First Trust Land Mortgage A Success!

Akiptan is excited to share the success of our first mortgage towards trust land! There is a myth out there that Native American landowners can’t mortgage trust land, and most of the time traditional banks won’t attempt it for various reasons. Because of that, typically producers across Indian Country aren’t able to leverage what should be their largest asset. However, we were able to close our first trust land mortgage with a producer! We knew that other Native CDFIs, like Four Bands Community Fund (FBCF) in Eagle Butte, SD and NACDC Financial Services in Browning, MT, have been doing trust land mortgages for a while now, and Akiptan is elated to join the class. The more we can normalize lending for trust land, the more successful producers across Indian Country will be at leveraging their largest asset in a way that brings prosperity to their operations and clarity to an ongoing misconception.

Akiptan’s Land Mortgage and Down Payment Assistance loan has been a lending product since inception in 2019 and provides producers a tool to purchase land or finance the down payment portion. Anyone over the age of 18 years of age can apply for the land loan funds. The down payment assistance has up to a 15 year repayment period, and the full Land Mortgage Product has up to a 30 year repayment period. And like all of our products, Akiptan’s technical assistance around financial literacy is included with this loan.

Since this was our first trust land mortgage, Sarah leaned heavily on support from those in the field who have been doing this work for years. We were supported by Four Bands Community Fund (FBCF) as we navigated the waters of the BIA. This was a super proud moment for the organization, the loan officer, and the producer, as a lot of lenders would have shied away from the extensive process (hence where the myth that trust land is not mortgageable) but that is what Akiptan is here to do - to help our producers get to a YES!! 

Sarah Puckett, Akiptan’s Loan Officer, was excited to share how the process went from start to finish as Akiptan meets a critical milestone. 

The first step of requesting a mortgage loan with Akiptan is to provide all of the required documents that are needed to package a general loan. In addition to our general required documentation, Akiptan requires supplemental documents for a land mortgage loan such as 1) A Title Status Report (TSR), 2) an Appraisal, a Valuation Report, or a Tax Valuation Report, and 3) A purchase agreement from the Bureau of Indian Affairs (BIA) on the property.

Once all of the required documents are submitted and the application receives internal approval on Akiptan's end, a commitment to approve the mortgage is then needed from the BIA. We create the loan agreement, security agreement, and the mortgage for the loan, which are combined with the lender's credit analysis, and the credit report pulled by the lender. From there, BIA will inform Akiptan if there are any changes necessary to gain the final approval or if there are no changes necessary, they will process the documents and provide the commitment to approve the mortgage. 

The timeline on this BIA portion of the process varies on a case by case basis, but we can generally expect it to take less than 30 days. In addition, this allows us time to schedule an in person closing date with the client to obtain wet signatures (a physical pen on paper signature) on the loan closing documents without having to redo any dates on any documents, resulting in having to restart any part of the process. One thing to also highlight is that instead of working with a title company through the county as you would with fee simple land purchases, trust land mortgages require the lender to be the sole closing agent with the client and BIA. As with most mortgage closings, you will also need a notary present for the mortgage document signing. We have yet to find a title company who will issue a title insurance on trust land. Normally, lenders require title insurance, but that system doesn’t account for Trust Land through the BIA. So, we adjusted our policy to fit the reality of Indian Country’s needs. Instead of saying “no, this isn’t possible” we figured out a way to get to a “yes.” There is a waiting period with perfecting the mortgage lien and because we cannot obtain a lender’s insurance policy (which would normally secure our loan during that waiting period) before the seller is actually listed as the owner of the property, we are essentially taking a temporary risk. Traditional lenders do not want to take that risk of being temporarily uncollateralized. We’re showing up as a true partner with our producers in making this adjustment and sharing in this risk. 

Melissa Curley, Akiptan's Director of Lending, says she was super excited to know that we had a mortgage loan request to purchase trust land in our loan portfolio because all of our mortgage loans were deeded land up until this point. Sarah did such an amazing job with the process by assuring her client had status updates and she answered any questions that they had. Sarah was so eager to learn and take on this new challenge. Don't get me wrong, there were some times of frustration, but Sarah stayed determined and took initiative on communication during the whole process. She knew when to reach out to our most experienced lender colleague, FBCF, as they have years of experience with the trust land mortgage process and she made it seem like a breeze. We cannot express how grateful we are of the loan officers at FBCF, Kirsten Stambach and April Anderson, for providing guidance.

"Now that Sarah has achieved our first Trust Land Mortgage, we have a good sense of the process, how to navigate with BIA, and we are hopeful to see more applications come through our door!"  - Melissa Curley - Director of Lending

Akiptan would like to welcome producers across Indian Country to inquire about our land mortgage and down payment assistance product. To date, we have been able to collaborate with other organizations to train on how to underwrite a trust land mortgage request, and accepted invitations to co-present on how trust land mortgages work to support producers across Indian Country. It’s an exciting moment and Akiptan is ready to share our knowledge in working through the Trust Land Mortgage process. Currently, Akiptan has 2 new trust land mortgages in our pipeline and we are ecstatic to continue doing our part in helping producers finally be able to leverage their largest asset.

To learn more about our Land Mortgage Product, please visit our website at www.akiptan.org where you will find a digital copy of the application to complete and mail to our office at PO Box 858, Eagle Butte, SD 57625. To request a mailed application, email us at info@akiptan.org or call our office at (605) 301-0581.