The largest credit union in Alaska is a cornerstone of one of the pioneer efforts to get private lenders to make mortgages to Native Americans, and smaller CUs in the state are beginning to follow its lead.
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Matanuska Valley Federal Credit Union, Palmer, and Credit Union 1, Anchorage, have joined the giant Alaska USA Federal Credit Union in participating in the Cook Inlet Housing Authority's HOME Loan program.
The Anchorage-based Alaska USA, the largest CU in the state with $1.6-billion in assets, was among the first of the nearly 20 lenders in the program to get involved when it began closing loans in 1993, according to the credit union's chief lending officer, Lorran Skinner.
Skinner said that members of the 13 Native "corporations" created by the Alaska Native Claims Settlement Act are eligible for inclusion in its field of membership.
The CU closes 10 or 12 loans a year through the program, and none is in default, according to Skinner. It can finance existing homes up to $129,597, and new construction up to $179,704. Vicki Kluever, mortgage services manager at Matanuska Valley, said that while its participation in the program has been "minimal so far, she hopes as the credit union increases its two-year-old mortgage operation, it will be able to participate.
Previous Experience With Program
Kluever called the program "great" and said she had worked with it several years ago, while she was employed by a non-profit housing agency in Anchorage.
"We think it's a great program," said Skinner, whose 220,000-member institution, with branches in Alaska and Washington state, originated a total of $300-million in loans last year. "We handle as many of them as are available to us."
The credit union had a mortgage portfolio of $89-million at the end of March, and is a big player in the secondary market as well, packaging pools for both Fannie Mae and Ginnie Mae.
Norman A. Kallender, director of the CIHA program, said he was pleased at the big credit union's participation. "They've been there from the beginning and they still to this date are very much involved in the program," he said.
Kallender noted that the relationship goes back so far, the person who answered the phones at Alaska USA back then is now a loan officer.
The 46,000-member, $279-million Credit Union 1 has closed its first loan in the program, he said, while the 22,000-member, $109-million Matanuska Valley has joined the program but has yet to do its first mortgage.
All tolled, the Cook Inlet Housing Authority program has closed more than 350 mortgages, and is looking forward now to doing 100 financings a year.
Cook Inlet is an Indian Housing Authority affiliated with Cook Inlet Region Inc., the native corporation that counts Anchorage, the Kenai Peninsula and the Mat-Su region in its service area.
First Loan Closed In 1993
It closed its first loan in 1993, years before the Native American Housing Assistance and Self Determination Act of 1996 was passed to encourage tribal housing entities to partner with private lenders to stretch their housing allotments.
The program has served Alaska Natives and American Indians in the Anchorage area, and Cook Inlet has now expanded to a rural program which has closed another 23 loans.
Kallender is proud that his program won a Department of Housing and Urban Development HOME Best Practices award, and that other areas, like the Nome community, want to copy it. He's also proud that just two of his 350 borrowers have defaulted.
Key to the success of the HOME program is the IHA's subsidizing part of the cost, which gives lenders the comfort they need to extend a mortgage for the balance of the loan. The Rural HOME Loan Program extends even deeper subsidies.
From just a couple of lenders in its beginning years, the program now works through 18 different financial institutions, including banks, mortgage bankers, and the three credit unions. The banks include National Bank of Alaska (just acquired by Wells Fargo Bank) and First National Bank of Anchorage. The Alaska Housing Finance Corp., the state housing finance agency, facilitates the loans by interest rate reductions through its first-time home buyer program.
Cook Inlet will extend a forgivable "soft second" mortgage to the tribal member, which amounts to 20% of the purchase price, plus 2% of the loan for a downpayment and 4% of the loan for closing costs.
Average purchase price of the homes is about $123,000, meaning CIHA has helped finance some $40- million of private mortgage money. Average size of the homes is between 1,100 and 1,200 square feet.
Native Areas Targeted
It has targeted native areas of Anchorage, such as the Mountain View and Fairview neighborhoods, for special emphasis. It has 350 applications in the hopper right now, of which 112 are eligible for the program. They have to be at or below 80% of area median income.
This year, the program has received $3.5-million in federal housing block grant money to fund its efforts, the same as it received last year.
On the rural side, the IHA gives a grant of $25,000 per qualified applicant, and the Affordable Housing Program of the Federal Home Loan Bank of Seattle gives $10,000 for downpayment assistance, in addition to CIHA's usual purchase price buy-down.
Kallender would like to see the rural program bump up its purchase price buy-down to 40% to help facilitate more Native lending in those areas.
