Market-rate home mortgages are six to eight times more likely to be in foreclosure than Community Land Trust mortgages

Site Search
About us |
Quiénes somos |
A propos de nous | Über uns |
Code of Ethics
Mayor Monitor

Mayors explore guaranteed income targeted at low-income Americans

Community Land Trusts
Fiscal control boards in the US
US bankrupt cities
Local government finance - USA
US cities finances
US subprime mortgage crisis
NC local government finance
Municipal bonds
US cities' legal powers
Politically neglected US cities
US community grant eliminated
Local government mergers
Large US cities hardest hit by recession
Metro job growth in the US
Poverty in US cities

City Mayors reports news from towns and cities around the world. Worldwide | Elections | North America | Latin America | Europe | Asia | Africa | Events |

Mayors from The Americas, Europe. Asia, Australia and Africa are competing for the annual World Mayor Award. More

City Mayors ranks the world’s largest as well as richest cities and urban areas. It also ranks the cities in individual countries, and provides a list of the capital cities of some 200 sovereign countries. More

City Mayors reports political events, analyses the issues and depicts the main players. More

City Mayors describes and explains the structures and workings of local government in Europe, The Americas, Asia, Australia and Africa. More

City Mayors profiles city leaders from around the world and questions them about their achievements, policies and aims. More

City Mayors deals with economic and investment issues affecting towns and cities. More

City Mayors reports on how business developments impact on cities and examines cooperation between cities and the private sector. More

City Mayors describes and explains financial issues affecting local government. More

City Mayors lists and features urban events, conferences and conventions aimed at urban decision makers and those with an interst in cities worldwide. More

City Mayors reports urban environmental developments and examines the challenges faced by cities worldwide. More

City Mayors reports on and discusses urban development issues in developed and developing countries. More

City Mayors reports on developments in urban society and behaviour and reviews relevant research. More

City Mayors deals with urban transport issues in developed and developing countries and features the world’s greatest metro systems. More

City Mayors examines education issues and policies affecting children and adults in urban areas. More

City Mayors investigates health issues affecting urban areas with an emphasis on health in cities in developing countries. More

City Mayors examines the importance of urban tourism to city economies. More

City Mayors examines the contributions history and culture make to urban society and environment. More

City Mayors describes the history, architecture and politics of the greatest city halls in the world. More

City Mayors invites readers to write short stories about people in cities around the world. More

City Mayors questions those who govern the world’s cities and talks to men and women who contribute to urban society and environment. More

City Mayors profiles national and international organisations representing cities as well as those dealing with urban issues. More

City Mayors reports on major national and international sporting events and their impact on cities. More

City Mayors lists cities and city organisations, profiles individual mayors and provides information on hundreds of urban events. More

Even Community Land Trusts affected
by American cities’ financial problems

By City Mayors’ Special North American Correspondent

26 February 2011: Mayors in at least 100 municipalities in the United States, from Bridgeport, Connecticut to Los Angeles, California, are openly contemplating bankruptcy. The cities’ financial problems result fundamentally from widespread home mortgage foreclosures that have reduced property values and consequently the amount of property taxes local governments can collect.

The sharply reduced revenues make it difficult for cities to meet obligations such as pension and health care costs for employees and bond debt payments. The New York Times recently reported that the housing crash has spread for the first time to metropolitan areas with the strongest economies, such as Seattle, Minneapolis, and Atlanta.

Some of the most stable owner-occupied housing in the US is located in the poorest urban neighborhoods and operated by Community Land Trusts (CLTs). According to a new study, mortgages held by Community Land Trust homeowners have a significantly lower risk of delinquency and foreclosure than comparable market-rate mortgages.

However, many Community Land Trusts are struggling because of the recession, and their ability to continue to outperform the market, and in some cases survive, is in question.

Community Land Trusts
The first Community Land Trusts were created in the 1970s by grassroots activists to provide affordable housing for low-income individuals and families and to re-use abandoned city buildings. Although different CLTs use slightly different approaches, the general model is for the non-profit trust to own the land and lease it for a nominal fee to individuals and families who own the home on the land. The home is built with public subsidies and sold at a below-market rate to income-eligible buyers. The lease contains a provision limiting the profit a homeowner can make on the re-sale of the house, thus ensuring that it remains affordable to the next buyer without the need for additional subsidies.

