CDA backs House efforts on private home financing

The Commonwealth Development Authority is backing a CNMI House of Representatives initiative that urges the federal government to provide indigenous Northern Marianas residents easy access to private home financing.

CDA Board Chair John S. Tenorio said the House Resolution filed by Rep. William Torres would strengthen the agency’s efforts to encourage private financing institutions to offer guaranteed home mortgage packages to local CNMI residents.

Mr. Tenorio explained that a backing from the United States Department of Housing and Urban Development is anticipated to virtually eliminate the risks that go with the restrictions on land ownership in the Northern Marianas.

Three programs that are now being implemented by the federal housing department provide guaranteed home loan assurance to Native American-Indians, Alaskans and Hawaiians.

Section 184 or the Indian Home Loan Guarantee Program for Native Americans including Alaskans of the federal housing act is available to eligible borrowers on tribal trust.

FHA Section 248 is restricted to Native Americans wishing to purchase, build or refinance on tribal land trust, while Section 247 is limited to owner-occupants who are Native Hawaiians.

Land ownership issues make traditional mortgage financing in the CNMI less attractive than those available on Guam and in the mainland U.S. , according to the CDA board chairman.

The CNMI Constitution restricts ownership of land to persons of Northern Marianas descent. Lands in the CNMI could not be transferred to non-NMI residents except for a 55-year leasehold interest.

Recent studies disclosed that money for purchasing a house can be borrowed at a fixed rate of less than 7.5 percent for 30 years while it is available on Saipan at rates closer to 15 percent.

Banks in the CNMI can only take title to real estate for a limited time, making them vulnerable to difficulties in foreclosing on loans secured by real property.

Rep. William Torres said including Northern Marianas Chamorros and Carolinians in the definition of Native Americans under the U.S. Housing and Urban Development would give local residents easier access to home mortgage agreements with private financing firms and banks here.

Mr. Torres previously solicited the support of U.S. Loan Guarantee acting director Robert Knecht in the inclusion of indigenous Northern Marianas residents in a federal program aimed at assisting Native Americans obtain guaranteed home mortgage from private financial institutions.

In a letter to Mr. Knecht, Mr. Torres said financing institutions on the island are using the land ownership restriction against applications by indigenous NMI residents for home mortgage.

“I thought that by getting the backing of the federal government, though the Federal National Mortgage Association, banks here would be more amenable to extending financing assistance to NMI-descent,” he told Mr. Knecht.