RDC chair, vice-chair hear plan to bail out stranded homeowners

By Cindy Yurth
Tséyi' Bureau

SHIPROCK, N.M., November 21, 2012

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H ome buyers who lost their equity in a 2008 bankruptcy ruling saw a ray of hope Monday after top officials of the Navajo Nation Council's Resources and Development Committee seemed amenable to a bailout proposal from the home buyers' attorney.

"We have some hope…a little hope…finally," declared Christine Tso after a three-and-a-half-hour-long public hearing here on the home buyers' dilemma before Committee Chair Katherine Benally (Chilchinbeto/Dennehotso/Kayenta) and Vice Chair Roscoe Smith (Crystal/Ft. Defiance/Red Lake/Sawmill).

The meeting was supposed to be of the entire RDC but only Benally and Smith showed, rendering them without a quorum and unable to take action.

However, Benally promised to follow up with the entire committee.

"We will not fail you," she told the buyers in the Shiprock I and II and Crownpoint I and II Navajo Housing Authority developments. "We will have a follow-up meeting and a work session."

The home buyers had been making payments on a rent-to-own plan in the four NHA subdivisions when a corruption scandal broke out in 2004 featuring alleged embezzlement and collusion between the NHA, contractor Lodgebuilder and the entity created to receive and administer the federal funding used to build and maintain the housing, Fort Defiance Housing Corporation.

FDHC declared bankruptcy and the complex ruling handed down in Arizona Bankruptcy Court in 2008 gave the buyers no credit for the payments they had made between 1997 and 2007 — essentially depriving each of them of tens of thousands in what they thought was equity they had built up in their homes over the years.

Some people who had opted for 15-year payment plans lost houses they were almost done paying for, they told the committee brass.

"We went from being buyers to renters, just like that," lamented Wilhelmina Clah, who said she lost $70,000 in past payments.

The home buyers' attorney, James W. Zion, had challenged the ruling, saying it amounted to a "taking" and deprived the home buyers of due process in their own Navajo Nation courts — and been promptly slapped with a contempt-of-court charge by the bankruptcy court judge.

The committee's attorney, Robert Allan, explained that the developments were on master leases taken out by NHA, so the home buyers had no individual legal right to the land their homes are sitting on — therefore no way to collateralize their loans the way off-reservation homeowners do.

But Zion argued they were assured in their contracts they did have lease rights to their individual parcels; NHA just never bothered to plat the land.

NHA CEO Aneva Yazzie and Dana Denney, the CEO of Sandstone Housing — the entity organized to replace FDHC — had been invited to the meeting to respond to the complaints, but didn't show.

At any rate, Zion said his clients were done with fruitless litigation and instead presented the committee members an alternative: rewriting NHA's master plan to channel some of the millions NHA receives from the feds every year toward helping the home buyers pay off their houses.

Zion even wrote draft legislation he called the "Sandstone Fix."

"There's an injustice done," Zion said, "and I'm here on behalf of these good people, begging you to make it right."

Both tribal attorneys present at the meeting — Allan and Luralene Tapahe of the Navajo Department of Justice — thought Zion's proposal might just work.

"Unfortunately," Tapahe said, "there's very little legally that we will be able to do. Mr. Zion's legislation is the only recourse."

"I would have to look at it," cautioned Allan, "but it sounds like it's the answer to a lot of our problems."

Shiprock Chapter President-elect Duane "Chili" Yazzie urged Benally and Smith to give serious consideration to Zion's proposal.

"I totally stand in support of the folks here that have shed their tears," Yazzie said. "They feel frustration. They feel anger. But on top of all that, to believe they will have that new home that they've been promised."

Also at the meeting, tenants in an older NHA development set for renovation told the committee officers they were afraid to move out of their homes because they didn't trust NHA to renovate the homes in a timely fashion, and felt they could be stuck in alternative housing for years.

Benally said the committee would look into that complaint as well and urge NHA to give the tenants an accurate timetable for the renovation.

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