Cedar Band of Paiutes Applauds New Resolution Calling for HUD to Consult with Tribes

The United South and Eastern Tribes Calls HUD’s Exclusion of Tribal Nations ‘Antithetical’ to Federal Policy

 

The Cedar Band of Paiutes today commended the United South and Eastern Tribes Sovereignty Protection Fund (USET-SPF) resolution responding to the April 18, 2019 Department of Housing and Urban Development (HUD) issuance of Mortgagee Letter 19-06. The HUD Mortgagee Letter endeavored to establish that tribes may act in their governmental capacity only on their reservations or when working with enrolled members. While HUD’s Mortgagee Letter was ultimately withdrawn in response to successful litigation brought by the Cedar Band of Paiutes, HUD has indicated that it intends to advance rule changes affecting tribal nations through rulemaking.

 

The resolution, entitled “Urging Consultation Prior to Proceeding with Rule Making on Tribal Down Payment Assistance Programs”, was adopted at the USET-SPF Annual Meeting on the Sovereign Territory of the Mississippi Band of Choctaw Indians. In the resolution, USET-SPF called on HUD to engage in meaningful government-to-government consultation with tribal nations before rulemaking or any other action that “would undermine the inherent sovereignty of Tribal Nations to act in a governmental capacity…”

 

The Cedar Band of Paiutes wholly owns and operates Cedar Band Corporation, which wholly owns CBC Mortgage Agency (CBCMA), which provides secondary financing to homebuyers receiving loans from the Federal Housing Authority. The Band heavily relies on the funds generated from CBCMA and other Band enterprises to support its essential governmental programs.

 

“Our Band operates within existing federal regulations pertaining to sovereign tribal nations. It is paramount that organizations such as USET support and defend the sovereignty of the hundreds of tribal nations affected by HUD’s rulemaking on down payment assistance,” said Delice Tom, chairwoman of the Cedar Band of Paiutes.

 

Chairwoman Tom also pointed to a similar resolution recently passed by the National Congress of American Indians, underscoring that “HUD has the full attention of the tribal nations community, which expects the agency to promote and protect the inherent sovereign rights of all tribal nations.”

 

While HUD has issued a Notice for Proposed Rulemaking confirming it intends to proceed with rulemaking, the Band maintains the importance—and requirement—of tribal consultation in the early stages of the rulemaking process.

 

About CBC Mortgage Agency

 

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

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Cedar Band of Paiutes Applauds Sen. Tom Udall’s Remarks Reinforcing Sanctity of Tribal Consultations

The Cedar Band of Paiutes applauds Senator Tom Udall’s (D-N.M.) recent remarks reprimanding a federal agency for its failure to conduct tribal consultations with regard to programs impacting Indian tribes.

 

In response to the agency representative’s assertion that it did not engage in consultation with tribes because it was not statutorily required to do so, Senator Udall stated, “I would really take issue with your statement. Consultation is the bedrock of a strong government-to-government relationship with Tribes . . . [the agency] knows very well that any direction it’s given to act is to be done with consultation. To say that the statute does not direct it runs counter to all Indian law principles, existing executive orders, and the spirit and the language of the law that’s before us.”

 

“On behalf of the Cedar Band of Paiutes, I thank Senator Udall for his thoughtful insights and supportive stance on the importance of tribal consultations involving federal agency actions,” said Delice Tom, Chairwoman of the Cedar Band of Paiutes. “Engaging in meaningful consultation with tribal nations before commencing rulemaking is paramount to respecting the sovereignty of tribal nations.”

 

The Cedar Band of Paiutes wholly owns and operates Cedar Band Corporation, which wholly owns CBC Mortgage Agency (CBCMA), which provides secondary financing to homebuyers receiving loans from the Federal Housing Authority. The Band relies on the revenues derived from CBCMA and other Band enterprises to sustain essential Tribal governmental programs.

 

“This isn’t the only instance where a federal agency has disregarded consultation with tribal governments on decisions which significantly impact them,” continued Chairwoman Tom. “Our Band experienced this very overreach when the Department of Housing and Urban Development issued Mortgagee Letter 19-06 earlier this year. In issuing the mortgagee letter, which significantly impacted our Band, HUD violated its own tribal consultation policies as well as long established federal policy.”

 

While HUD’s Mortgagee Letter 19-06 was eventually withdrawn in response to successful litigation brought by CBCMA, Cedar Band Corporation, and the Cedar Band of Paiutes, the Band maintains that the letter was issued without the required consultation with affected American Indian tribes and bands.

 

“We applaud Senator Udall for his unwavering support and commitment to holding federal agencies accountable for their failure to consult with tribes and upholding longstanding policies that protect, preserve, and promote the sovereignty of tribal nations,” Chairwoman Tom concluded.

