Comment Detail

Comment

March 17, 2016
Alfred M. Pollard, Esq.
General Counsel
Federal Housing Finance Agency
400 Seventh Street SW, 8th Floor
Washington, DC 20024

Re: Comments/RIN 2590-AA27 — Proposed Rule on Enterprise Duty to Serve Underserved Markets

Dear Mr. Pollard,

The Minnesota Community Land Trust Coalition (MNCLTC) appreciates the opportunity to submit this comment letter on the Federal Housing Finance Agency’s (“FHFA") Proposed Rule on the Enterprise’s Duty to Serve Underserved Markets (“DTS”) established by the Housing and Economic Recovery Act of 2008 (“HERA").

The MNCLTC is a Community Land Trust is a ten organization member-based coalition collectively serving the vast majority of Minnesota low- and moderate-income households in their goal of achieving affordable homeownership across the state. Over the past 20+ years, the collective members have created over 1,200 permanently affordable homes across the state and have assisted well over 1,600 households achieve their homeownership dreams. MN Community Land Trusts have and continue to serve underserved populations at rates of two to five times the MN average. All of the MN Community Land Trusts would be considered as Shared Equity Homeownership. The MNCLTC mission is to Coordinate, support, and enhance the activities of Minnesota’s Community Land Trusts to provide permanently affordable access to homeownership for low-to-moderate income individuals and families.

We strongly support the incorporation of “shared equity homeownership” into the Proposed Rule as a Regulatory Activity under affordable housing preservation in “Preservation of Long-term Affordable Homeownership Through Shared Equity Programs—Proposed §1282.34 (d)(4).”

While Minnesota is fortunate to have a strong Housing Finance Agency and several larger banks with the ability to support a portfolio loan product accepting of Community Land Trusts, hundreds of low- and moderate-income underserved households in Minnesota have been left behind due to the inability to obtain a loan that might have been available if an FHA loan would have been an option. We can do better and households in our communities are counting on all of us to come up with a solution.

Many of the Minnesota Community Land Trusts are viewed as national experts on this topic and MN CLTs represent some of the largest Community Land Trusts in the nation. As representatives of shared equity homeownership programs across the country, we believe that FHFA successfully reviewed how shared equity homeownership is an effective strategy to preserve affordable housing that offers owner-occupancy opportunities to low- and moderate-income households. Studies have consistently found that shared equity homeownership programs:
1) help low- and moderate-income households attain and sustain homeownership,
2) have lower rates of delinquency and foreclosure among their owners than those in the conventional market, and
3) help their homeowners build wealth from owning a stable home,
4) preserve the affordability of these homes in order to serve initial and subsequent low- and moderate-income homeowners,
5) combat the adverse impact of gentrification by preserving this stock of affordable housing regardless of whether nearby housing values escalate, and
6) foster residential economic diversity by ensuring that this stock of homes remains accessible and affordable to low- and moderate-income residents.

Shared equity homeownership programs intend to keep homes affordable in perpetuity—sale over sale over sale. Consequently, we believe that it is important that FHFA correctly defines “shared equity homeownership programs” in order to tease out shared equity homeownership programs that preserve affordability from other affordable homeownership programs that not preserve affordability (e.g. down payment assistance, closing cost assistance, affordable owner-occupied homes with short-term restrictions). It is also important to define shared equity homeownership programs correctly to ensure that profit-making shared equity products or programs are ineligible under the Proposed Rule since these types of products or programs do not aim to keep homes affordable.

We firmly support that shared equity homeownership programs should ensure affordability for at least 30 years, maintain pre-emptive purchase options, monitor units, and support homeowners as noted in the definition. When homeowners sell their homes, shared equity homeownership programs then enter into a new legal instrument with a new term, which also ensures that these homes remain affordability. Hence, affordability terms that are longer than 30 years are not necessary to ensure that these homes remain affordable sale over sale. In Minnesota, Community Land Trusts ensure the affordability of the homes for at least 99 years through the use of a Ground Lease.

Members of the MNCLTC are also members of the Grounded Solutions Network (GSN). GSN, formerly the National Community Land Trust Network and the Cornerstone Partnership program of Capital Impact Partners, is a national nonprofit membership organization of community land trusts, nonprofits, government programs, and individuals that create and preserve inclusive communities and housing with lasting affordability. With representation in 46 states and the District of Columbia, our membership includes 150 nonprofits and local government programs and over 1,000 individuals, including housing practitioners, policy makers, advocates, and researchers. The MNCLTC is fully supportive of the comments and details made by GSN through their written comments made to this request for comments.

We appreciate the opportunity to submit these comments. Please do not hesitate to contact me or any of the MNCLTC members for any additional questions or comments. Thank you.

Sincerely,

Jeff Washburne
Board Chair
Minnesota Community Land Trust Coalition

Executive Director
City of Lakes Community Land Trust, Minneapolis
612-594-7147