Comment Detail

Comment

Thank you for the opportunity to comment on the GSEs’ Duty to Serve plans. These comments are focused on shared equity programs for affordable housing preservation.

The Virginia Statewide Community Land Trust was created in 2000 and has been a Fannie Mae Certified Shared Equity Program for the past year. Unlike many other CLTs that work in a single market, we operate in many markets across the state with varying degrees of industry knowledge about mortgage lending on CLT properties. As a result, marketing our program to lenders has been a significant activity for our organization over the past several years.

In theory, becoming a Certified Shared Equity Program would have opened up many opportunities to work with lenders using Fannie Mae mortgage products. In reality, many of the lenders we have approached have had little interest in working on this relatively new, complex and small-scale program. So even though the mortgage products offered by Fannie Mae and Freddie Mac in the secondary market may be very good, the mortgage origination system is not yet working for this underserved market beyond a few niche lenders.

In Virginia, we are fortunate to have a program run by Virginia Housing that has been making some progress in this area by recruiting a growing list of lenders to participate in their CLT Property Pilot Program, in partnership with Fannie Mae. Virginia Housing staff are able to provide education and support to lenders as they become more familiar with the CLT housing model. This more proactive approach working with an intermediary that provides hands-on assistance seems to be a good fit for the current stage of CLT mortgage lending.

Based on our experience, we recommend the following:

- Expand outreach and education to mortgage originators, either directly or through intermediaries with strong ties to mortgage originators.
- Support continued research on shared equity and CLT housing models to build the knowledge base on this growing field of work.
- Continue improving and standardizing the mortgage products offered for CLTs to adapt to the specialized market in which they operate. For example, some nonprofit housing organizations use soft second mortgages as a tool to improve affordability for buyers, but these seller-affiliated mortgages are not allowed by both GSEs.

The shared equity housing model, and CLTs in particular, has tremendous potential to provide permanently affordable homeownership opportunities that can reduce homeownership disparities and racial wealth gaps. Bringing these models to scale requires building capacity within all elements of the housing industry, a role that Fannie Mae, Freddie Mac and FHFA can play with sustained effort through the Duty to Serve programs.

Thank you,
Michelle Winters
CEO, Virginia Statewide Community Land Trust