Detailed Information on the
Tribal Housing Activities Loan Guarantees Assessment

The Office of Loan Guarantee will emphasize long-term planning and project-based development to potential borrowers.

Measure: Reduce the average number of days it takes to process a Title VI loan, from the date the Preliminary Letter of Acceptance is issued, until the loan is guaranteed.

Explanation:The goal is to further reduce processing time by 10% per year with the long-term goal of processing the loan (date the letter of acceptance is issued until the date the loan is guaranteed) in 90 days

Measure: By 9/30/2010, reduce overcrowded Indian households by 10 percent, or 4,717 units. Each year, the goal will be to relieve a number of families from overcrowded conditions by constructing a corresponding number of new rental and homeownership units.

Explanation:The baseline was established by the 2000 Census as 47,169 overcrowded Indian households. A new baseline will be established when the 2010 Census is released. Each new housing unit constructed, with IHBG or Title VI funds, is considered to relieve the overcrowding situation by one household. Overcrowding is not a required reporting element for recipients. ONAP must use its current methold of measurement until a more reliable method can be determined. ONAP is researching how to better track this measure. Overcrowding reductions are measured with accomplishments of the IHBG program. Title VI has a minimal impact on overcrowding.

Measure: The number of loan guarantees in a given fiscal year.

Explanation:For purposes of performance measurement, a loan is considered guaranteed upon issuance of a certificate.

Measure: Conduct 4 training sessions that provide advanced training on the Title VI loan guarantee program.

Explanation:Conducting advanced training sessions promotes program awareness, increases familiarity with the program and ultimately increases access to private mortgage financing for Indian families and Tribes that would otherwise be more difficult to obtain

Measure: Track the amount of non-NAHASDA funds leveraged annually to fund Title VI housing projects.

Explanation:Includes all non-NAHASDA funds leveraged with funds from Title VI loans.

Measure: Build, acquire, or rehabilitate 52,000 affordable housing units by 9/30/2010, using IHBG or Title VI programs.

Explanation:This is a cumulative, long-term measure, from fiscal year 2005, through the end of fiscal year 2010. This indicator is tracked under the IHBG program.

Is the program purpose clear?

Explanation: The HUD Title VI (Title VI) Loan Guarantee insures private lenders, approved by the Office of Native American Programs (ONAP) against losses from defaults on Title VI loans they issue. The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), authorizes ONAP to guarantee, and make commitment to guarantee, notes, or other obligations issued by Indian tribes or tribally designated housing entities with tribal approval, for the purpose of financing affordable housing activities described in section 202, and housing related community development activities as consistent with the purposes of the Act. The loans are secured by pledges of current and future Native American Housing Block Grant (NAHBG) funds.

Evidence: According to NAHASDA regulations at subpart A, the program purposes are to: 1) Assist with affordable housing activities; 2) Ensure better access to mortgage financing; 3) Promote self-sufficiency of Indian tribes; 4) Plan and integrate infrastructure resources; and 5) Promote development of private capital financing. NAHASDA Section 202 generally recognizes six types of eligible activities, including: 1) Indian housing assistance; 2) Development; 3) Housing services; 4) Housing Management Services; 5) Crime prevention and safety activities; and 6) Model activities. The Title VI program supports the strategic goals of the NAHBG, which promote the development of private capital markets in Indian Country and to allow such markets to operate and grow, thereby benefiting Indian communities. Title VI loan guarantees facilitate the leveraging of NAHBG dollars to produce affordable housing activities that would not have otherwise received financing.

Does the program address a specific and existing problem, interest, or need?

Explanation: The Title VI program is a component of the NAHBG, the purpose of which is to provide safe, adequate, and affordable housing to low-income Native Americans. Census 2000 revealed that Native American and Native Alaskan communities are one of the fastest growing populations in the country. Such rapid growth is putting extreme stress on the housing supply and infrastructure.

