Although not common, community land trusts have been established in many locations throughout the United States. Regarding community land trusts, FNMA Selling Guide B8-5-04 says:
“Mortgages secured by properties located on a community land trust are subject to a ground lease, which may include provisions that require the continued use of the property for low- and moderate-income families, and may limit the maximum sales price of the property.
Fannie Mae has developed a standard ground lease rider for community land trusts when the ground lease developed by the lessor is based on the model developed by the NCLTN or the ICE. In these instances, the lessor and the borrower must execute a Community Land Trust Ground Lease Rider (Form 2100) that was developed for use with the NCLTN 2011 CLT Network Model Ground Lease (or the ICE Model Ground Lease).
The purpose of the rider is to ensure that the ground lease conforms to Fannie Mae’s guidelines for community land trust mortgage loans without the delay that would result from the lender’s obtaining Fannie Mae’s approval of each ground lease. Fannie Mae’s approval is required, however, if the rider is modified or is not executed. In addition, if the lender determines that the ground lease does not conform to the NCLTN 2011 CLT Network Model Ground Lease or to the ICE Model Ground Lease, Fannie Mae’s approval of the ground lease is required prior to delivery of the mortgage loan(s). See B5-5.1-04, Community Land Trusts, for more information.”
To provide some support for clients who may be involved with community land trusts, Docutech has created a new Community Land Trust Ground Lease Rider that is based on the FNMA Form 2100 referenced above. The field used to trigger this new document (Cx23607) is “Community Land Trust Ground Lease Rider Indicator” (FI 137243).
Our new Community Land Trust Ground Lease Rider is available immediately. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.