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Community Land Trusts Have Lower Delinquency and Foreclosure Rates

A recent ""report"":https://www.lincolninst.edu/pubs/dl/1936_1257_Thaden%20Final.pdf by the ""Lincoln Institute of Land Policy"":http://www.lincolninst.edu/ found that delinquency and foreclosure rates among owner-occupants living in homes in Community Land Trusts (CLT) were consistently lower than rates among owner-occupants in the market overall.


CLTs are a type of shared equity homeownership -- a resale-restricted, owner-occupied housing model designed to help low- to moderate-income families achieve sustainable homeownership.

CLTs own the land, and homeowners pay a monthly fee to lease the property. Homeowners are also responsible for purchasing structural improvements to their homes.

Homeowners must agree to certain resale restrictions set in place by the CLT to ensure affordability for future low-income homebuyers.

CLTs offer pre- and post-purchase guidance and support to maintain affordability, promote property maintenance, and prevent foreclosures.

The rate of serious delinquencies among CLT homeowners at the end of 2010 was significantly lower than serious delinquencies reported by the Mortgage Bankers


Association (MBA). While 1.3 percent of CLT homeowners were seriously delinquent at the end of 2010, 8.57 percent of homeowners nationwide were seriously delinquent.

The disparity in rates was similar for foreclosures, where 0.46 percent of CLT homeowners were in foreclosure at the end of 2010, while 4.63 percent of homeowners in the conventional market were in foreclosure.

Of the 1.3 percent of seriously delinquent CLT homeowners, 82 percent either sold their homes through their CLT or maintained ownership with financial assistance and counseling from the CLT through the end of 2010.

""Mortgages in the CLT sample are all held by low-to-moderate income homeowners, while mortgages in the conventional market are held by owners across all incomes,"" the Lincoln Institute of Land Policy noted in its report. ""Consequently, the differentials between CLT and MBA rates would have been greater if low-to-moderate income owners in the MBA sample could have been isolated for comparisons.""

According to ""National CLT's"":http://www.cltnetwork.org/ Web site, there are more than 5,000 CLT homes across the country.

The Lincoln Land Institute study examined 62 CLTs with a total of 3,143 homes with outstanding residential mortgages as of the end of 2010.

While affordability is one reason for the lower delinquency and foreclosure rates among CLT properties, the study also attributes the low rates to CLTs' efforts to ""oversee loan acquisition, educate and support their homeowners during both the pre-purchase and post-purchase periods, interact and intervene with mortgage lenders, and intervene with homeowners at risk of foreclosure.""

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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