Evidence: According to recent Census figures, the unemployment rate on Indian reservations is more than twice the national average, at 13.6 percent (the national average is 5.8 percent). Census 2000 data indicates that the real per capita income for Indians living on reservations is a little more than one-third of the U.S. average, at $7,942 (the national average is $21,587). The median income of Indian households is the second-lowest in the country ($32,116). The poverty rate for Native Americans is 26 percent, which is more than twice the average for all Americans. According to the Census, 14.7 percent of Indian homes are overcrowded, compared to 5.7 percent of homes of the general U.S. population, and 11.7 percent of Indian homes lack complete plumbing, compared to 1.2 percent of the general U.S. population. Some evidence suggests that the Census data may even understate the overcrowding and other problems.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The NAHBG, the largest single source of funding for affordable housing on tribal lands, was designed to give direct control to tribes in identifying and addressing their affordable housing needs. Using the Title VI loan guarantee involves leveraging the NAHBG to achieve maximum efficiencies and immediate results. No other federal, state, or private program gives tribes the opportunity to leverage NAHBG dollars using a federal loan guarantee to provide large-scale affordable housing initiatives. There are other federal and state programs that finance housing and infrastructure; however, these programs are highly competitive loans and grants that are secured by hard assets. These other funding sources do not always agree with the civil rights rules regarding Indian preference that exist within NAHASDA-based initiatives. Title VI loans have financed projects that are considered high-risk and would not have been economically feasible without a federal guarantee.

Evidence: Title VI-eligible activities are defined in Title II of NAHASDA; therefore, the NAHBG can fund the same activities on a smaller scale without the benefit of leveraging public and private capital. For example, Title VI loan guarantees have facilitated rental and homeownership opportunities in remote areas of Alaska, financed infrastructure to provide water and sewer service for 330 families on an Indian reservation in Arizona, and constructed 400 homes in Oklahoma for Indian families who did not qualify for traditional mortgage products. Title VI has delivered 1,109 homes in tribal communities through direct financing of housing and infrastructure. As of May 2005, 23 loans totaling approximately $87 million in loan guarantee authority have closed. The loan guarantees provided by the Title VI program made the projects viable. The tribes have been able to attract grants and low-interest loans to make the projects affordable for low- and moderate-income households.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: To generate interest in the program, the guarantee has been increased to a 95% federl share. While this helps foster demand for the program, it weakens the incentives of lenders to minimize defaults and claims.

Evidence: OMB Circular A-129 advises against high federal guarantee shares.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: Legislative and regulatory requirements limit access to the program to NAHBG recipients and define the application of the program. The applicant is required to provide a detailed description of the project that includes scope of work, resumes of the key managers, timetable for implementation, pro-forma based cash flow analysis of proposed activity, sources and uses of all funding, a copy of the Indian Housing Plan (IHP) that lists the Title VI project among planned activities, construction plans and specs, and documented need for the project. In addition, appropriate internal controls, including compliance reviews of audited financials, environmental considerations, and project management capacity are evaluated during the due diligence process. The due diligence process involves dialog between the OLG and the ONAP Area Office with oversight responsibilities for the applicant. Before issuing a Preliminary Letter of Acceptance, the OLG requests an assessment from the ONAP Area Office. The ONAP Administrator provides a timely response that highlights any deficiencies (outstanding audit or monitoring findings and/or issues with the IHP or the Annual Performance Report) that would prevent an applicant from participating in the program.

Evidence: As a component of the NAHBG, Title VI projects are part of the Indian Housing Plan (IHP) and Annual Performance Report (APR) processes. The Grants Management staff evaluates the 1-5 year IHP to ensure the planned activity is eligible or meets the requirements to be a model activity, and that projected costs of the activity comply with total development cost guidelines. Borrowers are subject to periodic field reviews and annual risk assessments from regional ONAP Grant Evaluation (GE) staff. The risk assessment places a numerical rating on the recipient based on risk factors like potential financial exposure, planned controls, complexity of planning activity, stability of the environment, time progress (performance), third party complaints, internal fiscal controls, administrative capacity, timely reporting, self-monitoring data, and maintenance and management plans for 1937 Act units. The loans are limited to affordable housing activities such as Indian housing assistance, development, housing services, housing management services, crime prevention and safety activities, and model activities.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: According to NAHASDA regulations at subpart A, the program purposes are to 1) Assist with affordable housing activities; 2) Ensure better access to mortgage financing; 3) Promote self-sufficiency of Indian tribes; 4) Plan and integrate infrastructure resources; and 5) Promote development of private capital financing. ONAP has developed long-term performance and outcome goals to measure the impact of the NAHBG (including Title VI) in terms of the numbers of safe, decent, affordable housing units for Native Americans built, acquired, or rehabilitated (the goals are to build, acquire, or rehab 52,000 units by 9/30/2010 and to reduce overcrowding in Indian Country by 10 percent from Census 2000 levels, by 2010). Other performance measures help assess administration of the program. By tracking the time and cost of producing loans, the OLG can measure the inputs and outputs of the program and compare them to the HUD Section 108 program, after which Title VI was modeled.

