Wake up Fannie, I think I got something to say to you: financing community land trust homebuyers without stripping affordability provisions

Individual homeownership, the backdrop of the American Dream, is often cited as a panacea of economic and social stability. Investment in and control over one’s “castle,” the story goes, creates neighborhoods and communities of involved, committed residents. Besides providing a stable place to live, homeownership allegedly serves as an important element of wealth accumulation and its expansion, especially among marginalized populations, has been a major goal of economic and social policy for decades. However, the recent foreclosure crisis and related economic collapse exposed vulnerabilities in the developed system of homeownership and mortgage financing—vulnerabilities so deep that they have left whole neighborhoods abandoned, and shaken economic stability across every income bracket. As a result, some analysts have begun to seriously question the virtues of—and sometimes to blame—policies that incentivize homeownership for people who traditionally cannot afford it. This Comment presents an existing model of affordable homeownership that has weathered the housing collapse with astounding resilience: the Community Land Trust (CLT). The CLT model aims to create communitybased, affordable housing available in perpetuity. This Comment outlines the concepts and structures that underlie CLT affordability, exploring how the model operates within the context of American homeownership. In particular, it examines the tensions between the CLT model and the mortgage industry, focusing on the crucial but often difficult process of obtaining CLT homebuyer financing. Ultimately, the Comment suggests changes to the Fannie Mae CLT Uniform Mortgage Rider, an instrument originally developed to encourage lenders to loan money to CLT homebuyers, but which threatens the fabric of CLT resilience by stripping the model of its affordability provisions. The proposed changes suggest that these provisions survive foreclosure, lending stability to the CLT model and acknowledging the demonstrated resilience of CLT borrowers in the recent housing collapse.