1. Vermont Shared Equity Program
Presented by Bruce Whitney
Lending and Shared Equity Manager, Windham & Windsor Housing Trust
November 2, 2017

2. WWHT uses Shared Equity
What’s in a name?
Homeland
Community Land Trust Model
Shared Equity
Shared Appreciation
WWHT uses Shared Equity

3. Program basics Program began in 1991
A pool of grant funds (subsidies) are held and distributed annually by the Vermont Housing and Conservation Board (VHCB)
Distributed to 9 Vermont non-profit organizations
Used to subsidize the purchase of single family homes throughout the state
One time investment from State of Vermont upon initial purchase
Subsequent re-sales remain affordable
Subsidy rolls over to the next buyer
Seller ‘shares’ a portion of the equity with the next buyer

4. VT’s Housing Crisis - Ownership
Affordability gap: The median household income in Vermont is $51,566. That income would be enough to purchase a home in the neighborhood of $163,000.
Median priced home in Vermont for is $190,000 for condominium; $200,000 for single family home; and $270,000 for new construction home.
A Vermont household would need an annual income of $63,000 as well as $14,000 in cash to purchase a $200,000 home.
61% of Vermonters have incomes below $63,000

5. Affordability over the years

6. 9 participating non-profits
Addison County Community Land Trust
Champlain Housing Trust
Downstreet Housing & Community Development
Rural Edge
NeighborWorks of Western, VT
Shires Housing
Twin Pines Housing
Windham & Windsor Housing Trust

7. Who can participate Mortgage Ready Buyers
Minimum/Maximum Asset Requirements
Incomes up to 120% of Area Median Income (AMI)
This varies among the programs
Households intending to occupy the home year round
Those who have completed a Home Buyer Education Program

8. 120% Median Income Limit Example 2017
Household Size
Maximum Income Windham County
Maximum Income Windsor County
Maximum Income Vermont 1
$55,188
$60,984
$58,212 2
$63,072
$69,696
$66,528 3
$70,856
$78,408
$78,844 4
$78,840
$87,120
$83,160 5
$85,147
$94,090
$89,813 6
$91,454
$100,059

9. Program details
VHCB provides grants of 20% of the purchase price UP TO $44,000
Grant serves as down payment
Buyers avoid PMI
Buyers enjoy lower monthly mortgage costs
Non-profit retains ownership of land, buyer takes ownership of the leasehold improvements.
Ground lease give owner full rights and responsibility for the use of land
Ground lease fee
Owners pay taxes on land

10. No free Lunch Upon re-sale, subsidy is passed on to next buyer
Seller ‘shares’ 75% of their equity with program/next buyer
Must live in the house year round

11. So how does it really work?
1. Value At Purchase:
Original value $200,000
Subsidy ,000
Net Price $160,000
3. Sale Price Back to Program Original Purchase Price $200,000 Plus 25% of appreciation 12,500 Minus Original Grant 40,000 Seller’s Option Price $172,500
2. Calculating Equity
New Value $250,000
Original Value ,000
Appreciation $50,000
% of Equity X
Owner Equity $12,500
4. Price to New Buyer
Purchase Price $172,500
Transaction Fee $ 7,500
Total $180,000
Market Value $250,000
Original Subsidy ($ 40,000)
Shared Equity ($ 30,000)
NET PRICE $180,000

12. Who benefits? Seller Next Buyer Community
Lower monthly costs for duration of homeownership (Mortgage Payment, No PMI, Lower Taxes)
Increase wealth
Possible graduation to market rate housing
Next Buyer
All of the above
25% increase in value of home
10% increase in price of home
Community
Retention of younger families
Minimal community investment
Community character of housing is preserved
Economic Diversity is maintained

13. Two ways to participate
Buyer Driven
Buyer Qualifies
House Qualifies
All major systems in good working order
Structurally sound
Broad marketability
Right priced
Re-sales
WWHT Underwrites new buyer
WWHT Coordinates closing

14. Marketing re-sales Online Marketing (Trulia, Realtor.com, Zillow)
Organizational Website
Facebook Ads
Craig’s List
blast to Stakeholders, graduates of HBE program
Sometimes newspaper ads

15. Vermont shared Equity homes
County
# of homes
Addison 69
Orange 25
Bennington 28
Orleans 4
Caledonia 1
Rutland 43
Chittenden
550
Washington
132
Franklin and Grand Isle 61
Windsor 84
Lamoille 11
Windham 85
Totals
1,093

16. Permanent Affordability
CLT has 1st option to purchase
Option price set by resale formula in land lease (SFH) or deed restriction by covenant (condo)
Formula balances a fair return for current homeowners with creating affordability for future homeowners
The CLT takes a fee at resale –provides revenue stream
CLT resells to another eligible household at an affordable price
Formulas can be appraisal-based, index-based, or mortgage- based (WWHT uses appraisals)

17. Example: Brookline VT Year Appraised Value Original Grant
Shared Equity
NET price to buyer
1993
$80,000
$12,000 NA
$68,000
2000
$88,000
#1 - $4,500
$71,500
2005
$180,000
$17,000
#1 – 4,500
# ,800
$93,300

18. Marsh Drive: Appraised Value and Net Price

19. Example: Circle Drive, Chester
Year
Appraised Value
Original Grant
Shared Equity
NET price to buyer
1995
$80,000
$17,000 NA
$63,000
2005
$109,000
#1 - $15,210
$76,790
2017 For Sale
$139,000
#1 – 15,210
# ,590
$94,200

20. Circle Drive: Appraised value and Net Price

21. Proven results
2009 Davis & Stokes “Land in Trust: Homes That Last”
Champlain Housing Trust homes become more affordable over time! Permanent affordability = deeper affordability. Average home, affordable to 56.6% AMI at initial sale, was affordable to 53.4% AMI at resale
Neighborhood stability: 96.7% of 465 units of housing developed by CHT between 1984 and 2008 has remained owner-occupied and permanently affordable

22. Proven results
2009 Davis & Stokes “Land in Trust: Homes That Last”
67.4% of WWHT homeowners went on to buy market-rate housing
Rate of return for homeowners out performs investing in the stock market.
Of 465 buyers over past 25 years, only 9 land trust loans went through foreclosure and all were saved and eventually sold to another buyer with a subsidy