The Cherokee Code: Published by Order of the Tribal Council of the Eastern Band of Cherokee Indians

Sec. 44A-1. Scope and intent of chapter.

This chapter establishes the minimum requirements and the mechanism by which the Tribe will guaranty the repayment of loans made by qualified lenders to eligible borrowers to purchase, refinance, construct or improve eligible housing on Tribal land, and provides minimum requirements for the guaranty. The Tribe may itself or through Qualla Housing Authority enter into agreements with lenders and others that provide requirements not expressed in this chapter, so long as the minimum requirements expressed in this chapter are satisfied.

(Ord. No. 366, 10-16-2002; Ord. No. 607, 12-5- 2002)

Sec. 44A-2. Administration by Qualla Housing Authority—Authority.

The Qualla Housing Authority shall administer the Home Loan Guaranty Program established in this chapter, and is hereby given the power and authority to establish rules, policies, guidelines, and to take other actions necessary to carry out the intent of this chapter.

(Ord. No. 366, 10-16-2002)

Sec. 44A-3. Definitions.

Approved house site means a physical location on Tribal land that meets criteria developed by the Tribe regarding the size and suitability of the location for construction or placement of eligible housing.

Co-borrower means any person whose per capita benefits (if a Tribal member), income or other assets are relied on by a lender in making the home loan for which the Tribal guaranty is given, and who is a party to the loan agreement with the lender.

Eligible activity means the activity for which the Tribe will guarantee loans as provided in this chapter.

Eligible borrower means a person who qualifies to have a home loan guaranteed by the Tribe under this chapter.

Eligible housing means housing that qualifies to be used as security in an agreement guaranteed by the Tribe.

Possessory interest means an interest in Trust Land, granted by the Tribe only to an individual enrolled member of the Tribe or a group of enrolled members, giving the member or members the authority to use and occupy a specific parcel or parcels of Trust Lands pursuant to Tribal ordinance and resolution, but maintaining legal title in trust by the federal government for the benefit of the Tribe and reserving to the Tribe certain rights regarding the parcel or parcels.

Qualified lender means any of the following:

(1) A lender approved by the Tribe;

(2) Lenders who are already approved by the Federal Housing Authority, U.S. Department of Housing and Urban Development for participation in the single-family mortgage insurance program under Title II of the National Housing Act;

(3) Lenders authorized by the US Department of Veterans Affairs to originate automatically guaranteed housing loans under Section 1802(d), Chapter 37, Title 38 of the US Code; or

(4) Lenders approved by the US Department of Agriculture to make loans for single-family housing under the Housing Act of 1949.

Qualla Housing Authority means the public body created by the Tribe at Chapter 44, Cherokee Code.

Tribe means the Eastern Band of Cherokee Indians.

Tribal land means land, or any interest therein, held by the United States in trust for, or for the use and benefit of the Tribe, and includes land held by the Tribe that is subject to federal restrictions against alienation.

(Ord. No. 366, 10-16-2002)

Sec. 44A-4. Limitations on guaranty.

(a) The Tribe will guaranty home loans under this chapter only for the purchase, refinance, construction or improvement of eligible housing on Tribal land.

(b) The Tribe will guaranty home loans under this chapter only if money is available and appropriated by Tribal Council to specifically provide the guaranty.

(c) The Tribe has absolute and final discretion to determine whether it will guaranty a proposed home loan.

(d) The Tribe will guaranty home loans only for eligible borrowers who are deemed by the Tribe and/or a lender to have difficulty obtaining a home loan, due to poor credit history; low income or other reason. In no event may a lender require home loan applicants residing on Tribal land, who otherwise meet the underwriting requirements of the lender, to obtain a Tribal guaranty as a condition of making the loan.

(e) If the Tribe enters into a home loan guaranty agreement with a lender, the Tribe may provide in its agreement with the lender that the guaranty is unconditional and may not be abrogated while any amount is outstanding on the loan.

(Ord. No. 366, 10-16-2002; Ord. No. 607, 12-5-2002)

Sec. 44A-5. Minimum requirements for loan terms.

(a) The Tribe will guaranty the repayment of loans made to eligible borrowers by qualified lenders for eligible activities provided the loan terms meet the minimum requirements provided in this section.

(1) The term of the loan may not exceed 30 years.