Evidence: See performance and efficiency measures. The goal is to, by 9/30/2010, reduce overcrowded Indian households by 10% from Census 2000 levels. Each year, the target is to relieve a number of families from overcrowded conditions by constructing a corresponding number of new rental and homeownership units. ONAP has accomplished its annual targets so far in achieving this long-term goal. To achieve this goal by 9/30/2010, recipients must build, acquire, or rehabilitate 52,000 affordable housing units, using the Indian Housing Block Grant and Title VI programs.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: ONAP has identified data reported for the 2000 Census as the best source for credible baseline information against which to measure the performance outcomes for NAHBG and Title VI. In addition to the goals of units produced and the reduction of overcrowding, OLG has developed efficiency measures that call for a 75 percent reduction in processing time for a Title VI loan. By tracking the time and cost of producing loans, the OLG can measure the inputs and outputs of the program and compare them to the HUD Section 108 program, after which the Title VI program was modeled.

Evidence: See the section on performance measures. Timeframe for the longterm meaures goes until 9/30/2010. Target is to reduce overcrowded conditions by 10% in 10 years, using the Census 2000 and Census 2010 measures of overcrowding. The goal to build, acquire or rehabilitate 52,000 affordable housing units by 9/30/2010, will mostly be accomplished by leveraging Indian Housing Block Grant funds, but Title VI funds will also be an important component of the total, especially for new construction.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: For each outcome goal, ONAP has established annual performance measures to measure progress towards achievement of the long-term goals set for 9/30/2010. The baseline (Census) data is collected every 10 years; therefore, the annual goals measure outputs in terms of loans and units produced. OLG tracks program efficiency goals such as the processing time for loans to ascertain the cost of producing a Title VI loan for a comparison to the cost for producing a HUD Section 108 loan.

Evidence: See the section on performance measurement. Guarantee 10 Title VI loans in fiscal year 2005, for a cumulative total of 31 Title VI loans. The goal for 2004 was 6 loans, the goal for 2003 was 4 loans. Conduct 4 training sessions that provide advanced training on the Title VI program. Establish a baseline of the amount of non -NAHASDA funds leveraged annually with NAHASDA funds to finance homeownership initiatives.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Title VI program has annual performance goals that are adjusted each year. For example, FY 2005 has a target goal of producing 10 Title VI loans. Achieving this goal would represent a 250 percent increase over FY 2004 loan production totals. The OLG tracks units developed by type (single-family or multi-family), costs per unit (single-family or multi-family) and the percentage of leveraged dollars included in each loan (defined as grants, loans, and tax credits). These data will assist ONAP in determining the net cost of producing a housing unit.

Evidence: See the section on performance measures.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: HUD currently lacks a performance measurement system for this program that would allow for both full commitment to goals on the part of partners and reporting on achievement of those goals. Such a system, however, is in development.

Evidence: Indian Housing Plans. Annual Performance Reports.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: No such studies exist, although ONAP is negotiating with the Office of Public and Indian Housing to conduct an independent study of the Title VI program.

Evidence:  

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The budget includes a set-aside of $4.8 million for the continuation of the Title VI Indian Federal Loan Guarantee program. This program is authorized by Section 601 of NAHASDA, P.L. 104-330. The request will support loan guarantee authority of $37.9 million. The fiscal year 2006 budget request represents an increase in the level of funding from the fiscal year 2005 budget request.

