The Department of Agriculture's Rural Housing and Community Development Service, in partnership with Fannie Mae, has signed an agreement with the Grand Traverse band of Ottawa and Chippewa Indians to expand homeownership opportunities. Until recently, virtually no mortgage lending was available on trust lands.

Because of the shortage of housing units on the reservation, many of the band's 3,000 members are unable to reside on the reservation and are scattered throughout several counties in Michigan.

The Grand Traverse band is the first Native American group in the Midwest and the second in the nation to be approved for section 502 guaranteed loans under a pilot program, which requires no down payments and covers homes on trust lands.

Under the pilot, the Grand Traverse band will use funds from its local casino to provide low-interest-rate construction loans, then local lenders will make loans for the purchase of homes built on the reservation.

By agreeing to purchase loans originated under the program, Fannie Mae - formally the Federal National Mortgage Association - replenishes local lenders' funds, helping them expand their lending on restricted land.

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