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The Unequal Costs of Native American Homeownership

CICD Working Papers 2023-04 | Published August 3, 2023

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Helen Banga Consumer Financial Protection Bureau
Donn Feir CICD Research Fellow (former)
Matthew Gregg Senior Economist, Center for Indian Country Development
The Unequal Costs of Native American Homeownership


Using the confidential Home Mortgage Disclosure Act (HMDA) data from 2018 to 2021, we document disparities in interest rates and rate spreads on home loans between American Indian and Alaska Native (AIAN) borrowers living either on or off federally recognized reservations and White borrowers. Consistent with past research, we find large raw interest rate and rate spread disparities, especially for on-reservation AIAN borrowers. These rate disparities are largely driven by the disproportionate use of home-only loans, which are not tied to real property. While on-reservation AIAN borrowers are more likely to have leasehold interest in the underlying property, property interests alone cannot explain the greater reliance on home-only loans by on-reservation AIAN borrowers. We find that living closer to a manufactured home dealership is highly correlated with a greater likelihood of securing a home-only loan, but this factor, along with distance to a city and stated preferences about trust in the banking system, cannot account for the differential rate of home-only loan usage between AIAN and White applicants.