Evidence: The first two Title VI loans were issued for approximately $7 million in fiscal year 2000. Indian tribes and their TDHEs are now partnering with HUD and the public and private sectors, resulting in a greater number of loans being underwritten. As of the end of September 2004, cumulative loan guarantees of $84.8 million had been issued. More than two-thirds of this activity occurred in fiscal years 2002, 2003, and 2004. Most borrowers include leveraged funds from other sources in the projects funded with Title VI guarantees, reducing their dependence on federal grant funds. More aggressive marketing and outreach efforts to potential borrowers and lenders by the six Area Offices of Native American Programs and the Office of Loan Guarantee have resulted in increases in both inquiries and actual loan guarantees, as tribes and TDHEs become more familiar with the program and recognize its usefulness.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: ONAP has worked for the last 2 years developing meaningful goals and objectives. The OLG continues to make improvements in the program database to refine the information collected. OLG maintains a separate database, which is populated with a wide range of information about each loan application. Analysis of this data has produced significant improvements in the program. For example, by tracking the benchmark dates in the application process, OLG identified a weakness in the lack of tribal planning prior to making a Title VI loan application. The data also track the type of leverage being employed by applicants.

Evidence: Based on statistical data and a review of the files, OLG has made changes in the application process to require more pre-planning before submitting a request for a PLA, thus shortening the processing time and making the dollars to fund projects available quicker. Implementation of the processing procedure has become an efficiency measure for the program. Data collected from previous applicants has altered the way the program is marketed. OLG has increased the emphasis on leveraging Title VI dollars with other public and private sources to reduce the reliance on federal funding to repay the debt. One byproduct of increasing the leverage is an increase in the number of safe, decent, and affordable housing units built with NAHASDA dollars.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: HUD lacks an effective system for collection of Indian housing performance data although a better system is in development. The current system is paper-intensive and prone to mis-counts.

Evidence:  

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The Title VI program is managed by the OLG from the ONAP Headquarters in Washington, DC. The OLG has assigned a Loan Guarantee Specialist (LGS) to monitor the progress of loans in process and collect data required for the efficiency measures of the program. The LGS receives periodic progress reports and feedback from the Regional Administrators with assistance from GM and GE staff. The borrowers are evaluated and monitored based on grant performance measurements outlined in their IHP and reported in their APR. Lenders are required to provide collection data on a quarterly basis to assist the OLG with tracking the performance of loan guarantee by the Title VI program. ONAP holds tribes, TDHEs, sub -grantees, lenders, loan servicing entities, and contractors accountable for complying with budgeted project costs and program guidelines, as well as NAHASDA regulations. Depending on the violation, ONAP can perform a monitoring visit to the tribe, impose sanctions and/or refer a case to the Office of Inspector General. OLG can also limit a lender's ability to participate in the loan guarantee programs.

Evidence: The efficiency measures of the Title VI program focus on cost of production and time to complete a transaction. The performance measures are tied to units produced and dollars, which is consistent with Congressional mandates. Although the Title VI program has not experienced any defaults, OLG has contacted two lenders on behalf of tribal borrowers. One tribe was seeking a refinance to lengthen the maturity of a transaction to reduce debt service and improve cash flow for the tribe, and another requested a rate reduction refinance when an interest rate reduction was warranted. ONAP and OLG made recommendations that a note and guarantee modification be explored by the participants (two tribes and lenders) involved in transactions during 2004 when the Title VI loan guarantee was limited to 80 percent. Appropriate internal controls, including compliance reivews of audited financials, environmental considerations, and project management capacity is evaluated during the loan due diligence process and construction. Applicants must demonstrate capacity, sound operational business practices, and provide a detailed plan of action that falls within the regulatory guidelines of NAHASDA to obtain Title VI financing. Tribes that are not compliant with NAHASDA guidelines, e.g., if they have outstanding audit financing or are substantially noncompliant, they are inelgible to participate in the program. As of May 2005, there have been no defaults or substantial noncompliance from participating tribes, lenders, or other program participants.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: NAHBG funds including Title VI are obligated in a timely manner. The rate of obligation matches or exceeds that of other programs that include housing construction and infrastructure development among the eligible activities. The Title VI loan application process evaluates the detailed plans that define the scope of the project, unit costs, the capacity of the applicant, and historic compliance issues. NAHASDA created performance measures for obligation of funds and accountability to grant-based eligible activity limitations. The OLG has efficiency measures that track the processing time from the date an applicant receives a PLA until a loan is guaranteed. The cost of producing each transaction is measured and tracked to determine the overall cost of producing Title VI loans relative to the origination of HUD Section 108 loans.

