With the approval of the Secretary or the Interior or authorized delegate, you, as the landowner of a restricted Native allotment or townsite lot, can mortgage your restricted property. If you default on the mortgage, the property will be subject to foreclosure, and the BIA will not be able to protect you from the loss.
You must have title to the restricted property, which is confirmed by Certificate of Allotment, Restricted Trustee Deed, Probate decision, or other approved conveyance document.
The following is an outline of the steps involved in the mortgage process:
1. Lender Arrangements: If you wish to apply for a loan from a bank using your restricted Native land as collateral, it is necessary for you to make the necessary loan arrangements with the lender and provide them with any documents that they may require. We will ultimately require a complete copy of your loan package from your lender.
2. Survey: If you are not mortgaging your entire allotment parcel, a survey may be necessary. The BIA does not have funding to pay for surveys, so it is your responsibility to pay for a private survey.
3. Initial Contact: Submit a request in writing to our office informing us of your intention to mortgage your restricted property. Your letter must describe in detail your plans for the loan. If you share ownership of the property with other restricted landowners, you will have to have a lease in place with the other owners, and will obtain a leasehold mortgage.
4. Application & Counseling: A Realty Specialist will be assigned for the transaction, and will contact you to discuss the mortgage process. Emphasis will be placed on the importance of repayment, as well as, the significance of default and foreclosure. You must clearly understand the effects of default and foreclosure and the possibility of losing your land if you do not make your payments to the bank. The Realty Specialist will provide you with an Application for Mortgage to complete and return.
5. Review of Loan Documents: The lender will need to provide a copy of all the loan application documents, as well as the Draft Deed of Trust, Note, and any applicable riders for review. An appraisal of the land by the Appraisal and Valuation Services Office is not necessary; however, the lender will prepare and provide the BIA with their in-house appraisal. If the value of your land is much higher than your loan amount, we may recommend that the mortgage not be approved since that creates the potential of losing more than what you applied for in the loan. The Realty Specialist will review the draft Deed of Trust and other documents to make sure there are no corrections that need to be made to the legal description, and to confirm that there are no other changes which need to be made before you sign the documents. Please note that if the lender attempts to add a spouse or other party to the Deed of Trust who is not on title, we will not approve the Deed of Trust. We also will not accept a quit claim deed prepared by the lender or Title Company attempting to convey title to a spouse or other party solely for the purpose of keeping them on the Deed of Trust.
6. Archeological Inventory: The allotment or townsite lot must be inventoried for potential cultural or historical remains. BIA Archeology staff will conduct the inventory at no cost to you. You may, at your own expense, acquire the services of a private archeologist. The private archeological report will be subject to review and approval by the BIA Archeology staff and must be prepared in accordance with their guidelines. The private Archeologist should contact the BIA Archeology staff prior to conducting any fieldwork.
7. Environmental Compliance: Compliance with NEPA regulations is required. The Realty Specialist assigned to your case will assess the reason for the mortgage and determine the type of environmental document required and who will be required to prepare the environmental document.
8. Timber Clearance: If the land is valuable for timber, a timber clearance and/or timber report may be necessary. The Realty Specialist assigned to your case can determine the necessity based on their knowledge of the general location of your land and from discussions with you. If a timber clearance/report is necessary, BIA Forestry staff will be responsible for conducting the fieldwork.
9. Report of Investigation: After all previous requirements have been met, the Realty Specialist assigned to your mortgage transaction will prepare a report of their findings and make a recommendation for the transaction.
10. Commitment to Approve Mortgage: The Regional Director will review the Report of Investigation and make a decision to either approve or disapprove the mortgage.
a. If approved, the Regional Director will issue a "Commitment to Approve Mortgage" document. The "Commitment to Approve Mortgage" will then be forwarded to the lender, with instructions to include the required approval block in the final Deed of Trust. The Lender will schedule a closing with the landowner to have the Deed of Trust and other applicable documents signed and transfer the funds.
b. If disapproved, you will be informed of the decision.
Any affected parties can appeal the decision, and will be informed of the appeal procedures.
11. Deed of Trust: After the lender’s closing, the Deed of Trust signed by the landowner will be forwarded to the Regional Director for final approval. After approval, the Deed of Trust is sent to the Alaska Land Title and Records Office for recording and then returned to the Realty Specialist for delivery to the lender or to the appropriate State of Alaska Recorder’s Office for recording, depending on previous arrangements made with the lender.
FOR FURTHER INFORMATION, CONTACT:
Bureau of Indian Affairs Alaska Region
Real Estate Services
3601 C Street, Suite 1200 MC-304
Anchorage, Alaska 99503-5947
(800) 645-8465 ext. 1