(2) The loan must be a first-mortgage loan, fully amortizing, level payment. The loan may be assumable or due-on-sale.

(3) Interest rates must be a fixed rate and competitive with fixed rates available from a variety of lenders regularly doing business in or near Cherokee, North Carolina.

(4) The loan may be prepaid without penalty.

(5) The loan is secured by a leasehold interest in eligible housing and the possessory interest in Tribal land on which the eligible housing is located, provided that the possessory interest has been assigned to the Tribe in return for a lease that is pledged as security for the home loan. A home loan may not be collateralized or secured by Tribal land itself, which land may never be alienated from the Tribe.

(b) The Tribe may guaranty up to 100 percent of the outstanding principal balance and interest on the loan as well as all sums that comprise the total indebtedness secured by the mortgage or deed of trust.

(Ord. No. 366, 10-1~2002)

Sec. 44A-6. Restrictions on alienation.

Except as expressly stated in this chapter, this chapter shall not be construed to divest the Tribe of its control of Tribal land itself, and the control of personal property on Tribal land, as provided in Section 23 of the Tribal Charter and Chapter 47, Cherokee Code. In no case may Tribal land be alienated from the Tribe. Improvements affixed to Tribal land may be removed from Tribal land only if done so in compliance with Tribal law.

(On No. 366, 10-16-2002)

Sec. 44A-7. Requirements for eligible borrowers.

A person is an eligible borrower if they meet all of the requirements of this section at the time of their application for the Tribal guaranty:

(1) The person is 18 years of age or older.

(2)The person is an enrolled member. Non-members who are the current or former mate (as evidenced by a commitment in a long term relationship), widow or widower of an enrolled member of the Tribe with whom the person has minor children who are enrolled members and who will live in the home as their primary residence may only be co-borrowers as provided in Sec. 44A-8.

(3) The person is not excluded from the Tribe pursuant to Chapter 2, Cherokee Code.

(4) The person has in their name a possessory interest in Tribal land, issued by the Code.

(5) The person assigns the possessory interest in Tribal land to the Tribe.

(6) The Tribe, in exchange for the assignment, leases the Tribal land, as landlord, to the person who assigned the possessory interest to the Tribe.

(7) The Tribal land on which the home is to be located qualifies as an approved house site according to criteria developed by the Tribe. The possessory interest assigned to the Tribe must be used as the house site.

(8) The person meets the credit and underwriting requirements of a qualified lender.

(9) The person executes a deed of trust.

(10) The person executes a marketable promissory note as evidence of the indebtedness created by the home loan.

(11) The person is eligible to receive per capita distributions of net gaming revenues from the Tribe.

(12) The person has a sufficient portion of his or her per capita distributions of net gaming revenues unencumbered and available for assignment to the Tribe for repayment of the home loan.

(13) The person assigns the otherwise unencumbered portion of his or her per capita distributions of net gaming revenues to the Tribe or lender, as directed by the Tribe, for a period of years sufficient to fully amortize the debt, provided:

a. An eligible borrower, applying individually for a loan for which a Tribal guaranty is sought, may not assign more than 80% of each per capita distribution for repayment of the loan.

b. If a man and a woman, who as a couple qualify as eligible borrowers, are applying for a loan for which a Tribal guaranty is sought, the couple may not assign more than 65% of their combined per capita distributions. For example, a couple receiving $3,000 each from each biannual per capita distribution may only assign 65% of the $6,000 they receive every six months.

c. Other income may be used to supplement per capita distributions to repay the loan for which a Tribal guaranty is sought.

(14) The person occupies the home full-time as his or her principal residence.

(Ord. No. 366, 10-16-2002; Ord. No. 607, 12-5-2002)

Sec. 44A-8. Participation of nonmembers.

(a) A person who is not a member of the Tribe may not individually apply for or be granted a guaranty under this chapter. However, a nonmember may be a CO-borrower with a Tribal member and may, if a party to a home loan agreement for which the Tribe has issued a guaranty; may continue as a party under the guaranty if the enrolled member is deceased or no longer lives in the home. However, the nonmember CO-borrower must meet the requirements of this chapter that do not, by their terms, apply only to Tribal members. Where appropriate, the term eligible borrower may be interpreted to include CO-borrowers

(b) Allowing a non-member to be a CO-borrower shall not be construed to allow a nonmember to own real property or improvements on Tribal land, or to divest the Tribe of its control of real and personal property on Tribal land. Regardless of the Tribe's control of, and action or inaction, regarding real and personal property on Tribal land, a nonmember CO-borrower who is a party to any agreement contemplated in this chapter is bound by the promises and obligations they made in the agreement.

