502 Direct Native CDFI Relending Pilot Program

PROGRESS REPORT

(FEBRUARY 2020):

502 Direct

Native CDFI Relending

Pilot Program

Making History Through a Unique Partnership

Although the USDA Rural Development 502 Direct Loan is highly utilized by low-income families across the country as

a way to achieve homeownership, it has historically been a largely untapped resource in reservation communities even

though the 502 Direct Loan is one of the few loan products that can be used on tribal lands. In FY 2019, of the 6,194

direct loans made nationally by Rural Development, 127 were to Native American borrowers but only six of them were

for homes on tribal land.

In the summer of 2018, USDA Rural Development and two Native community development ﬁnancial institutions

(CDFIs) — Four Bands Community Fund on the Cheyenne River Reservation and Mazaska Owecaso Otipi Financial on

the Pine Ridge Reservation — formed the ﬁrst-of-its-kind partnership to launch the 502 Direct Native CDFI Relending

Pilot Program to increase homeownership opportunities on tribal lands. The partners committed to deploy a total of

$2,000,000 ($800,000 from USDA and $200,000 from the Native CDFIs) to eligible Native American homebuyers

located in tribal communities of South Dakota and North Dakota. According to USDA, the CDFIs’ deep ties in local

communities would help them to reach homebuyers more effectively than other lenders. Approval of funds for

deployment began in October 2019, and as of February 2020, approximately 50% of the loan capital allocated to the pilot

program was deployed, and there were eight new homeowners in the designated service area.

Through the 502 Direct Native CDFI Relending Pilot

Program, the deployment of 502 Direct Loans on tribal

lands in South Dakota has increased more than ten-fold.

Making the South Dakota Native Homeownership Coalition

The South Dakota Native Homeownership Coalition is a collaborative group of key agencies dedicated to increasing

homeownership opportunities for Native Americans in the State of South Dakota. Our growing group of members —

including representatives of South Dakota’s tribes, federal and state agencies, tribally designated housing entities (TDHEs),

nonproﬁt organizations, housing developers, lenders, and community development ﬁnancial institutions — collectively

develop and implement innovative strategies that promote Native American homeownership. We facilitate ﬁve working

committees that strategically address challenges and pave the way for aspiring homeowners.

www.sdnativehomeownershipcoalition.org

502 NATIVE CDFI RELENDING PILOT PROGRAM:

CREATING HOMEOWNERSHIP OPPORTUNITIES

502 DIRECT LOANS

DEPLOYED, TOTALING

$847,794

PINE RIDGECHEYENNE RIVER

AVERAGE LOAN

AMOUNT

$97,951

$102K

$93K

PINE RIDGECHEYENNE RIVER

PREVIOUS/CURRENT

LIVING SITUATION OF

APPROVED AND

DEPLOYED LOANS

OWN TRAILER IN NEED OF REPAIRSRENTING

LIVING WITH FAMILY / OVERCROWDED

TAYLOR LAWRENCE (Cheyenne River Sioux) is a dental

assistant and single mother of two from Eagle Butte, South

Dakota. She had been renting a one-bedroom apartment that was

in need of repairs and would often be without a working heat

source for weeks at a time. She used a 502 Direct Loan from Four

Bands Community Fund to purchase a Governor’s House and

provide a safe and stable home her family.

GARFIELD IRON CROW (Oglala Sioux) is a retired veteran

who tried several times since the 1970’s to purchase a home of

his own. With the help of Mazaska Owecaseo Otipi Financial,

he was able to navigate the tribal land lease process, ﬁnance the

construction of his dream home, and obtain a 502 Direct Loan for

permanent ﬁnancing — all where he grew up on the Pine Ridge

Reservation.

CONTINUED DEMAND

Ϣ Through the pilot program, local Native CDFIs have built a steady pipeline (applications that

have been submitted, are in underwriting, or approved) of 502 Direct Loan borrowers in their

communities.

Ϣ Mazaska and Four Bands are currently working with 24 borrowers in various stages of the

homeownership process.

Ϣ Given the success of the pilot, the partnership between USDA and Native CDFIs in SD should

continue and be expanded to other Native communities in Indian Country.

APPROVED**

DEPLOYED

APPLICATIONS RECEIVED*

}

NUMBER OF 502 DIRECT LOANS

INTEREST RATE

3.125%

ON DEPLOYED

LOANS

}

FUNDS ALLOCATED TO PROGRAM

USDA

$1.6M

MASAKSKA

$200K

FOUR BANDS

$200K

Four Bands utilized earned

income from their revolving

loan fund while Mazaska

leveraged funding from other

federal sources to deploy 502

Direct Loans.

*Borrower has submitted application and may be in various stages of mortgage loan

process. CDFI is actively working with borrower to help them qualify for 502 Direct Loan.

**Approved by CDFI and/or USDA.

APPROXIMATELY

$2.4 M

IN THE PIPELINE