U.S. urged to include NMI families in federal home financing program

The CNMI government is seeking the inclusion of indigenous Northern Marianas residents in a U.S. Department of Housing and Urban Development program aimed at assisting Native Americans obtain guaranteed home mortgage from private financial institutions.

The move came following disclosure from the Commonwealth Development Authority that the exclusive right to own a land granted by the CNMI Constitution to people of Chamorro and Carolinian origin hamper the growth of real estate financing 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.

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.

In a letter to Robert E. Knecht, acting director of the Office of Loan Guarantee, 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.

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

According to Housing Corporation Executive Director Marylou S. Ada, Article 12 in the Commonwealth Constitution which restricts land ownership in the islands to local residents hamper NMHC’s efforts to move home mortgage financing to a much better scale.

Foreclosure

Because of this restriction, chances have become slim for both private and government financial institutions which gave out the loan to sell the property in the open market in case of foreclosure.

Financial institutions are actually faced with a major difficulty in bringing the foreclosed property to the open market since potential buyers are limited only to those who are of Northern Marianas descent.

From among the culturally-qualified buyers, the market will be trimmed further to identify those who actually have the financial capability to buy the foreclosed property.

“In case of foreclosure, when banks sell it in the open market the potential buyers are limited because those who may be interested and have the capability but are not qualified under the restrictions imposed by Article 12 can’t participate in the process,” Ms. Ada pointed out.

The housing corporation chief also noted that NMHC face the same dilemma with its program on homesteaders since foreclosed property in government homesteads cannot be sold unless the buyers are homesteaders themselves.

At the same time, Development Authority Board Chair John S. Tenorio also blame the restrictions on Article 12 in CDA’s failure to meet its target to approve 1,000 home loan agreements by end of last year.

Mr. Tenorio noted that banking institutions have taken conservative attitude toward giving out advances due to Article 12 restrictions which has forced CDA to lower by 40 percent the number of home loan agreements it projected to close by end-December 1999.

The housing corporation managed to close only 600 home loan agreements by end of last year, short by 40 percent from the original target of 1,000 housing loan packages.