No place like home
Process, lack of land ownership, stifle growth on the rez

With their own two hands: Michell Gale and Percy Gale, work outside their home watering plants in Fruitland, NM. The Gales have worked since 1994 to build a home of their own while still living on tribal land. They have managed to do it without loans, completing the process as they live in the home. The private home provides more space for their son to play inside and out, compared to the alternative of living in a subdivision.

"The legal systems are simply unfriendly toward poor people ... Two-thirds of the world's population, 4 billion people, are locked out of the captilist system. They want to participate but they can't because participation means being able to make safe contracts with everybody, being able to get credit ... They can't"

First in a two-part series.

By Zsombor Peter
Staff writer

Adam Gale,4, glances up from playing on the floor in his home that his parents Michelle Gale and Percy Gale have built in Fruitland, NM. The Gales have worked since 1994 to build a home of their own while still living on tribal land. They have managed to do it without loans, completing the process as they live in the home. The private home provides more space for their son to play inside and out. One concern while living in a subdivision alternative, would be keeping their son safe around traffic. [Photo by Daniel Zollinger/Independent]

The preceding quote belong to renowned economist Hernando de Soto, who coined the phrase “dead capital” to describe the stagnant wealth trapped within the homes of the poor by the laws of their lands.

The Peruvian native, who has done most of his work in South America, was speaking of the poor outside the industrialized world. But he could have been speaking about the United States, about the American Indian reservations where some of the nation’s first inhabitants live in conditions little better than those found in the slums of some Third World countries.

Like those Third World residents, the inhabitants of America’s reservations have a much more difficult time gaining ownership, or title, to homes than the rest of their countrymen. On tribal trust land, the federal government’s involvement can draw paperwork that takes days to complete anywhere else out for months, even years, scaring many potential lenders off. Like de Soto, many experts here believe is the difference holding those lands and their people back from achieving the economic growth just beyond their borders.

Of the myriad barriers to economic development on tribal land, said Steven Barbier, a consultant for NeighborWorks, a nonprofit corporation studying tribal efforts to promote home ownership, “it’s right at the top.”

“There’s a school of thought that the lack of home ownership is what keeps populations impoverished,” said Evert Oldham, a title examiner for San Juan County Abstract & Title Company in Farmington.

Despite Americans’ low savings rates, home ownership, he said, “is basically the source that gives citizens in the U.S. their wealth.”

“That’s why America has a middle class,” said Tommy Haws, senior vice president of Gallup’s Pinnacle Bank.

By holding title to their homes, residents can use the wealth stored up in them to borrow money, money they can use to move ahead, whether by starting a business, pursuing a higher education, or buying another home.

Writes de Soto, “The single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur’s house.”

On America’s reservations, more than anywhere else in the United States, that source remains elusive.

In land we trust
Newly planted baby pine trees line the gravel driveway leading up to the sandy brown house of Michelle and Percy Gale. A wind chime slung low over a potted plant outside taps out a tuneless song.

“We’re getting the afternoon breeze,” Michelle Gale said as she pulled on a water hose snaking around the house. “We were planting some honey suckle, but they just dried out ... so we’re planting a pine to try and block the wind.”

It’s a quiet spot, penned in between a small hill on one side and a tree-lined branch of the San Juan River on the other, a few miles south of Kirtland. For the Gales, it’s made all the more peaceful by the knowledge that they own the house that sits there, and all the more rewarding by the work it took. After first applying for a site lease in 1994, the Navajo couple finally moved in to their 1,900-square-foot home in October 2006.

“On Halloween,” Michelle recalled with a chuckle.

“It took a lot of work,” she said, sounding worn out by the mere memory. “You got to keep pushing yourself.”

What slowed them down was the land they chose to build on — tribal trust land, land the U.S. Bureau of Indian Affairs nominally holds in trust for the tribes. Because the BIA holds the title to that land with an iron grip, neither the tribe nor any of its members can buy or sell it. And therein, as Shakespeare would say, lies the rub.

To issue a loan, mortgage lenders want something in return in case the borrower defaults. That something is usually the title to the property the borrower wants to buy. On tribal trust land, the title isn’t the borrower’s to give, and the BIA won’t let go. That makes most lenders wary of doing business on trust land. While some lenders have opened up ways around a title-secured mortgage, it’s a long and laborious path.

The Gales spent so many years merely qualifying for such a loan, which they turned down, they managed to save up enough cash to build their house debt free. It worked out for the Gales. But among those who choose to go it alone, said Eric Schmieder of the New Mexico Tribal Home Ownership Coalition and a former lender for Wells Fargo Bank specializing in tribal land, they’re among the lucky ones.

