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Outperforming the Market

Delinquency and Foreclosure Rates in Community Land Trusts

Emily Thaden

October 2010, English

This study examines the rates of delinquencies and foreclosure filings in mortgages that were held by households who owned homes in Community Land Trusts (CLTs) during 2009. A survey was administered to U.S. CLTs, yielding a sample of 42 CLTs that represented 2,173 owner-occupied, resale-restricted mortgages. The survey was designed for comparisons with the Mortgage Brokers Association National Delinquency Survey. Results indicated that CLT loans outperformed MBA loans on all comparable delinquency and foreclosure measures. To better understand the outcomes of 2009 CLT loans, the survey gathered information on the prevalence of stewardship activities conducted by CLT staff. The majority implemented pre-purchase education, post-purchase support, high-risk loan prevention, and delinquency detection and intervention. While findings support the efficacy of homeownership in CLTs to preclude delinquencies and foreclosures, results also found that a minority of CLTs received external funding to expand or support their work.

  • MBA prime loans were 4.3 times more likely to be seriously delinquent on December 31st, 2009 than CLT mortgages (defined as 90 days or more delinquent on in the process of foreclosure).
  • MBA prime loans were 5.9 times more likely to be in the process of foreclosure on December 31st, 2009 than CLT mortgages.
  • Rates of serious delinquencies and foreclosure filings were consistent across 2008 and 2009 in CLT loans while MBA rates increased.
  • CLTs cured or helped to cure 51 percent of mortgages that were ever seriously delinquent during 2009.
  • The high prevalence of comprehensive stewardship practices—spanning education, prevention, and intervention activities—may help to explain the low rates of delinquencies and foreclosures and high cure rates in CLTs.
  • Only 1 out of 3 CLTs received external funding for foreclosure prevention activities during 2009.
  • Only 1 out of 3 CLTs received any funding to acquire foreclosed or vacant properties during 2009.