Homeowners become members of the Community Land Trust and have input into how it operates. Some CLTs partner with other organizations to offer programs, such as preserving open space and creating economic opportunities for low-income residents in city neighborhoods. Membership in a CLT also requires homeowners to participate in mandatory training on stewardship activities like home maintenance and how to be a good neighbor, as well as personal financial counseling. Interventions by a CLT to prevent foreclosures may go beyond education and counseling. Many trusts provide rescue funds, pay a mortgage until resale, or even purchase a home to avoid default or foreclosure.

Over the past ten years, the number of Community Land Trusts in the US doubled to over 200, as local governments increased their support. Mayors such as Richard Daley of Chicago and Beth Krom of Irving, California became notable supporters of Community Land Trusts. The CLTs offer long-term housing affordability and long-term neighborhood stewardship, both of great value to local governments. Despite their effectiveness and, in some cities, prominent support, Community Land Trusts are generally not well known. Most CLTs are small, accounting for a total of about 6,000 dwelling units nationally.

Defying the trends
According to a study published by the Lincoln Land Institute, market-rate home mortgages were six times more likely to be in foreclosure than Community Land Trust mortgages at the end of 2008. By the end of 2009, the gap widened and conventional mortgages were eight times more likely to be in foreclosure. CLT mortgages were also less likely to be delinquent than conventional mortgages. While the number of market-rate mortgage loans that were delinquent more than 90 days increased 1.3 per cent to 7.5 per cent between 2008 and 2009, the number of seriously delinquent Community Land Trust mortgages declined 0.4 per cent to 1.6 per cent.

The ability of Community Land Trust homeowners to defy national economic trends is impressive considering that they have low-incomes (less than 80 per cent of the area median income), often lack health insurance, and are generally more susceptible than middle- and upper-class individuals to unemployment and health problems.

The study concluded that the “extensive stewardship of Community Land Trust homeowners appears to contribute to the low rates of delinquency and foreclosure.” But the study also found that the current recession has placed many CLTs under considerable stress. Most Community Land Trusts, according to the study, have had to “expend more resources on delinquency and foreclosure prevention stewardship.” Moreover, stricter national mortgage rules make it more difficult to qualify potential buyers for financing than in previous years, and, in some markets, declining home prices place Community Land Trusts in competition for buyers with lower-cost, market-rate-homes.

Funding for pre- and post-purchase homeowner education and training, as well as the more intensive interventions of Community Land Trusts, typically come from private donations, foundation funds and, mostly, city and state grants.

Funders view Community Land Trusts as cost-effective means of promoting family and neighborhood stability. Stable neighborhoods provide reliable property tax revenues and require less spending for police and fire services, demolition of vacant properties, and fees to process foreclosures. Community Land Trusts operate primarily in low-income and minority neighborhoods, helping to lessen racial disparities.

While most mayors continue to call bankruptcy protection for their cities a last resort, they are desperate for relief from financial difficulties. Mayors are cutting spending for a wide range of services that impact the quality of life of their communities, including infrastructure and public works, public safety, and parks and recreation. They are trying to freeze wages and cut pension and health care benefits for employees and retirees.

These financial challenges explain why mayors and others find it difficult to increase or even maintain support for Community Land Trusts. The study found that most land trusts are “not sufficiently resourced” to meet the stewardship needs they face.

Community Land Trusts have been a bright spot in low-income neighborhoods over the past ten or twenty years. Because most CLTs are small, they flew under the radar screen in good economic times - quietly and efficiently providing stable, affordable housing, and growing slowly. Now, the message of their success is being drowned out by other voices petitioning city governments for financial support in a challenging economy. Many Community Land Trusts are struggling to survive, adding to the challenges of urban America.

Reference: Emily Thaden. Outperforming the Market: Making Sense of the Low Rates of Delinquencies and Foreclosures in Community Land Trusts. Lincoln Institute of Land Policy, 2010.

World Mayor 2023