CLTs and foreclosures

Unfortunately, foreclosures remain very common in the US. However, community land trusts have a remarkably low foreclosure rate.

According to a survey(1) of 42 CLTs in 22 states with a total of 2,173 residential properties:

  • In 2009, the height of the foreclosure crisis, 1 in 45 housing units nationwide had a foreclosure filing. You did not misread that; 1 in 45 housing units (not mortgages) had a foreclosure filing.
  • For CLTs in the survey, the median number of foreclosures was 0 with overall rate of 0.56%
    • This was 5.9 times lower than nationwide prime loan rate and 27.8 times lower than nationwide subprime loan rate
  • CLTs also had very low rates of people falling behind on their mortgage payments. Median number of 90+ day delinquencies was 0 with overall rate of 1.26%
    • This was 5.8 times lower than FHA home loans and 18.9 times lower than nationwide subprime loans
  • When CLT homeowners fall behind on a mortgage, CLTs help them get caught up (this is called “curing” a mortgage delinquency). Of all 90+ day delinquencies of CLT homes in 2009, 51% were successfully cured. However, in 2009, not all CLTs were using current best practices; more cures would have been possible using current best practices.
    • Meanwhile, in 2009, just 6.6% of prime home loans cured and 5.3% of subprime loans cured. However, many of these “cures” were not really cures, since homeowners got current on their mortgage by taking out another loan with monthly payments they could not afford.

The community land trust model has proven effective at ensuring program participants are in a sustainable housing situation. CLT homeowners almost never lose their home to foreclosure.

 

 

 

 

 

1. Thadden, Emily (2010). Outperforming the Market: Making Sense of the Low Rates of Delinquencies and Foreclosures in Community Land Trusts. Lincoln Institute of Land Policy.

Thadden created a survey for CLTs based in part on the Mortgage Bankers Association National Delinquency Surveys, as well as on existing public datasets so that the survey results would be directly comparable to the overall mortgage market. She administered a very similar survey the following year and found similar results:

Thadden, Emily (2011). Stable Home Ownership in a Turbulent Economy: Delinquencies and Foreclosures Remain Low in Community Land Trusts. Lincoln Institute of Land Policy.