Research News

Defying national trends, delinquent mortgages and foreclosures remain low in community land trusts for 2009

Homeowners in community land trusts across the nation continue to have substantially lower delinquency and foreclosure rates than owners of market-rate homes, according to survey results released this month by Vanderbilt University researcher Emily Thaden in partnership with the National Community Land Trust Network .

“There’s a chance to turn crisis into opportunity by supporting CLTs to acquire foreclosed properties and
steward homeowners,” Thaden, a graduate student in the Center for Community Studies at Vanderbilt University’s Peabody College of education and human development, said. “Foreclosures hurt neighborhoods by contributing to increased crime rates and declining housing values. CLTs could be stabilizing forces in these neighborhoods.”

Community land trusts offer low-to-moderate income households the opportunity to buy homes at prices substantially below market rates, using a combination of public and private subsidies. CLTs provide pre-purchase education and support that prepare families for homeownership, and after purchase, CLTs provide ongoing stewardship services to backstop homeowners for as long as they own their homes. In exchange, homeowners agree to limit the appreciation they receive when they sell their home to keep it affordable to future generations of homebuyers. According to the National CLT Network website, there are currently over 200 CLTs encompassing 5,000 homes nationwide.

Results from the survey found that conventional homeowners were eight times more likely to be in the process of foreclosure than CLT homeowners at the end of the 4th quarter of 2009.

According to the Mortgage Bankers Association survey of market-rate mortgages, 4.6 percent were in the process of foreclosure, compared to only 0.6 percent of CLT mortgages. This represents a widening of the gap as compared to 2008, when market-rate homeowners were six times more likely to be in the process of foreclosure as compared to their CLT counterparts.

When the percentages of “seriously delinquent” mortgages for the end of 2009 were calculated (which includes delinquencies of 90 days or more and those in the foreclosure process), market-rate mortgages ranged from 5.4 percent to 30.6 percent (depending on loan types) compared to only 1.6 percent in CLTs. While market-rate delinquencies increased 1.3 percent to 7.5 percent from 2008, CLT percentages actually declined in that same period by 0.4 percent.

“What this data shows is that CLTs are clearly outperforming the market. Unlike foreclosure trends in the market, which hit all time highs during 2009, CLTs keep finding ways to safeguard their homeowners from foreclosure,” Roger Lewis, executive director of the National CLT Network, said.

The survey results were based on 2,173 mortgage holders in 42 CLTs across 22 states. The study also found that CLTs helped to prevent foreclosure for 51 percent of mortgages that were seriously delinquent during 2009.

The survey found that, for homeowners in trouble, 57 percent of CLTs were providing financial counseling and 72 percent were facilitating loan modifications with lenders. Over and above these activities, which are components of government-funded foreclosure prevention programs, approximately 50 percent of CLTs reported that they also try to rectify overdue mortgage payments to help owners keep their homes. And for those who are simply not able to hold onto their homes, CLTs facilitate short sales to prevent the adverse consequences of foreclosure.

The survey was supported with funding from the Lincoln Institute of Land Policy.

More information:

Center for Community Studies:
National CLT Network:
Lincoln Institute of Land Policy:

Media contacts: Melanie Moran, (615) 322-NEWS

Roger Lewis, National CLT Network, (503) 493-1000