Foreclosures And Recession Fears

Posted in Foreclosures, January 24th, 2008 |

As foreclosure listings numbers increase so too do fears about impending recession. But man always rises to a challenge and the best example is types of housing known as the community land trust that is a harbour free from the foreclosure waves. In Boston can be found one such instance of a safe haven.

The story has its roots about 25 years ago in Roxbury near Dudley Square. The founders wanted to ensure the gains of their labours to be enjoyed by the residents of modest means for a long time. Community Land Trust that sells the houses to buyers but not the land on which the houses stand took the initiative.

What was once weedy land now sports 400 new houses. In it are small business complexes, growing organic vegetables used in local eateries and well cared for parks. Right next to it is a community centre costing $100 million is being built. The prices of houses in this area of Roxbury are 10 times more than Dudley Street Neighbourhood Initiative started in 1984. Those who want to stay in the community can buy the houses in it.

The best characteristics of house ownership is reflected in a community land trust – control, anticipation of mortgage costs, inheritability and creation of wealth. It is protected from speculators that improve upon the land by dispossessing the hapless underprivileged residents of the place. The occupant owns the house but the land belongs with the community land trust or CLT.

A non-profit group that acts as a monitor for the bigger community forms the CLT. A long-term lease is offered to the house owner who can sell it for a profit but not for a windfall, to the next lot of buyers who want to occupy affordable houses. Thus during critical hours like the present sub-prime crisis the house owners have a partner to share the problem. The result is that none of the houses on Dudley Street land has slipped into foreclosure although many of the owners have been served default notices. The trust lends a shoulder to lean on and works directly with the lenders to work out an amicable mutually satisfying settlement.

Nation wise only a fraction of CLT lands have gone into foreclosures. The trust has always stepped in to ward off the menace. Land trust seems to be the answer to the problem combining private ownership with community protection.