 

About CBC Mortgage Agency

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

 

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

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CBC Mortgage Agency Lauds Chairman Lacy Clay’s Questioning on Down Payment Assistance

Clay Questioned FHA Commissioner Brian Montgomery; Underscored Collecting Data on Individual Government Entities as Paramount to Extending DPA Assistance to Minority Communities

 

CBC Mortgage Agency (CBCMA) today applauded Chairman Lacy Clay (D-Mo.) of the House Financial Services Subcommittee on Housing, Community Development & Insurance for his supportive remarks regarding down payment assistance (DPA) programs. During the subcommittee hearing entitled, “An Examination of the Federal Housing Administration and its Impact on Homeownership in America,” Rep. Clay questioned Brian Montgomery, commissioner of the Federal Housing Authority, to elaborate on the importance of DPA programs.

 

Below is an excerpt of the exchange:

 

Congressman Clay: “It appears that HUD can’t determine which government programs are providing down payment assistance on any FHA loan, which is critical before attempting to issue new regulations of government down payment assistance programs. Will you commit to not moving forward on any rule making or other administrative changes related to down payment assistance provided by governmental entities until HUD is able to collect data on individual governmental entities and has analyzed a statistically significant amount of data on the performance and pricing of FHA loans with down payment assistance from each specific governmental entity?”

 

Commissioner Montgomery: “Thank you, Mr. Chairman. As you know payment assistance has a long history at FHA…I just want to make sure that any down payment assistance provider is doing so within what our rules permit. Whether it’s a jurisdictional, whether it’s whether or not they financially benefit off the transaction which HERA doesn’t permit. So, I will commit to any effort to undertake rule making will be deliberate, it will be based on research and facts as we know it.”

 

“It is crucial that HUD collect data on individual government programs before trying to regulate them,” said Michael Whipple, vice president of CBCMA, noting that HUD recently issued a Notice for Proposed Rule Making, indicating that the agency intends to move forward with rule making in January. “Only by accurately tracking the performance and pricing of loans originated by each government entity can HUD better manage their risk and protect taxpayers.”

 

CBCMA provides secondary financing to homebuyers receiving loans from the FHA. Earlier this year, HUD initiated a major policy change that would have effectively ended or significantly reduced many DPA programs run by government entities — but without doing anything to protect the FHA Mutual Mortgage Insurance Fund. HUD did this without any data to support its actions. Following a legal dispute, a federal judge stayed HUD’s ability to enforce its new policy, and ultimately the agency withdrew it.

 

“Had HUD gotten its way, groups like CBCMA would have been put out of business, and borrowers would have suffered,” continued Whipple. “We hope that Commissioner Montgomery’s response indicates he intends to collect data on individual government programs before HUD engages in its announced rulemaking.”

 

About CBC Mortgage Agency
CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.  CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

 

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New Mortgage Industry Report Seriously Challenges Down Payment Assistance Stigma of “High-Rates of Delinquency”

Over the last several years reports have surfaced stating that down-payment assistance exhibit “high rates of delinquency” as in the 2018 Department of Housing and Urban Development’s (HUD) report to Congress1,

 

“Mortgages with DPA generally exhibit higher rates of delinquency and default, and those with such assistance financed by self-identified governmental entities have higher rates of default than those with other forms of DPA.”

 

The Stigma of DPA, the “High Rates of Delinquency”

If you only look at that statement “High Rates of Delinquency,” you would clearly have the impression that ALL down payment assistance provides for “Unnecessary Risk.”

 

HUD is attempting to make the case that nationwide DPA programs generally are too risky because of their past experience with another type of nationwide DPA, which has been illegal since 2008.

 

HUD’s analysis has serious limitation because it fails to take account of other risk factors unrelated to down payment assistance, such as the borrower’s demographic attributes, including credit score, which could lead to poorly designed and racially punitive corrective action.

 

This view is likely the result of pre-crisis down payment assistance programs in which property sellers were allowed to pay the buyer’s down payment and raised the price of the property in order to cover the cost. Those seller-paid programs have been shut out of the market for years and are no longer an issue. Today’s programs must be economically viable without the help of a home seller. In recent years, loan performance on transactions in which the borrower received down payment assistance has been far better compared to loans under the former seller-paid programs.

 

DPA Loans Perform Equal to or Better than Other Mortgage Loans

According to the joint report from the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, Center for Community Capital at the University of North Carolina and Harvard Joint Center for Housing Studies, 2 receipt of down payment assistance is not significantly associated with default risk.

 

The study3 sheds light on the relationship between different forms of DPA and default risk using multivariate methods applied to a well-documented national affordable lending data set from the Community Advantage Program (CAP). Despite HUD’s stated concerns, “my colleagues and I find that the receipt of down payment assistance is not significantly associated with default risk.”

 

In the 10-year study researchers looked at 3,000 loans that were made under the Community Advantage Program (CAP) originating between the years of 1999 and 2000, authors concluded, “Our multivariate analysis indicates that the receipt of DPA (down payment assistance) is not significantly associated with default risk. In particular, while grant assistance from a government or community organization is marginally significant as a predictor of default risk in one of our model specifications, this effect disappears altogether when racial controls are incorporated in the model. Thus, the receipt of DPA appears to be unrelated to default risk.”

