Like most community land trusts over the past few years, HLTSC has posted mortgage delinquency and foreclosure rates far below national averages. CLTs give lower-income people like Gibson an opportunity to become homeowners, using public funds, private donations, and municipal programs like inclusionary zoning to lower the purchase prices of homes. But CLTs do not stop there. Helping lower-income families attain homeownership is just the beginning; sustaining homeownership is the next step in order to realize the full social and economic benefits. For CLTs, post-purchase stewardship, which supports and protects homeowners against negative outcomes like foreclosure, is as important as their pre-purchase services that boost families into homeownership. As Connie Chavez, president of the National CLT Network (NCLTN) is fond of saying, “We are the developer that doesn’t go away.”
Until recently, CLTs had many stories to tell about successful interventions to prevent foreclosure, but little quantitative data to establish that stewardship works. That changed when the NCLTN, in partnership with Emily Thaden, an independent researcher at Vanderbilt University, surveyed 42 CLTs across the country to gather data on delinquencies and foreclosures. Delinquency and foreclosure rates among the sample of 2,173 mortgages held by CLT homeowners were compared to delinquency and foreclosure rates reported by the Mortgage Bankers Association (MBA) National Delinquency Survey. Findings showed that prime-rate MBA mortgage loans were 5.9 times more likely to be in the process of foreclosure than CLT mortgages at the end of 2009. MBA loans were also 4.3 times more likely to be “seriously delinquent,” defined as mortgages that are 90 days or more in arrears or mortgages in the process of foreclosure.
CLT delinquency and foreclosure rates are remarkably low compared to mortgages in general, but when two considerations are added, CLT performance becomes even more impressive. First, CLT mortgages are held by low-income households, which are more at risk for default and foreclosure than higher-income households. MBA surveys are based on outstanding mortgages regardless of income, so the difference between MBA and CLT rates would have been even greater if low-income MBA loan holders could have been isolated for comparison.
Second, the foreclosure crisis worsened in 2009, during which a foreclosure was filed on one in every 45 mortgaged homes. As delinquencies and foreclosures among MBA mortgages climbed, CLT mortgages continued to outperform the market. The rate of MBA prime mortgages in the process of foreclosure from the end of 2008 to 2009 increased by 1.43 percentage points, while the increase in the foreclosure rate among CLT mortgages was only .04 percentage points. The delinquency rate increased by 3.27 percentage points for MBA prime mortgages, but decreased by .36 percentage points for CLT mortgages. Emily Higgins, director of homeownership at the Champlain Housing Trust (CHT) in Burlington, Vermont, explains, “Our positive outcomes aren’t just because CLT homes are more affordable. Our homeowners have been hit by the economy just like everyone else. They succeed, in part, because we stand behind them.”