“People underestimate how much it’s going to cost,” he said. “You can see half-finished homes all over the place.”

For many hopeful home owners, a mortgage is the only option.

What a long strange trip
In San Juan County, where nearly half the land lies within the Navajo Nation’s borders, Oldham said, “there’s virtually no bank that will lend on the reservation.”

Most of the ones that do are based out of state. And though they can not secure the loan with a title, they can secure it with the borrower’s lease to the home site. But even that demands a title search, to make sure the lease is unencumbered and free for resale in case the borrower defaults.

On private land, whether on or off the reservation, the records a lender needs to clear a title rest with the county.

“Normally we can do this in a day or so, at most a few days,” said Oldham, “almost always in less than a week.”

But when it comes to trust land, the records rest with the BIA. For title search requests originating on the Navajo Nation, that means a paper trail that winds first through one of the BIA’s five agency headquarters spread across the reservation, then through its office in Gallup, and finally ends in Albuquerque — before making the same trip in reverse on the way back.

Shirley McCabe, an appraiser for the Navajo Nation Land Department’s title section, said she’s been waiting for word on a pair of titles since April. But it could be worse.

“There’s examples for this process taking three years,” Oldham said.

“The processing of title information has improved,” Barbier said, “but nowhere near industry standards.”

The wait still averages months. And in the mortgage business, a lengthy title search can kill a loan applicant’s chances faster than bad credit.

Driven by a commission-based system, Schmieder said, “the whole business of making loans has to do with timeliness and speed.

“If you have 10 loans in downtown Gallup you can close in 15 to 30 days and you have two loans in Window Rock on the Navajo Nation, and you get paid to close a loan, what are you going to focus on? Naturally, most lenders concentrate on doing the stuff that’s easy, like most of us.”

Home sweet home
Nearly a year after moving in, Michelle and Percy Gale are putting the finishing touches on their house. Wheel barrels and bags of dirt still ring the front lawn, hinting at the landscaping that’s left to do. Inside, the rooms are filled with the managed clutter of a house that’s become a home. The kitchen still needs tiles and cabinets.

Amid the house’s modern amenities, an old fashioned potbelly stove fills a corner of the living room. Flowers and garden lights line the carefully manicured path around the back porch. For all their modesty, the Gales take obvious pride in what they’ve built.

After so many trips to the local hardware and supply stores, said Michelle, “the people know us by name.”

With the money they saved up preparing for a loan, the Gales know they had easier, perfectly adequate options a matter of miles to the north, on private county land.

“We could have just gone across the river and bought a house. We could have been moved in in two or three months,” Michelle said.

But the couple wasn’t looking for perfectly adequate. They wanted something secluded, with room for their 3-year-old son Adam to roam. And they wanted to stay on tribal land.

“It’s about us. It’s who we are,” Michelle said. “This is where I grew up, this is what I know. I didn’t grow up in a sub-division.”

Now the Gales are looking ahead. They’ve already started thinking about what they’d like to do with the loans they can take out against the house. They’re thinking of their son’s college education. They’re thinking of expanding the house. They’re even thinking of building another one to sell.

It’s the stuff economic development is made of. But on tribal trust land, the Gales are the exception.

On the Navajo Nation, those who don’t earn too much can qualify for subsidized tribal housing, but only half the units are rent-to-own, and even among those more than 1,000 are still waiting to be adequately surveyed before the tribe can release them. Many buy mobile homes and trailers, said Mike Halona, head of the Navajo Nation’s Land Department, “but economically we know the mobile home doesn’t appreciate.”

“Every time I see another mobile home dragged on to the reservation,” Barbier said, “I think, boy, another missed opportunity.”

Others, who want and can afford a conventional house but don’t want to bother jumping through the extra hoops trust land comes with, move off the reservation altogether. For the tribes they leave behind, that carries its own costs.

“If they move off the Navajo Nation, they’re not spending money on the Navajo Nation,” Schmieder said.

Unless they follow the work off the reservation, it’s also another lost job for a Navajo contractor and its crew.

According to the U.S. Census Bureau, nearly 67 percent of Americans owned their homes in 2005. Among American Indians and Alaska Natives that same year, home ownership hit only 56 percent. The Bureau does not keep track of rates on reservations alone, but Schmieder suspects they would be far lower.

For most Americans, the ability to buy, sell and mortgage a home is a key step to economic progress. For most Native Americans living on tribal trust land, Halona said, “that economic ladder is not there.”

TOMORROW: What the tribe is doing to solve the problem.