Evidence: The OLG tracks the efficiency measure components associated with processing loan applications. The Area ONAP offices monitor progress on the loans based on NAHBG management and performance evaluation. The Title VI program has annual output -based goals. In fiscal year 2003, Title VI exceeded its goals by 50 percent (goal of 4 loans with 6 guarantees issued). Obligations in 2000 totaled $7 million, for 2 loans. In 2001, there were 5 loans totaling $7.7 million. In 2002, there were 4 loans totaling $51.8 million. In 2003, there were 6 loans totaling $8.1 million. And, in 2004, there were 4 loans totaling $10.2 million. The level of interest in the program dropped significantly when the loan guarantee authority was reduced to 80 percent in February 2004. In November 2004, a legislative fix was signed into law that created a permanent guarantee of 95 percent. OLG has made meaningful changes to the loan application process (see Evidence/Data Section 2.8) that will result in shorter processing time, thereby accelerating the obligation time and producing a more user-friendly lending environment.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Cost comparison and time efficiency measures are in place but the program has not shown it has achieved efficiencies, particularly in the areas of increased leveraging and lower credit subsidy costs. The OLG recognizes the potential cost associated with inefficient processes. The OLG refined the queries for the ONAP database to collect unit - and dollars-based data, as well as cost -perunit information for comparisons, and created spreadsheets to track active loans in process. The loan applicants are required to use competitive procurement methods for financing and construction costs. These requirements promote greater efficiency in terms of application of the loan guarantee dollars. (See Explanation in Section 2.8) These are positive steps but they must be augmented with procedures that increase efficiency and measures that track such progress. Additional credit subsidy analysis is necessary to prove that the appropriated cost of the program is decreasing on a per-dollar basis.

Evidence: The data collected have been used to validate and measure the performance of the Title VI program against a similar program in the public housing universe. The time it takes to process loans speaks directly to cost efficiency. The long-term goal is to serve more families through greater efficiencies with available human resources. By reducing the processing time from 363 days (based on guarantees issued) to a 60-90 day process, OLG is creating an environment that is more closely aligned with industry standards. Improvements to the type and quality of the data collected have improved OLG's ability to identify trends and respond to the needs of our clients.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Title VI program collaborates with a wide range of federal, state, and local agencies and programs. The loan guarantee makes the projects financially viable; and the supplementary grants, loans, and tax credits make the housing affordable. The transactions can become complex and challenging when program guidelines overlap and offer differing opinions on civil rights issues. Nonetheless, the life blood of the program lies within the improved efficiencies of delivering the product and overall performance of the loan which has supported the evolution of the secondary market.

Evidence: The OLG tracks the unit cost for homes financed with Title VI dollars. The objective in tracking these data is not to compare the average cost per unit. The data are collected to measure the efficiency of the Title VI dollars invested in a given project. Indian tribes and their TDHEs are now partnering with HUD and the public and private sector, resulting in a greater number of loans being underwritten. As of the end of April 2005, cumulative loan guarantees of $87 million have been issued. Over two -thirds of this activity occurred in fiscal years 2002, 2003, and 2004. Most borrowers include leveraged funds from other sources in the projects funded with Title VI guarantees, reducing their dependence on Federal grant funds. Total project costs in the Title VI-funded activities exceed $126.6 million; $87 million has come from the loans themselves and $39.6 million has come from other sources. The ONAP has been more active in marketing to lenders and has been successful in obtaining commitments from Fannie Mae and the Federal Home Loan Banks to purchase Title VI loans. ONAP collaborates with many federal, state and local funding agents. Applicants are encouraged to maximize the leveraging of their resources when applying for Title VI financing. Title VI transactions have included: Indian Housing Block Grant funds, HOME Funds ($1.3 million), RHED funding ($1.9 million), AHP dollars ($1.67 million), Low Income Housing Tax Credits ($4.46 million), HFA grants/loans ($.86 million), IHS funds ($1.1 million), BIA funding ($1.37 million), USDA grants/loans ($1.94 million), tribal contributions from non-federal sources ($5.27 million), and Tax Exempt bonding ($25 million).

Does the program use strong financial management practices?

