VA Native American Direct Loan in American Samoa

Start with the number that explains this entry. The Government Accountability Office pulled VA data on how many veterans living in each territory used the VA home loan guaranty, and for American Samoa the answer was zero in fiscal year 2021, zero in 2022, and zero in 2023. Guam, next door in the same VA system, recorded 577, 300, and 231. In the same three years American Samoa veterans drew disability compensation in the hundreds, so the veterans are there and they are in the VA system. The guaranty is simply not usable. The reason is land. About ninety percent of American Samoa is communal land held by an aiga under a matai, and Code section 37.0204 prohibits a matai in control of communal family land from alienating any of it without the written approval of the Governor, and prohibits alienating any land other than freehold land to a person with less than one-half native blood. A lender cannot take a mortgage on that. A guaranty program that assumes a mortgageable fee interest has nothing to work with. Congress wrote American Samoa a different door. The VA Native American Direct Loan is defined at 38 U.S.C. 3765, and the definition of qualifying trust land includes land "on any island in the Pacific Ocean if such land is, by cultural tradition, communally-owned land, as determined by the Secretary." VA has made that determination for three territories: American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam. The same section defines Native American to include a Pacific Islander within the meaning of the Native American Programs Act of 1974, which reaches American Samoans. Under this program VA is not a guarantor standing behind a bank. VA is the lender. It is a thirty-year fixed mortgage, usually with no down payment, and VA publishes the rate rather than a bank pricing it; the rate VA published most recently starts at 2.5 percent, which is well below anything a commercial lender offers. Check the current rate before you plan around it, because VA moves it. There are two gates beyond the ordinary ones of a Certificate of Eligibility, credit, and income. The first is the memorandum of understanding: the program only operates where the governing entity has signed an MOU with VA, and the American Samoa territorial government is one of the signatories. As of September 30, 2021 VA had MOUs with 109 entities, of which four were the State of Hawaii and the three Pacific territorial governments. This is the rare case where the MOU requirement that blocks most mainland tribes is already satisfied for you. The second gate is the hard one and it is not about you. You must be able to convey a meaningful interest in the land to VA as security for the loan. On communal land that means going to the matai and the family, and it means the separate written agreement that detaches the house from the land, which has its own entry in this catalog. A veteran who arrives at the Development Bank of American Samoa with a Certificate of Eligibility and no conversation with the family yet has done the easy half. The Development Bank of American Samoa is the on-island point of contact for this program. The loan itself is VA's. One more reason this matters more here than elsewhere. HUD's Section 184 Indian Home Loan Guarantee, which covers some of the same land types on the mainland, does not offer loans in any of the Pacific territories. USDA Section 502 is the other federal program on this kind of land. If the Native American Direct Loan does not work for you, the list of remaining federal options is short. Take the scale seriously. VA originated 76 of these loans across all three Pacific territories in the ten fiscal years 2012 through 2021, against an estimated 5,200 potentially eligible veterans in those territories. That is about one and a half percent. Low use is not evidence that the program does not work; it is the reason to ask, early and in person, rather than assuming someone has already checked.