Honoring Nations: Kay Perry: Chuka Chukmasi Home Loan Program
Perry, Kay. "Chuka Chukmasi Home Loan Program." Honoring Nations symposium. Harvard Project on American Indian Economic Development, John F. Kennedy School of Government, Harvard University. Cambridge, Massachusetts. September 10, 2004. Presentation.
"Well, they're a hard act to follow, but I am going to ask Kay Perry from the Chuka Chukmasi Home Loan Program to come forward and to talk about the program there and perhaps some of the other things that are going on at Chickasaw, again with this focus on helping us thinking about using financial and human resources wisely on the ground. There are a lot of examples of that in the cultural protection example we just saw."
"I'm Kay Perry and I'm Director of the Housing, Counseling, and Loan Services Department in Ada, Oklahoma. And our program was the Chuka Chukmasi Home Loan Program. I think that every winner here, the idea started somewhere with a fire that just kind of burned within and there are all kinds of programs -- can everybody hear me? I can't tell. Okay -- that are winners, but an idea had to start somewhere, and I know for me, home ownership was a fire that was kind of within me because I grew up very, very, very poor and I guess I was a freshman in college before my parents ever owned their first home. And I can remember growing up, thinking that people who owned their own homes were rich and they had money and, "˜Gosh, wouldn't it be nice to have a house of your own instead of living in rent houses where the curtains blew out in the winter because of the wind coming in around them, or that were up on cement blocks, didn't even have foundations.' And I can remember growing up that way and thinking that people who owned their own homes were rich. And I can always remember having that desire, even as a little kid to have a home of my own.
And I've actually worked in the mortgage lending industry for 30 years now and I worked primarily at banks. I've been with the Chickasaw Nation for a little over five-and-a-half years and I worked at banks and I saw the inequities in lending, and there were many inequities in lending, and it was always the minorities that that inequity was reflected on. And I can always remember hating it. And I'll be honest with you, I've even lost a couple of jobs because I'm pretty outspoken because I spoke up about some of those inequities. I went to work for the tribe five-and-a-half years ago and the Chuka Chukmasi Home Loan Program was already in existence and it has grown tremendously since 1998, when it started. And when it first started, it was a collaboration between a broker, PMI mortgage insurance company and Freddie Mac -- actually started out to be a Freddie Mac loan, Freddie Mac is an investor -- and it was the beginning. It was a full-documentation loan, it was underwritten by human beings, and when I went on board, after it had been in existence for a couple of years, we weren't doing a lot of loans. They weren't doing a lot of loans because, quite frankly, even though there was risk-share agreements in place...and there were still those inequities because even the underwriters were involved in the underwriting process and you just almost had to be a perfect applicant to become approved for a loan. The loan required counseling, but at that time it was done over the phone with a company that was contracted. We talked to applicants. They spent about ten minutes on the phone with them and then they signed off on a counseling piece. Well, that didn't make me very happy.
And so when I came on board, I immediately started talking to the powers that be about making some changes. And that's the one thing that I can say about the Chickasaw Nation, that the leadership, put people in places and then give them the freedom to talk about making changes for the better, to look for ways to make things better. And in 2000, we actually changed the way we were doing everything. We partnered with a different lender. PMI Mortgage Insurance Company remains our partner today, they've been there from the very beginning, but we went to doing Fannie Mae loans, and we do automated underwriting, so that your race is not there, your sex is not there, your marital status is not there, your age is not there. The file is underwritten automatically, on an automated program but everything is based just like everything else. Everybody's underwritten under the same conditions.
We are really, really, really heavy on the counseling portion. In 2000, we started doing our own counseling and that was a real trip. It took a while to put everything together. We partner with different companies to obtain materials free of charge. We look for different resources to add to our programs. We get a HUD grant, we've applied for a HUD grant five years in a row. Four years -- we don't know this year -- but four years in a row we've been very fortunate to get a counseling grant that supplemented our counseling program. We won't allow our counseling to be farmed out to anyone. When we first started, we did loans only in our 14-county service area. Now, we can do loans for Chickasaws anywhere in the continental United States and for other Native Americans living in the State of Oklahoma, we can also help them as well. We do down-payment and closing-cost assistance. We use the lender's money for the first mortgage loan, which keeps our money freed up for the down-payment and closing-cost assistance loans. We actually service those ourselves, and all the grant money, all the leveraging that I do for resources, for materials, to supplement our counseling program, it keeps my budget money in place so I can give raises and have good fringe benefits and just make everything more attractive. We're huge on education.
When I first started, it was a one-man show, it was just me, and I was doing all of it. I was doing the seminars, I was taking the applications, processing the loans, getting them through underwriting, following them up and getting them to closing, doing the seminars. It was tough. We're up to four people now. All my, everyone in my department has to be a certified home buyer educator-counselor. They have to go to school, they have to test, and they have to pass the test. And then we do continuing education every year, anything that comes up that pertains to us, because we want to be better so we can pass on that knowledge. Many Native Americans who are buying homes on the secondary market in the private market aren't just first-time home buyers, they're first-generation home buyers. And the problem has been that...getting a mortgage loan, it's not an easy thing from the standpoint of understanding what's going on. And being in the lending field, I know that I wasn't that way, but I know it's all in the numbers, it's all in the profit, it's all in the bottom line, it's all in how many you close, every month, and what you're going to make on all those closings. So no one was taking the time to explain everything from start to finish, talk to people about what all these charges were, what they meant. All these vendors that were charging things as surveys, title insurance, title work, you know, you just throw those words out there, and people are embarrassed to say, whether you're Native American or regardless of your race, you're embarrassed to say, "˜I don't understand what you're talking about.' And loan officers just assume that people understand what they're talking about because it's everyday language to them, but people don't understand. And I always took the time to explain everything, line-by-line, go over what it meant, and we do that today.