Explanation: The program has financial management and review measures that track loan performance and facilitate early intervention. Sound financial principles begin with prudent underwriting criteria. The OLG seeks and receives feedback from the Area ONAP Administrators, GE and GM staff before proceeding with a loan. The borrowers are evaluated and monitored based on grant performance measurements outlined in their IHP and reported in their APR. After closing, servicing financial institutions are required to submit a quarterly collections report that provides P&I history and quantifies late payment fees. The Title VI program has not experienced a default to date; however, the payment data provide timely notification prior to a loan going into default.

Evidence: The application process for the Title VI program is predicated on the applicant demonstrating its capacity to plan the project, manage or obtain through proper procurement procedures the services of a competent management team to oversee the project, ensure that financial controls are in place that are validated by audit reports (2 years), and have a compliant IHP and APR. The Area Field Offices conduct periodic monitoring visits and rate the tribes based on the grants management rating points. The OLG collects quarterly P&I payment history and reviews the data prior to submission of the quarterly collections reports to the Budget Office. The OLG tracks loan characteristics e.g., rate, adjustable rate indexes, duration, construction draw schedules, planned disposition rate when applicable, and payment history to identify and quantify the risks associated with the program.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Title VI program staff routinely monitors cost and performance data to ensure efficient operations. The efficiency measures for the program were developed based on data collected and a desire to be more effective. The OLG has upgraded the application process, created new databases, and implemented new standards to ensure higher quality loan packages. In addition, OLG is working with a consulting firm to improve the IT data collection capabilities of the program.

Evidence: OLG identified a deficiency in the loan process by analyzing the benchmark dates within the loan application process. Reducing the time it takes to complete the application process is the primary focus of the program staff. OLG identified a deficiency in the loan application process and changed the training program for FY2005 to address the problem. The loans are originated through HUD-approved lenders. Tribes are generally familiar with HUD processes and procedures. Lack of familiarity with banking practices often delayed the loan process. ONAP altered the expectation for the tribe by increasing the amount of documentation required during the preliminary application stage, which reduced the paperwork request from the lenders. The long -term benefit from improved efficiencies within the program will be greater participation from lenders and tribes. The OLG is using the data collected to assess the subsidy rate applied to the program. By collecting more information from the borrowers OLG can provide better data to OMB.

Is the program managed on an ongoing basis to assure credit quality remains sound, collections and disbursements are timely, and reporting requirements are fulfilled?

Explanation: The Title VI program is highly centralized with the Headquarters OLG maintaining all official data, loan files, collection report information, client information, and approved lender information. The OLG relies on the ONAP field offices for site reviews of projects, program audits, and environmental reviews to ensure consistency with policy. Private lenders originate the Title VI loans. Before issuing a firm commitment on the loan, the OLG reviews the loan submission sheet used by the bank when underwriting the loan. This document helps the OLG maintain good credit standards and identify any weakness within the file. The servicing lenders are required to provide periodic (quarterly) collections reports, which are reviewed by OLG. The OLG is working with lenders to improve the timeliness of the collections reports from the private sector lenders.

Evidence: The Title VI loan program has a built-in early intervention warning system created by the ongoing interaction between the tribe and ONAP GE and GM staff at the field offices. For example, this interaction identified a potential payment risk that was caused by a borrower taking out a short-term loan when a longer term would have reduced the cash flow burden on the tribe. The program has not experienced a default since its inception. However, one loan is being modified to extend the payment to an intermediate term based on payment risk caused by a reduction in grant award. The OLG is counseling tribes to do a better job of planning their long -term financing to anticipate potential cash flow concerns and request longer repayment periods to reduce the annual debt service burden. The programmatic changes will enable the OLG to reduce the process time for a Title VI loan from approximately 1 year to a more desirable 2- or 3-month process. Most borrowers include leveraged funds from other sources in the projects funded with Title VI guarantees, reducing their dependence on Federal grant funds. The ONAP has been more active in marketing to lenders and has been successful in obtaining commitments from Fannie Mae and the Federal Home Loan Banks to purchase Title VI.

Do the program's credit models adequately provide reliable, consistent, accurate and transparent estimates of costs and the risk to the Government?