(Ord. No. 366, 10-16-2002)

Sec. 44A-9. Priority of applicants.

When deciding who may receive a Tribal guaranty of a home loan under this chapter, Qualla Housing Authority shall evaluate applicants using criteria approved by the Qualla Housing Board of Commissioners.

(Ord. No. 366, 10-16-2062)

Sec. 44A-10. Requirements for eligible housing.

Housing is considered eligible housing if it meets all of the requirements of this section.

(1) The home must be a one to four unit residential dwelling located on Tribal land.

(2) The home must be used solely as the eligible borrower's full-time principal residence.

(3) The home must comply with all applicable Tribal laws, including without limitation, Tribal construction and safety codes and regulations.

(4) The home must be permanently affixed to Tribal land. Single-wide house trailers do not qualify as eligible housing.

(5) The home may be new, existing or undergoing improvement.

(6) The home must be located on a house site approved by the Tribe.

(7) The home must be approved by the Tribe.

(Ord. No. 366, 10-16-2002)

Sec. 44A-11. Notifications to Tribe.

(a) Within 48 hours of submitting an application to a qualified lender for a home loan for which a Tribal guaranty is sought, the eligible borrower shall provide to the Tribe a copy of the completed home loan application.

(b) Additionally, the following information, whether or not requested by the qualified lender, must be submitted by the eligible borrower to the Tribe before the Tribe will decide whether to make the guaranty:

(1) A pre-qualification letter from qualified lender.

(2) A statement from the qualified lender as to the amount of the loan, the terms, the monthly payment amount, and any special conditions, and any other information required to be provided by the lender to the borrower under federal law.

(3) Evidence of an executed assignment to the Tribe of the eligible borrower's possessory interest in Tribal land that will serve as the approved home site.

(4) Evidence of a lease for the land given by the Tribe in return for the assignment of the possessory interest to the Tribe.

(5) An executed assignment to the Tribe of an appropriate percentage of the eligible borrowers per capita distribution of net gaming revenues, and if necessary; a written commitment of other income to be provided with per capita distributions if the assigned per capita distributions are not sufficient to make monthly payments on the loan.

(6) Detailed plans and specifications for the home, if applicable.

(7) Any other information requested by the Tribe.

(c) If the eligible borrower complies with this section, the Tribe shall make a decision regarding the guaranty within 30 business days after receipt of all of the foregoing material.

(d) A Tribal guaranty of a home loan under this chapter must be in writing. Oral representations regarding a Tribal guaranty do not bind the Tribe.

(Ord. No. 366, 10-16-2002)

Sec. 44A-12. Insurance.

(a) An eligible borrower who obtains a home loan from a qualified lender and a Tribal guaranty of the loan under this chapter shall obtain, maintain, and faithfully comply with any property; liability and other insurance policy as may be required by the Tribe and/or the qualified lender. All insurance policies shall:

(1) Name the Tribe, the eligible borrower, and the lender as insured, as their respective interests may appear.

(2) Provide that all claims for losses shall be adjusted by the insurer subject to the approval of the Tribe;

(3) Provide that any losses shall be payable notwithstanding any act or failure to act or negligence of the Tribe or eligible borrower or any other person;

(4) Provide that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least thirty (30) days after receipt by the Tribe, the eligible borrower and any lender of written notice of the cancellation, reduction or material change in coverage;

(5) Require the insurer to promptly notify the Tribe of any non-payment of any premium when due; and

(6) Provide that the Tribe has authority to invoke the defense of sovereign immunity in connection with any proceeding asserting liability against the Tribe.

(b) An insurance escrow or impoundment account shall be established with the lender, and the eligible borrower shall escrow such funds with the lender for payment by the lender of the insurance premium, as and when payment therefore is due. The eligible borrower shall also escrow in this same account funds sufficient to cover payment by the eligible borrower of any Tribal levy or assessment.

(c) The eligible borrower shall deliver to the Tribe evidence of the payment of the annual premium for insurance if paid directly by the eligible borrower; if paid by the lender, the lender shall deliver to the Tribe evidence of the payment by the lender.