Our counseling for out-of-state clients is actually done on the phone. Summer Stick is here with me. Up until recently, she was our main counseling person. Summer, stand up. Summer developed a pretty extensive questionnaire. We mail materials, a packet of materials about this thick to clients who are out of state and can't come to regional seminars that we do. They're given ample time to study that material. They can call and ask questions and then when they feel like they're ready to talk to the counselor about the process, then Summer calls them, so that it's on our nickel, and she spends whatever amount of time is necessary on the phone with them. And she has a list of 36 questions, areas that she feels like they need to really understand so that we know that they're going into this process understanding. We also, on all our loans, require post-purchase counseling. We work with a lender that if a customer misses a payment, we're the first person they call. We get on the phone, try to figure out what's going on. And so, we're trying to create good retention numbers for Native Americans.
Our current delinquency and default rate, when we applied with Honoring Nations, it was zero. And it's not that now, but it's still lower than the national average. We're at .07% of all the loans that we've done. We've originated almost $22,000,000 in first-mortgage loans. We've done a little over $620,000 in second-mortgage loans, which are the down payment on the closing cost assistance and we have no defaults on those. So we're pretty proud of those records, and we want to establish really good lending figures for Native Americans, because it's always been the assumption that they were high risk. Well, they're not high risk. They're just like anybody else. We're hard working, you know, just haven't been given a lot of opportunities, and [there] haven't been a lot of people that took the time to go into this area with Native Americans. I don't personally think that all Native Americans want to live colloquial lives. I think that in Oklahoma, we're fee simple land. I know reservations are different and I understand that, but there are a lot of areas where Native Americans want to live outside the reservation or they live where there are no reservations, and there are no reservations in Oklahoma. And we try to be very culturally sensitive. We do, actually, have a reservation in Ada. It's a tract of land, and we call it 'Kullihoma Reservation,' and we have actually traditional housing, traditional Chickasaw housing, and the council, huge council house on that land. And the Chickasaws are very culturally sensitive, but at the same time we all have to learn and grow and live together and do things according to the way that things are done to a degree, as much as we can. The lending arena is one of those areas. What the Chickasaws have done is partner with people to make sure that Native Americans have the same opportunity that everyone else has, and then we've carried it a step further by having negotiated some concessions, it's a little bit easier. We're very proud of our program. October the 5th we are having a roundtable and we want to partner with other Native American tribes who don't maybe have the expertise or the money to set up a lending program, but who would like to assist their tribal members in purchasing homes through maybe down-payment and closing-cost assistance. And we are going to offer our expertise. We have the manpower. We will teach you how to originate the loan. That's take the application and gather the supporting documentation, send it to us. We're going to process it. We're going to get it approved. We're going to walk it through to the closing process. We'll even provide the counseling.
For five years now, we have people who come in who want to build a home of their own, new construction, and we have to outsource them to a lender once they're approved for their permanent financing to do the construction loan. And I haven't been happy with the fees. So the powers that be said, "˜Sure, you can do your own construction loans.' So we'll start, we'll get them approved for their permanent financing, we'll provide the construction funds, we'll follow that through all the way to the end. And then once the house is completed, we'll pay ourselves off with the first mortgage lender's money and have collected a little bit of interest in the interim. So all our assistance loans, they are loans, they are not grants, I don't have the funds to make grants available and as you all know, grants run out real quick. Maybe you allot $100,000 and it's gone in six months and then you're out of business 'til the next fiscal year and more money is allotted. So all our loans are loans, but at a very, very low interest rate that way we get the money back plus a little bit of interest to put in the pot to loan out to more people.
I think that one of the reasons our program has been so successful is we took over the counseling area of it and are really, really big on counseling. There's a bank in Ada that has branches throughout the state of Oklahoma. There's another bank locally. There's two banks in Ada. USDA and HUD, all now are referring clients to us to do pre-purchase counseling. So our counseling program has really taken off as well, and that's just really happened in the last two-and-a-half years. So we're also really, really proud of that and feel like it'll continue to help our retention figures and our delinquency figures for Native Americans because I want us to be the best, the lowest. I think that what we're doing in Ada helps to strengthen our community. Our counseling, our seminars, are actually open to the public.
We think that our program is a wonderful complement to the mutual help programs. There's a huge need for the mutual help program and there always will be. Not everybody is meant to be a homeowner. Some of us are meant to be renters, some of us are meant to be in mutual help homes and that's okay, there's nothing wrong with that. But for those of us that do want to be homeowners, we should have a choice about where we want to live and how we want to do a loan and so we feel like we've given our customers and other Native Americans that choice. And we're really proud of Chuka Chukmasi."