Explanation: The Title VI program lacks a credit subsidy model that provides analysis specifc to the program. Instead, it relies on the HUD Section 108 program as a loose analogue. The PIH Budget office has stated that the credit model for the Title VI program will be reviewed prior to FY 2006. The program does not have a single default, but the credit subsidy rate remains relatively high based on the program 's reliance on federal dollars to repay the debt. The outstanding Title VI loans have a wide range of characteristics, including differing maturities, interest rate structures (fixed and adjustable, prime and LIBOR based), use of proceeds, rental housing versus lease purchase agreements, principal curtailment payments and interim financing. The only variables that are consistent with the loans are maximum loan commitment as a percentage of the NAHBG, 20-year maturity, and federal guarantee without the collateralization of real assets.

Evidence:  

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The most important long-term goal of the program is the reduction of over-crowding. Currently, this information is only collected in the decennial Census so it is not possible to know in the interim how much progress has been made in achieving this goal.

Evidence: HUD Annual Performance Report.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Title VI program is a young program that is maturing and has the potential to grow in impact. To date, it has made a modest but important contribution to Indian housing. The Title VI program has been supporting the Department's goal of reducing overcrowding since the first loan closed in 2000. From the date the Title VI loan guarantee is issued, there is a time lag of 1-3 years before construction is completed on the proposed activities. In FY 2000, 123 rental units were funded with Title VI. In FY 2001, the program funded 102 rental units and 10 homeownership units. In FY 2002, the program funded 619 homeownership units and infrastructure to support 10 housing units. In FY 2003, the program funded 14 homeownership units, 5 rental units, and infrastructure for 322 more housing units. In FY 2004, the program funded 128 rental housing units. In FY 2005 (as of July 2005), the program has funded 30 rental units. ONAP will use the Title VI assessment process to generate current data with verified outcomes.

Evidence: ONAP's annual goals to train potential and actual borrowers and lenders have been consistently exceeded. The goal to increase leveraging of IHBG dollars is a new one and a baseline is being established for 2005. However, records indicate that, since its inception, Title VI financing has been leveraged with more than $39 million of private and public sector funds. The tribes play a vital role in addressing the goal of creating safe, decent, and affordable housing for tribal members. Each year NAHBG recipients are required to submit an IHP and APR as well as audited financial statements. The IHP establishes the plan of action and the APR measures success by documenting achievements during the reporting period. The IHP, APR and financial statements are key components in the review process before a Title VI loan can be approved. OLG requires that the applicant (tribe) demonstrate its capacity and accountability; financially, performance in project and grants management, and abilities. There have been 22 Title VI loan transactions with 19 different tribal entities. The program has directly financed or indirectly provided financing that generated 1,109 new housing units in Indian Country. Through homeownership initiatives involving Title VI financing, the program has contributed to a growth in ownership among minorities. Each new unit developed under he Title VI program contributes to NAHBG goal of reducing overcrowding by one percent each year.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The program has goals to reduce processing time for loans but has yet to show improvement in this area or in areas such as leveraging or credit subsidy cost.

Evidence:  

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Title VI program is unique because the security is based on the pledging of current and future block grant dollars of the application. It has the advantage of encouraging the leveraging of non -HUD sources of funding. The program has achieved success having made direct loans and/or supplied infrastructure financing support for 1,109 affordable housing units. In contrast, USDA provides a wide range of programs that can finance each individual component of the equation, but the applicant is subject to civil rights requirements that are not consistent with the language in NAHASDA. In addition, the Title VI program provides a viable solution in situations where delays from the Bureau of Indian Affairs have become an impasse to residential development on tribal lands.

Evidence: Participating tribes are exempt from Title VI of the Civil Rights Act of 1964 and Title VIII of the Civil Rights Act of 1968. Recipients can limit benefits to tribal members or other American Indians. The Title VI program does not encumber real property and this is a tremendous benefit to the tribes. The BIA has a long backlog of Fee-to-Trust applications; therefore, it take years to complete the process. The Title VI loan makes it possible for tribes to acquire land and finance an entire project without encumbering the asset. Because the development costs do not encumber the land, the Title VI loan makes it possible for the Fee-to- Trust application to proceed free of encumbrances.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: ONAP is negotiating with the Office of Public and Indian Housing to conduct an independent study of the Title VI program.

Evidence: