A safer way to finance lower income borrowers

We have all seen what happens when homebuyers borrow more than they can sustainably afford. Shared equity homeownership allows lower income homebuyers to partner with a local government or community organization to bring the price of their home down to a level that they can truly afford. Affordable prices together with the ongoing “backstopping” support that most program sponsors provide for homeowners mean that loans to shared equity homeowners are far less risky than traditional mortgages. In fact a study by the National CLT Network found that Community Land Trust homeowners were far less likely to experience foreclosure than the average homeowner – in spite of their generally much lower than average incomes.

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  • Survey: Community land trusts lower risk of losing homes to foreclosure
  • Homeowners in community land trusts (CLTs) across the country are much less likely to lose their homes to foreclosure than owners of market-rate homes, according to survey results released by the National CLT Network and the Lincoln Institute of Land Policy. The new data show 2008 closing with a slight 0.52 percent foreclosure rate among […]

  • Commercial Mortgage Insight: Shared Equity Gains Acceptance
  • Picture 6This 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.

  • Fannie Mae: Guidelines for Resale Restricted and CLT Properties
  • 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.

  • WA Housing Finance Commission: CLTs Come of Age
  • picture-31The Washington Housing Finance Commission published this 8 page overview of Community Land Trusts in Washington and the growing role that they are playing in implementing the state's affordable housing goals. Kim Herman, Executive Director of the Commission and past president of the National Council of State Housing Agencies, writes ...

  • National Association of Realtors: On Common Ground
  • winter2008_cover_smThis article comes from the Winter 2008 issue of On Common Ground, a publication of the National Association of Realtors focused on smart growth issues. The article describes "a growing trend toward shared equity housing, a trend that, in the past few years, has taken on the momentum of a bullet train." The article profiles several shared equity homeownership projects including the Beecher Cooperative in Washington DC and Southern Lights a " a deed restricted housing project initiated by the Boulder Area REALTOR® Association."

  • Shared Equity Homeownership: the Changing Landscape of Resale-Restricted, Owner-Occupied Housing.
  • sharedequityhomecoverhis 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.

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