Financial Institutions

Why do Financial Institutions want to finance Community Land Trusts?

  • Low Risk: 10-15% of market foreclosure rate.
  • Expanding market of qualified borrowers.
  • Nationwide opportunity.
  • Borrower is provided with support and education in financial literacy, from the CLT.


Source: Stable Home Ownership in a Turbulent Economy:
Delinquencies and Foreclosures Remain Low in Community Land Trusts, Lincoln Institute 2011

CLTs are a great new opportunity for Banks and other financial institutions in Australia to expand the market that they serve.  Although they serve moderate income households, the track record of CLTs demonstrates an extremely low default and foreclosure rate.  Even at the most difficult time during the GFC, CLTs maintained a foreclosure rate around 1/10 that of market rate housing.  This is due to several reasons:  Borrowers are usually prescreened for debt ratios and reliable credit and income.  Borrowers are given extensive homeowner education and ongoing support in case of difficulty.  CLTs maintain the first right of refusal in case of default, so in case of imminent foreclosure, the CLT will either purchase the property outright or find a new buyer to take over the defaulted mortgage.  The bank retains its first mortgage and collateral on the property identical to other property.


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