Homeowners in community land trusts are much less likely to lose their homes to foreclosure than owners of market-rate homes, according to a survey released by the National CLT Network and the Lincoln Institute of Land Policy. At the close of 2008, homeowners in community land trusts had a foreclosure rate of 0.52 percent, compared to 3.3 percent among market-rate homeowners. Among 1,930 CLT homeowners responding to the survey – representing about 60 percent of all community land trust homeowners nationwide – only 1.4 percent were behind 90 days or more on mortgage payments at the end of 2008; up to 23 percent of market-rate homeowners were late.
In a community land trust, a non-profit organization such as a community development corporation lease land and sells the homes at below-market rates. Buyers benefit from front-end guidance to acquire safe loans, and continuing support and counseling to keep up with mortgage payments. In exchange, homeowners agree to limit the price of their homes when they sell.
"Community land trusts are proving to be a highly effective way to create and sustain stable neighborhoods," said Roger Lewis, executive director of the National CLT Network, a coalition of 230 nonprofits that operate community land trusts. "That's partly because community land trusts don't allow the kind of 'too-good-to-be-true' financing that has taken down so many American families." Support stems from the unique, long-term relationship between community land trusts and homeowners, he said, prompting help before the first mortgage payment is missed.
There are over 200 community land trusts including some 6,000 homes across the US, from Delray Beach in Florida, to Austin and Chicago, and Irvine, Calif. Many CLTs have a track record of zero foreclosures among homeowners. Communities that are set to receive federal funding for neighborhood stabilization and long-term housing affordability should consider investing in community land trusts, Lewis said. Over half of survey respondents already have received, applied for or will apply for neighborhood stabilization program funds from the 2008 Housing and Economic Recovery Act. CLT organizations will use those funds to purchase foreclosed or abandoned homes and expand the community land trust model. The survey was conducted in February, 2009 of 230 community land trusts in 45 states. Respondents represented 1,930 CLT homeowners among 85 community land trusts in 32 states, including Washington, D.C.