“During every community land trust homebuyer education class, I’ve looked each person in the eye and told them, ‘When your financial circumstances change — good or bad — you call me.’ I didn’t know the weight of my words until recently,” says Devika Goetschius, executive director of the Housing Land Trust of Sonoma County (HLTSC) in Petaluma, Calif. Amid the worst foreclosure crisis since the Great Depression, she’s discovered that HLTSC’s homebuyers took her words to heart. They have been quick to alert HLTSC to financial difficulties that could threaten the security of their mortgages, allowing HLTSC to be quick to act to prevent foreclosures.
Mary Gibson’s story is typical. (All homeowners’ names have been changed.) In January 2008, she bought a home from HLTSC for herself and her two children. Shortly thereafter, her ex-husband lost his job and could no longer pay child support. Without this income, Gibson realized that keeping up with the mortgage would be difficult, if not impossible. She immediately called Goetschius.
As with all community land trusts (CLTs), HLTSC retains ownership of the land underlying Gibson’s home and holds an option to repurchase the home at a below-market price determined by a specific formula if Gibson ever sells. HLTSC is also a party to Gibson’s mortgage, with a durable right to cure any default that might occur, arresting the slide toward foreclosure. In short, HLTSC remains in the picture, with an abiding interest in safeguarding Gibson’s success as a newly minted homeowner.
When informed of Gibson’s circumstances, Goetschius was prepared to do what was necessary to keep her in her home. Goetschius asked Gibson to come down to HLTSC’s office, reviewed her family budget, and explained the available options. “Mary would never have known that the state financing agency recently changed a policy that cut through red tape so she could refinance her first mortgage,” Goetschius recalls. “We walked her through all the paperwork, helped her write letters to her lenders, and completed a rate-and-term refinance before she defaulted. She’s still in a 30-year, fixed-rate mortgage and her payments are now affordable to her again.”