Homeownership on tribal lands remains low. A new initiative from five CDFIs is hoping to help change that.
By Bianca Gonzalez
Members of the Rosebud Reservation in Southern South Dakota face a number of barriers to wealth-building. For one, there has historically been a lack of access to banks on reservations. Many traditional financial institutions outside of the reservations are unwilling to navigate the technical aspects of owning a home on trust land. To add to the difficulty, there’s also inadequate housing stock on Rosebud Reservation.
To address the problem, five CDFIs located on Rosebud Reservation and the neighboring Pine Ridge Reservation have joined forces to launch the Rosebud Homeownership and Wealth Building Initiative. With funding from NeighborWorks America, the initiative focuses on increasing knowledge of the home-buying process and how to prepare for it in underbanked and underdeveloped communities on the Rosebud Reservation.
“We've got the poorest counties in the United States. That's Rosebud and Pine Ridge,” explains Tawney Brunsch, executive director of Lakota Funds.
In addition to Lakota Funds, the initiative includes Lakota Federal Credit Union, Mazaska Owecaso Otipi Financial, Sicangu Wicoti Awanyakapi Corporation and Tatanka Funds. The five financial institutions are providing communities in the Rosebud Reservation with trainings on the homeownership process and becoming stewards over their finances.
Brunsch started Lakota Funds, the first Native CDFI, in 1986 when the Pine Ridge Reservation had virtually no banking options. “It's 3,500 square miles with 40,000 people and we didn't have a bank [before Lakota Funds],” Brunsch says.
The CDFI, located in the southwest corner of South Dakota, provided members of the Pine Ridge and Rosebud Reservations with crucial access to credit. Today, much of their work is livestock production loans, called AG loans. Their portfolio is now around $8 million, and their delinquency rate is less than 1%.
“It's about economic development, but it's also under that big umbrella of asset building and almost everything else that goes along with it,” Brunsch says.
According to Britney Hiseley, executive director of Tatanka Funds, the Rosebud Reservation is the sixth largest reservation in the United States. “The reservation covers a land base of approximately 950,000 acres and as a checkerboard, which means it's a mix of fee trust, tribal trust and allotted trust land,” she says. “So it kind of gets really complicated when it comes into mortgage lending.”
The section 184 Indian Home Loan Guarantee Program was designed specifically for American Indian and Alaska Native families in 1992 to facilitate homeownership and increase access to capital in Native American Communities.
“Sadly, only 10% of those HUD 184’s were even done on trust. They're still done off the reservation because they're just so complicated,” Brunsch says. “Native CDFIs are doing 70% of the mortgage lending [on tribal lands] in the state of South Dakota.”
The Rosebud Reservation is a credit desert, which adds an additional barrier for its communities. According to Hiseley, many residents either “don't have credit, or if they got a credit card, they just aren’t fully understanding the responsibility, and have established very poor credit because of a lack of financial education.” That’s why one of the initiative’s classes focuses on credit.
One challenge the CDFIs faced was ensuring communities on the Rosebud Reservation had easy access to the trainings. Rosebud has 20 different communities, ranging from about 50 to 100 residents. These communities are also relatively spaced out. Additionally, according to Hiseley, the median household income is around $28,500 — nearly 20,000 less than the median American income. This means that most households will have one means of transportation at most.
“You need to take your services, your message and your trainings to the community,” Brunsch says. “Oftentimes they don't have the means to get too far away from home.”
Using Lakota Federal Credit Union’s “Rolling Res Bus,” members of the initiative visited 12 different communities on the reservation. “We use it as a mobile training facility and a mobile bank,” Brunsch says. “We parked in different communities on Wednesdays through the summer, and just had great conversations with people. It was super helpful to introduce ourselves to help them to know not only Lakota Funds and the Lakota credit union but all of the partners.”
Native CDFIs are able to build trust with the community by being a part of the community. “We're not like other lenders,” Hiseley says. “We build relationships with our people. We see our clients every day, most mortgage lenders don't. We go to the same grocery store, we go through the same gas stations. So everything we do is very much relationship-based.”
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is developed in partnership with Next City.