower than the national average for Native Americans, indicating potentially unique challenges within the state.
Adding to the concern, approximately 43 percent of Native American mortgage applications in New Mexico were denied outright. Furthermore, 21 percent of applications were withdrawn or left incomplete, echoing the national trend of potential discouragement within the application process. The HMDA data revealed that only 695 mortgages were granted to Native Americans in New Mexico during 2013, highlighting the limited access to homeownership for this community.
In contrast, the state’s small Native Hawaiian population experienced a more favorable outcome, with an approval rate of 54.5 percent. This resulted in 104 mortgages being granted to Native Hawaiians in New Mexico during the same period. The disparity between the approval rates for Native Americans and Native Hawaiians within New Mexico suggests that factors beyond ethnicity, such as geographical location, economic conditions, or specific lending practices, may contribute to the observed differences.
The Dollar Value of Mortgages
The HMDA data also provides insights into the dollar value of mortgages issued to Native Americans and Native Hawaiians. In New Mexico, Native Americans were loaned a total of $93 million in mortgage financing during 2013. In comparison, Native Hawaiians received $6 million in mortgage loans.
While $93 million may seem like a substantial amount, it is important to consider the context of the overall mortgage market within New Mexico. Native Americans’ 1.1 percent share of total mortgage dollars in the state was significantly lower than their proportion of the population, which stood at approximately 10 percent. This discrepancy underscores the underrepresentation of Native Americans in the housing market and the need to address the systemic barriers preventing them from accessing fair and equitable lending opportunities.
Top Lenders in Native American Mortgage Finance
The HMDA data also identifies the leading mortgage lenders serving the Native American community. Notably, no single lender issued as much as $1 billion in mortgages to Native Americans in 2013. This further highlights the relatively small scale of mortgage lending activity within this demographic.
Wells Fargo Bank, based in Sioux Falls, South Dakota, emerged as the top lender, providing $730 million in mortgages to Native Americans and Alaska Natives. Quicken Loans, headquartered in Detroit, Michigan, secured the second position with $397 million in loans. Bank of America, located in Charlotte, North Carolina, ranked third with $338 million in mortgage financing.
Interestingly, the list of top lenders also included a military credit union and a farm credit lender. Navy Federal Credit Union, based in Vienna, Virginia, ranked 17th with a volume of $78 million. Farm Credit Services of MidAmerica, located in Louisville, Kentucky, finished eighth with $89 million. Farm Credit banks primarily focus on providing loans to farmers and ranchers but also offer rural mortgages, potentially contributing to their presence in the Native American mortgage market.
Bank2 of Oklahoma City, traditionally a leading mortgage provider for Indian-controlled lenders, ranked 28th nationwide with $26 million in loans. This institution is owned by the Chickasaw Nation of Oklahoma, demonstrating the role of tribal entities in supporting homeownership within their communities.
Implications and Conclusion
The HMDA data from 2013 reveals a concerning reality: Half of Native Mortgage Applicants Were Denied in 2013. This disparity in mortgage approval rates underscores the need for a deeper understanding of the factors contributing to these challenges. Potential contributing factors may include:
- Limited access to credit: Native American communities often face challenges related to credit history, income stability, and access to financial institutions.
- Geographic barriers: Many Native American reservations and tribal lands are located in rural areas with limited infrastructure and economic opportunities.
- Historical discrimination: Past discriminatory lending practices may have created lasting barriers to homeownership for Native Americans.
- Lack of financial literacy: Insufficient financial literacy education may hinder some Native Americans from navigating the complex mortgage application process.
Addressing these challenges requires a multi-faceted approach involving government agencies, financial institutions, tribal entities, and community organizations. Potential solutions include:
- Expanding access to credit counseling and financial literacy programs.
- Promoting culturally sensitive lending practices.
- Investing in economic development and infrastructure improvements in Native American communities.
- Strengthening fair housing enforcement and addressing discriminatory lending practices.
The data from 2013 serves as a crucial reminder of the ongoing need to address the systemic barriers preventing Native Americans and Native Hawaiians from achieving the dream of homeownership. By understanding the challenges and implementing effective solutions, it is possible to create a more equitable and inclusive housing market for all.