Shared Equity Homeownership offers local governments a way to use today’s investment in homeownership to build a lasting stock of affordable homes that will assist one family after another. Cities and counties around the country have developed a range of shared equity homeownership programs that offer homebuyers meaningful wealth building opportunities while, at the same time, ensuring that homes resell at affordable prices to one generation of homeowners after another.
A one time investment of affordable housing subsidy brings the initial purchase price within reach of low or moderate-income households. Upon resale an equity sharing formula provides a fair return to sellers while preserving the value of the public subsidy so that, in most cases, a new buyer in the same income category can be served without any new subsidy. Shared equity affordability restrictions can be imposed through a deed restriction or covenant, a Community Land Trust ground lease, a shared appreciation loan or a Limited Equity Cooperative structure.
- Commercial Mortgage Insight: Shared Equity Gains Acceptance
- Burlington Resale Study
- American Planning Association: Affordable Forever
- Fannie Mae: Guidelines for Resale Restricted and CLT Properties
- Montgomery County, MD Mandates Affordable Homes
This article from Commercial Mortgage Insight explains how mortgage brokers and lenders can participate in the growing trend toward shared equity homeownership. The greatest benefit of shared-equity ownership is that it presents the opportunity to both generate substantial wealth for individuals and allow communities to create a stock of permanently affordable ownership housing. Historically, the only housing options available have been renting or traditional homeownership, where the buyer reaps all the rewards of ownership, but also bears all of the burdens. More often than not, those burdens are too great for low- to moderate-income individuals.
This 2004 study of the first 100 home resales conducted by the Burlington Community Land Trust (now known as the Champlain Housing Trust) is the only formal study of program outcomes for shared equity homeownership completed to date. The study documents significant asset building outcomes for homeowners as well as success in preservation of affordability for future buyers.
This article from Planning Magazine profiles a number of community land trusts and describes how local planners are turning to CLTs as a means for preserving long term affordability of homeownership units.
Fannie Mae has developed a thoughtful set of guidelines that allow lenders to originate mortgages for buyers of shared equity homes. The guidelines are designed to protect the lender's security interest in the property right to repayment while still allowing local affordable housing programs to protect affordability for the longest term possible. The guidelines allow for resale price restrictions that survive foreclosure by the mortgage holder.
Montgomery County's Moderately Priced Dwelling Unit Program, one of the nation's first inclusionary zoning programs, has created over 12,000 affordable housing opportunities. The program preserves affordability of new homeownership units with a shared equity resale price restriction.
- Boston Globe: A Foreclosure Free Option
- The Times: British Shared Equity Housing Explained
- The City CLT Partnership
- Shared Equity Homeownership: the Changing Landscape of Resale-Restricted, Owner-Occupied Housing.
THE MORTGAGE CRISIS and the rise in foreclosures nationwide have left the American dream in tatters and may be sparking a recession. Yet a fast-growing form of housing - the community land trust - has become a virtually foreclosure-free safe harbor. One of the best examples of this fresh approach to putting a roof over people's heads is in Boston.
This short article from The Times of London provides an overview of the national 'shared ownership' program which has helped 95,000 families into homeownership in the United Kingdom since 1997.
Community Land Trusts can offer a stable institutional structure for long term stewardship and monitoring of affordable homeownership units. This report produced by the Lincoln Institute for Land Policy provides an overview of the Community Land Trust model for local and state government policymakers and outlines best practices among cities that have chosen to partner with land trusts to produce permanently affordable homeownership opportunities.
his 150 page report produced by the National Housing Institute (NHI) was the first to group together several models of resale restricted homeownership under the general term "shared equity homeownership." The report focuses on three models of housing tenure that use durable contractual controls to perpetuate the occupancy, eligibility, and affordability of homes that are owned and occupied by low- and moderate-income households: the community land trust, the limited-equity cooperative, and deed restricted housing with covenants lasting 30 years or more.