Joe D. Lucero has a strong grip for a man of 81. Over the past 30 years, his calloused hands have built a six-room home-and sometime gathering place for the Isleta tribe-one room at a time, with no financial assistance from a bank.

Mr. Lucero and his wife, Lupita, are leaders of the pueblo of Isleta, a 200,000-acre reservation just 15 miles south of downtown Albuquerque, offering counseling to the 7,000 tribe members on issues ranging from baptism to marriage.

But they haven't been able to get a mortgage.

"When you apply, the first thing they say is 'Do you live on the reservation?' And that stalls things," Mr. Lucero said. The stumbling block, he said, is collateral.

The Luceros' plight is typical for the estimated 1.2 million Native Americans living on trust lands.

Myriad obstacles to traditional financing - among them the difficulty of underwriting loans when the title on the land cannot be transferred - force Native Americans to build houses board by board, meeting expenses one paycheck at a time.

From 1992 through 1996, eight lenders made just 91 conventional mortgage loans on the 55 million acres of trust lands nationwide, according to a 1998 report by the General Accounting Office.

Public housing programs have been the main source of new housing development for pueblos and reservations. But a tour of New Mexico, where trust land accounts for about 7.8 million acres or about 10% of the state, provides a stark example of the limits of government programs.

Mobile homes are scattered everywhere on reservations, evidence of the difficulty of getting financing on tribal trust land. With no zoning laws on the pueblo of Isleta and other reservations, members of tribes are free to put up a house of any type on the land assignment they receive from the tribal council.

Of the 1,153 houses on the pueblo-a mix of traditional pueblo housing, with flat roofs; government-financed houses, with pitched roofs; and manufactured homes and trailers-more than 75% are in substandard condition and more than half are overcrowded, according to the Isleta Pueblo Housing Authority, the tribal organization that focuses on housing needs. Funds from the Department of Housing and Urban Development have been used to build 152 of the pueblo's houses.

Most of those built with adobe and vigas-long circular shafts of trees to support the ceiling-are in disrepair, uninhabitable. Doorways and windows are boarded up in some; in others, adobe bricks have fallen out of walls and roofs have caved in, scattering vigas on the ground.

Only a handful of banks have been willing to venture into mortgage lending on reservations in New Mexico. The market leader in Albuquerque is First Security Bank of New Mexico, and it has closed fewer than 30 mortgages on reservations in the last three years.

"There is such a tremendous need for housing and there is no housing stock out there," said Paul Jurkowski, community reinvestment officer for New Mexico residential mortgage lending at First Security, part of First Security Corp. of Salt Lake City.

But the problem of trust land is hardly insurmountable, he said. "The biggest obstacle to homeownership is lack of information."

Lending on tribal trust land is not impossible, but it is unusually cumbersome. The borrower needs a residential land lease approved by the tribe, which entails a survey and approval by the tribal council. And the Bureau of Indian Affairs requires environmental and cultural resource assessments before signing off on the residential lease and title status report.

For the mortgage business, which thrives on volume, setting up an adequate staff is another issue. Native Americans live primarily in isolated rural areas, making it more costly to lend, said Jim Stretz, executive director of the New Mexico Housing Finance Authority, which functions like an in-state, government-sponsored enterprise. The remote locations mean most reservation homes lack running water, electricity and telephones.

On average, Native Americans have larger families, lower incomes, and fewer college graduates than the general population. The poverty rate is more than double that of the population at large, according to the New Mexico Mortgage Finance Authority.

When the Luceros moved into their house, it had just one room but no bathroom or running water. Until recently the house was heated only by a wood stove. The original room, now used as a bedroom, dates back to the 1850s.

As a visitor walked through this and other traditional homes on the Isleta pueblo, one architectural detail stood out: There are no hallways. That is because building room by room has been the only affordable way to create a home.

Mr. Lucero has done all the electrical, structural, plastering, and drywall work himself, often using recycled materials he bought at auction.

To finance his repairs and home expansion, Mr. Lucero used some of his family's resources as well as grants from the tribe. "We're very fortunate the tribe has a little money and they were able to help me out with an extra bathroom and running water," he said.

The self-financing route can be arduous. Norbert Lucero, the Luceros' son, has been working on his house nearby for 20 years. It is still an unfinished wooden frame.

"There's a lot of men and women who would get help from the bank," the elder Mr. Lucero said. "Houses are always in need of repair and remodeling. And nowadays, it's keep up with the Joneses.'"

Financial services in general are a relatively new concept on Native American reservations. Banks have played a role in providing basic financial services, such as auto loans and checking or savings accounts.

But when it comes to making mortgage loans, many Native American leaders note, most banks are apprehensive. While some pueblos are working to establish relationships with banks, others have plans to underwrite mortgages on their own.

The government has long played a role through the departments of Housing and Urban Development and of Veterans Affairs, the Bureau of Indian Affairs, and the Agriculture Department's Rural Housing Service. Grants, subsidies, loan guarantees, and insurance have been used to provide housing assistance with owner-occupied and rental homes.

But the shortcomings of government programs led to the Native American Housing and Self Determination Act of 1996, which refashions HUD-assisted Native American housing programs into block grants that may be made directly to a tribal government. The law has given tribal housing entities nationwide more flexibility in how they use federal funds.

For fiscal year 1998, the pueblo of Isleta received $1.1 million, which its housing authority plans to use for rehabilitating substandard housing.

But tribes are also waiting for banks to step up to the plate. Isleta has a list of more than 300 families waiting for houses.

At one point the Luceros had 12 people living with them and only one bathroom, said their daughter, Stephanie Zuni, a homeownership counselor with the Pueblo Housing Authority.

"Twenty-five years ago, it was accepted that three families live in a household," she said. "Now it's not."

Native American housing loans are just a fraction of 1% of First Security of New Mexico's mortgage business.

Even so, "First Security is an example of a bank doing better than most," said Christopher D. Boesen, executive director of the National American Indian Housing Council, an advocacy organization. In Albuquerque "they're the only ones considering the pueblos as part of their market," he said.

The majority of First Security's loans have been section 248 loans, made under the housing department's FHA mortgage insurance program, Mr. Jurkowski said. The section 248 program enables the bank to refinance mobile homes and manufactured housing units, of which there are many on reservations.

The bank has a pipeline of about seven loans for rehabilitation or refinancing and another seven loan requests under consideration, Mr. Jurkowski said.

One homeowner in the Tortilla Flats subdivision at the pueblo of San Juan, north of Espanola, said the bank was very helpful, but he complained that the Bureau of Indian Affairs took eight months to return closing documents.

"What really irked me," he said, "was when I finally saw what I had been waiting for. It was a signature."

Another difficulty Native Americans have in trying to get a HUD or FHA mortgage loan is that both require some type of construction warranty, said Denise Chee, an attorney at Chee Law Offices in the Isleta pueblo.

"Most people can't get that, because they've built the home on their own," she said. "They haven't sought the expertise of a professional builder."

Meanwhile, for Joe and Lupita Lucero and their family, there is still much work to be done on their houses. Moisture has damaged a wall of the Luceros' oldest room, and they plan to expand the kitchen to accommodate the guests who flow in and out of their home.

It is always open to members of the tribe. Sometimes guests are drawn by the aroma of Mrs. Lucero's bread baking in their outdoor oven, or of her chili stew cooking inside. But people also just knock on the door and enter because they need a place to stay.

Thursday: Norwest's initiatives on the Navajo reservation

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