(Ord. No. 366, 10-16-2002)

Sec. 44A-13. Reimbursement to Tribe on borrower's default.

(a) To secure the Tribe's guaranty of the eligible borrower's obligation to repay the home loan, the eligible borrower shall grant to the Tribe, at the Tribe's request; a security interest in the eligible borrower's interest in eligible housing, the eligible borrower's per capita distributions of net gaming revenues from the Tribe, and other collateral as may be requested by the Tribe.

(b) Every eligible borrower who receives a Tribal guaranty of a home loan under this chapter agrees that if he or she defaults and the Tribe becomes obligated to pay on the guaranty, the Tribe may garnish, withhold or set-off the eligible borrower's per capita distributions of net gaming revenues, and take other legal action as necessary; until the note or amount paid on the guaranty, and other expenses incurred by the Tribe as a result of the borrower's default, is repaid to the Tribe in full. CO-borrowers are jointly and severally liable to repay to the Tribe the guaranty and other expenses incurred by the Tribe in the event of default.

(c) If an eligible borrower who receives a Tribal guaranty of a home loan under this chapter defaults on the loan and the Tribe becomes obligated to pay on the loan, the Tribe may, in combination with any other action allowed by Tribal law, take any action allowed under Tribal law to ensure that the home is put to its best use as a principal residence.

(Ord. No. 366, 10-16-2002)

Sec. 44A-14. Deposit of Tribal guaranty monies.

Monies for the Tribal guaranty of home loans as provided in this chapter shall be deposited in the Tribal Housing Fund established in section 16C-22, Cherokee Code; provided, that monies agreed by the lender and the Tribe to be necessary for full repayment of a percentage of outstanding guaranties may also be maintained in an escrow or similar account if so required by a lender to ensure that adequate funds are available to pay all or a portion of the guaranties issued.

(Ord. No. 366, 10-16-2002)

Sec. 44A-15. Limited waiver of sovereign immunity.

The Tribe expressively waives its sovereign immunity from suit to recover solely for the limited purpose of allowing a money judgment of no greater than the costs of sale plus the loan's outstanding principal and interest accrued through the date of filing suit, or in the alternative a specific performance remedy, to be granted only by the court designated in this section, against the Tribe, only in an action for enforcement or collection of a guaranty of a home loan made under this chapter. Any action to enforce the obligations owed by a party under such a guaranty shall be heard by the Cherokee Court; provided, that if the Tribe, a lender and Fannie Mae have agreed in writing, or the Tribe and a lender have agreed in writing, to hear such actions in the courts of the State of North Carolina, such agreement(s) shall prevail. This waiver is not intended to nor shall it be construed to waive the sovereign immunity of the Tribe or any other party for any other purpose or with respect to any claim or other matter not specifically mentioned herein and is not intended to nor shall it extend to the benefit of any person other than a party to the Memorandum of Understanding entered between the Tribe, the qualified lender and Fannie Mae, or the party's respective successors or assigns.

(Ord. No. 366, 10-16-2002)

Sec. 44A-16. Home sale if Tribe guaranteed loan.

A borrower's interest in eligible housing for which the Tribe has guaranteed a loan may be sold or transferred, by operation of law or otherwise, only to the Tribe, the lender and its successors and assigns, or to persons qualified under Tribal law to own eligible housing on Tribal land. In all circumstances, the Tribe shall have the first option to purchase eligible housing.

(Ord. No. 366, 10-16-2002)

Sec. 44A-17. Tribe to maintain records.

Regardless of whether and what title documents are recorded with the Cherokee Agency of the Bureau of Indian Affairs pursuant to federal law, the Tribe shall maintain its own organized and accessible record (including copies) of the documents named in this section that relate to the issuance of a Tribal guaranty of a home loan, including but not limited to:

(1) Each possessory interest in Tribal land, assignment of such interest to the Tribe, and each lease entered in return for such assignment.

(2) Tribal home loan guarantees, promissory notes, and other security instruments entered to purchase, construct or improve eligible housing.

(3) Any sale and transfer of eligible housing backed by a Tribal guaranty pursuant to this chapter.

(4) Any amendment, modification or termination of any of the aforementioned documents.

(5) Other documents the Tribe considers necessary and/or helpful in administering the home loan guaranty program and fulfilling the intent of this chapter.

(Ord. No. 366, 10-16-2002)

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