Agenda - 09-01-2009 - 4c - Laserfiche WebLink

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W ORANGE COMMUNITY HOUSING m LAND TT2UST Board of Directors Jinr Trrcler President Mnn~ Bratscl+ Vice President Lisa bn++nu Secretary Michael Hmrsen Treasurer John Cooper Lnrrrir+ Errstl+ou+ Grtn~ Giles Jncquel~n Gist Brimr Lowers Miclrrtel Nelson Barre RnnLer~ Mangy Jemr Seyrta RoLcrt Dowling Executive Director Funding Provided by: Torun of Chapel HiIT Orrnrge County Town of Crrn•Goro Torun of Hillsborouglr PO Sox 307 I04 Jones Ferry Road Suite C Carrboro, NC 27510 919.967.1545 Fax 419.968.4030 www.ochlt.are Date: May 9, 2009 To: Tara Fikes and Loryn Clark From: ~,,~ Robert Dowling, Orange Community Housing and Land Trust Re: '- Use of the Fannie Mae Uniform Community Land Trust Ground Lease Rider Background about the Fannie Mae Uniform Community Land Trust Ground Lease Rider The Community Land Trust model which we use in Orange County is part of a larger model and movement in use throughout the United States. There are currently over 200 Community Land Trusts (CLTs) operating in 33 states throughout the country. All of these CLTs create permanently affordable homeownership opportunities by using a ground lease and selling the homes as "leasehold estates" rather transferring fee simple title to the property. Because the leasehold estate form of homeownership is unusual in the United States, it has been somewhat difficult for CLTs to find lenders who are willing to make mortgage loans for CLT leasehold homes. In the past, the greatest roadblock to lender comfort with CLTs was the fact the Fannie Mae would not buy mortgage loans made against CLT homes. This meant that lenders had to "shelve" these loans, or hold them in house until the loan was paid off or the borrower sold their house. In general, banks do not like to shelve loans; they much prefer to sell them on the °secondary mortgage market", which in most cases means selling them to Fannie Mae. In 2002, Fannie Mae solved this problem for CLTs by releasing the "Uniform Community Land Trust Ground Lease Rider". When a CLT attaches this rider to its ground lease, it adjusts the terms of the ground lease so that they are acceptable to Fannie Mae. Fannie Mae will then buy mortgage loans which include the Fannie Mae Rider. On a national level, the Fannie Mae Rider has greatly increased the numbers of lenders willing to originate loans for CLT homes.