Home equity comes to Mashantucket

Attorneys open door for tribal mortgages

By Scott Ritter
The Day

Mashantucket — When the Mashantucket Pequots broke ground this week on the first major housing project on the reservation in more than a decade, the ceremony was marked by traditional Native American offerings of sweet grass and tobacco.

But when tribal members begin moving into the first of those new homes this fall, they'll be offered something that has virtually no tradition on tribal lands: a 30-year mortgage from a commercial bank.

Hoping to lure more Mashantuckets to the reservation and give them the benefits of home ownership, attorneys for the tribe have come up with a novel way to bring mortgage lenders into the Indian housing market: Tribal members for the first time will be able to accumulate equity, reap tax benefits and sell their homes to other members, said Tribal Council Treasurer Rodney Butler.

The approach has attracted interest from other Native American tribes, said Mashantucket lawyer Henry Sockbeson, who developed the program with Karl Sternlof, an attorney with Brown Jacobson in Norwich who specializes in real estate and Indian law. Fannie Mae, the Federal National Mortgage Association, which finances one of every five home mortgages in the United States, is working with the tribe.

The Mashantuckets envision about 100 single-family homes and a half-dozen two-unit townhouses that will be built on 120 acres between Indiantown and Shewville roads. The tribe declined to disclose sales prices.

“It's finally a chance for my family to be home, truly,” said Tina Harris, a Mashantucket Pequot who expects construction to begin on her house this summer. “For me, it's completely cultural. Once this happens, I've come full circle.”

Because tribal lands are held in trust by the federal government, banks have long been reluctant to finance mortgages for reservation housing, because if the loan wasn't paid, the bank couldn't foreclose on the property. Other issues conspired to keep lenders away: Most reservations are held in common by a tribe, with no property lines or residential lots.

In search of a solution, Sockbeson and Sternlof asked the U.S. Department of the Interior whether tribes had the authority to assign parcels of land to their members. Government lawyers last year concluded that they did. The two lawyers then set about crafting tribal law that gave individual members the right to use, develop and sell residential lots.

They also wrote a tribal foreclosure and eviction law, which allows banks to foreclose on loans and sell the property through the tribal court. Only the Mashantucket tribe and its members are allowed to offer bids. Mortgage lenders are comfortable with those arrangements, Sockbeson said, because demand for reservation housing is high, and there are plenty of qualified buyers.

Butler, the tribal treasurer, said there's been little or no residential development on the reservation in the past 10 to 12 years. About half of the tribe's population is under the age of 18, and the need for housing is expected to grow as those members age, Butler said. “This thing is so big for us,” he said.

Work began this week on a pair of two-unit townhouses tucked into the woods on Joseph Williams Road. Each unit will be about 1,800 square feet and include an unfinished basement. Vine Enterprises LLC of North Stonington will be in charge of construction.

Vine Enterprises' principal owner, Bill Vine, is a member of the Mohegan Tribe. He presented sweet grass and tobacco to Mashantucket tribal officials as a gesture of goodwill during a groundbreaking ceremony Tuesday.

“As a Mohegan,” Vine said, “it's a pleasure to come here and do work for our cousins across the river.”