Inclusiv Makes First Purchase of a Community Land Trust Loan
In 2022, Inclusiv Mortgage expanded its offerings to include the purchase of CLT loans from approved sellers who are working with local CLT properties. We are proud to announce that on Dec 7th 2023, Inclusiv bought its first CLT loan through Unitus Community Credit Union in Oregon. Unitus is doing it’s part to help under resourced people get into their own homes in partnership with Inclusiv Mortgage. We hope this will be the first of many. Inclusiv is also working with Bond CU in Atlanta, in conjunction with the Atlanta Land Trust and NuVista FCU in Colorado, and are hoping that these CLT loans will start rolling in sometime in 2024.
What are Community Land Trusts?
A Community Land Trust, commonly referred to as a CLT, is a nonprofit organization that acquires and holds land for the benefit of a specific community, usually low to middle income people. The mail goal is to provide affordable housing, promote community development and preserve land for community use while empowering these communities to have a stake in the long-term use of land in their area.
How do Community Land Trusts Work?
A CLT acquires land, either through purchase or donation with the intention of keeping it in trust for a long term. The land will either come with already existing properties or the land will have to be developed.
If no properties exist, the CLT can build houses in a number of ways:
- By collaborating with Developers who build the properties in alignment with the CLT’s mission for the houses to remain permanently affordable.
- Through self-development (i.e securing financing, hiring architects & contractors etc. while ensuring that it aligns with their goals).
- Through community involvement (i.e. gathering input from the community, organizing community workdays to help with the construction process or even using sweat equity programs where the community members help build the properties in exchange for affordable homeownership opportunities).
- Through government partnerships by working with local government organizations to access funding, tax incentives or other resources that can help support the development of the CLT.
If the CLT purchases land with existing properties, the CLT will rehab the properties if necessary and then sell the houses to individuals or families while the CLT retains ownership of the land itself, leasing it to the homeowners at a very affordable monthly fee for a long-term, renewable period, usually 99 years. The CLT places income restrictions on the qualifying borrowers and places restrictions on the resale price of the homes to ensure that they remain affordable for future buyers. Some CLTs also offer a shared equity model, where the homeowner and the CLT share in the appreciation of the property's value over time. This can allow homeowners to build equity while also ensuring that the home remains affordable for future buyers.
Benefits to Homeowners?
CLTs are designed to provide affordable housing options for borrowers who cannot afford typical market prices. When you purchase a property on CLT land, you are paying for the building but not the land itself, which significantly reduces the cost of the home. The land is leased back at very affordable rates, usually for a renewable term of 99 years. By placing restrictions on the resale price of the homes, the CLT ensures that it remains affordable for future buyers. Because the CLT retains ownership of the land, homeowners on CLT land don’t have to worry about escalating land costs or being displaced due to rising property values providing increased long-term stability and security.
Benefits to the Credit Union?
Overall, offering financing for CLT properties can help the credit union fulfill its mission, support community development, and contribute to positive social impact while also potentially providing stable and socially responsible investment opportunities.