 

DPA is Important Component of Mortgage Finance

 

Down payment assistance has become an important component of mortgage finance for a growing segment of first-time homebuyers. Approximately 43 percent 2 of FHA first-time homebuyers relied on some form of down payment assistance.

 

Down payment assistance can take many forms. In many situations, family members provide relatives with the necessary funds for a down payment. But in the minority community, especially among African American families which have 1/10th the household net worth compared to whites, family members often lack the capital to help relatives with a home purchase. This is where government down payment assistance programs help bridge the gap.

 

The differences in the performance of FHA loans that receive DPA from governmental entities versus FHA loans that receive DPA from relatives may have little to do with questionable practices by government DPA providers. It may not be programmatic at all, but rather the simple fact that government programs help an entirely different set of people. Those who are helped by relatives are the beneficiaries of intergenerational wealth, while those that are helped by governmental entities are typically underserved borrowers who come from disadvantaged backgrounds.

 

It is not a simple coincidence that approximately 54% of families that CBC Mortgage Agency assists are minorities, including about 20% that are African American and about 30% that are Hispanic. Families that CBCMA assists do not typically come from generations of homeowners. Some are the first homeowners in their families, and many are lower income.

 

Conclusion

The truth is, everyone deserves to own a home. Some may have issues to address before they are ready, like poor credit histories or the need to secure stable employment, but such barriers can be overcome. The worth of every individual is great, and each among us deserves to enjoy the peace and security that come from homeownership.

 

We admonish HUD to not make decisions about DPA that will harm minorities by limiting DPA, which will do nothing to improve performance, and only shut people out of becoming homeowners.

 

1HUD: Annual Report to Congress Regarding the Financial Status of the FHA Mutual Mortgage Insurance Fund…Fiscal Year 2019

2Harvard Joint Center for Housing Studies: A Cautionary Tale of How the Presence and Type of Down Payment Assistance Affects the Performance of Affordable Mortgage Loans

3 CBC Mortgage Agency: 2019 State of Down Payment Assistance Report

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Studies Find that Down Payment Assistance Programs Don’t Affect Loan Performance

CBC Mortgage Agency President Richard Ferguson seeks to dispel misconceptions that negatively impact thousands of borrowers

 

A groundbreaking report released by the Harvard Joint Center for Housing Studies found that down payment assistance programs had little impact on loan performance. The center’s Working Paper, “A Cautionary Tale of How the Presence and Type of Down Payment Assistance Affects the Performance of Affordable Mortgage Loans,” found, among other things, that the performance of home loans was not significantly impacted when down payment assistance was used.

 

According to the study’s authors, “Our multivariate analysis indicates that the receipt of DPA (down payment assistance) is not significantly associated with default risk. In particular, while grant assistance from a government or community organization is marginally significant as a predictor of default risk in one of our model specifications, this effect disappears altogether when racial controls are incorporated in the model. Thus, the receipt of DPA appears to be unrelated to default risk.”

 

Down payment assistance can take many forms. In many situations, family members provide relatives with the necessary funds for a down payment. But in the minority community, especially among African American families, family members often lack the capital to help relatives with a home purchase. “This is where government down payment assistance programs help bridge the gap,” said Richard Ferguson, president of CBC Mortgage Agency, a nationally chartered housing finance agency and a leading source of down payment assistance.

 

A recent white paper published by CBC Mortgage Agency, found that more than 90 percent of down payment assistance recipients would not have been able to purchase a home without down payment assistance. More than half of buyers helped by CBC Mortgage Agency are racial or ethnic minorities.

 

“Down payment assistance programs have come under attack lately, with some arguing that all down payment assistance is bad,” stated Ferguson. “This view is likely the result of pre-crisis down payment assistance programs in which property sellers were allowed to pay the buyer’s down payment and raised the price of the property in order to cover the cost. Those seller-paid programs have been shut out of the market for years and are no longer an issue. Today’s programs must be economically viable without the help of a home seller. In recent years, loan performance on transactions in which the borrower received down payment assistance has been far better compared to loans under the former seller-paid programs.”

 

“Many individuals are unaware that they can achieve homeownership even though they are unable to save for a down payment,” Ferguson added. “This includes many who diligently make large student loan payments each month which leave them with little money to save towards a down payment for a home. Down payment assistance is the solution for these individuals.”

 

Reporters who would like to arrange an interview with Ferguson about down payment assistance or the reports mentioned in this announcement can reach out to Strategic Vantage Marketing and Public Relations.

 

About CBC Mortgage Agency
Founded in 2013, CBC Mortgage Agency is a nationally chartered housing finance agency. As a leading source of down payment assistance, the company helps low-income consumers, often in minority neighborhoods, achieve the dream of homeownership. CBC is a subsidiary of the Cedar Band Corp., a federally chartered tribal corporation founded by the Utah-based Cedar Band of Paiutes. More information can be found at chenoafund

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