Why You Should Give Up Your Land
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Why You Should Give Up Your Land
Community land trusts can prevent foreclosures, yet few use them.
Posted Tuesday, April 14, 2009 - 10:46am
But even with these protections, some homeowners in CLTs have fallen on hard times, and it is here that the trusts perform their last protection. Take the Chicago Community Land Trust. A few months ago, its director—Dena Al-Khatib—got a call from one of the trust's homeowners who had lost her job and knew she wasn't going to be able to make her mortgage payments. The woman had tried talking to her bank, but they were unwilling to cut her any slack. So the Chicago CLT intervened on her behalf, encouraging the bank to temporarily cut her payments. This time the bank responded. The woman was able to keep her home, where she lives to this day.
But if community land trusts work so well at staving off foreclosures, why aren't there more of them? Four decades after their founding, there are only about 200 CLTs, encompassing approximately 6,000 dwellings, nationwide. What's stopping them from becoming the new model for American homeownership?
Partly, it's that CLTs require people to work together. The first CLT was founded in 1968—the year of the Prague Spring, student uprisings in Paris, and riots at the Democratic National Convention. It was a time when radical movements challenged hierarchical structures, and that sensibility is reflected in the collective decision-making structure of CLTs, which empowers communities to work with the government and lenders in plotting their own development.
Yet while community participation is one of the trusts' greatest assets, it has also slowed their expansion. Michael Wadman—vice president of the Phipps Houses Group, a nonprofit housing developer based in New York—explains: "Look at any co-op board in any city. When you have a whole lot of people making decisions together, it may have that feel-good quality, but it can be difficult getting there."
Running a CLT also requires a lot of expertise. Staff and boards have to navigate complex laws and regulations involving zoning, tax codes, and shared finances, all while managing development and tricky public-private partnerships. There just aren't many people around with the know-how—to say nothing of the patience—to take this on.
And some say that the biggest obstacle to scaling up CLTs nationwide is more money.
(Photograph of a foreclosure sign by Justin Sullivan/Getty Images)
Comments
Reply from an Oregon community land trust
I am a member of the 10-year old Community Land Trust in Clackamas County, Oregon (suburban Portland). We, too, know a homeowner like the one you described in Chicago who went to the CLT, which intervened and helped her to work out a solution with her lender. Many of us at CCLT especially appreciated the article's insights on foreclosures and the buffer CLTs provide against them. We think that's a great argument for municipalities and lenders to throw more support to CLTs. We want to make a couple points: 1. In Clackamas, we're anxiously awaiting almost $900,000 in federal Neighborhood Stabilization Program funds, and we're ready to buy foreclosed homes in the community when we get it. Mr. Steinberg wrote that CLTs have been passed over by federal stimulus programs. It's true there isn't a set-aside spelled out in a piece of legislation, which is certainly a missed opportunity by lawmakers. But CLTs have long been recognized and defined by the federal government (in the policies of FHA and Fannie Mae). 2. To respond to the source from the Urban Land Institute who said no matter how successful a CLT is, Americans still probably won't go for it: We understand and believe in the American Dream. We know why people want to own a home and we want to help them get there. We want people who sell their CLT home and have the ability to purchase in the conventional market to do so. We would never tell anyone who has the means to buy their home and their land not to: we're not against private land ownership in any way. I know this ULI official wasn't saying that, but I think it's important to point out. Often we have to explain this. We think a lot about the "path to homeownership" at our organization. We're also convinced, however, that shared equity ownership like the CLT model is a safer way to promote homeownership among people of lower-incomes than the policies of the past 10-15 years. That's what got us into this big economic mess we're in. Research shows there's an increase in the public's willingness to consider shared equity (or shared appreciation, deed restricted, etc.) housing options like CLTs when traditional market ownership is out of reach for them. We have 31 homes in our trust that have served 37 homebuyers of lower incomes, and many hundreds of people have attended our homebuyer education program to receive unbiased information about mortgages and lending. We think the best way to fight harmful lending practices is by arming people with the knowledge they need to be successful; that's also why we provide financial education and instruct people on the need to make savings and spending plans. Thanks for the article.