source:
  type: guide
  id: usda-hb-3555-13.2
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.2 —
    Overview
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.2
    — Overview.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-13.2-full
  canonical_id: usda-hb-3555-13.2-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.2 — Overview
  type: do
  tags:
  - regulator-direct
  - usda
  - usda-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.2
      — Overview
    source_class: usda-handbook
    source_url: https://www.rd.usda.gov/sites/default/files/hb-1-3555_consolidated.pdf
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-05-25T14:10:13Z'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '13.2 OVERVIEW This section discusses processing requirements
      for guaranteed loans for dwellings that fall under special ownership types:
      Community land trusts, properties with restrictions on resale price, leasehold
      estates, Native American restricted land, and loans on Hawaiian Home Lands.
      Unless otherwise indicated in this section, the same basic requirements for
      loan guarantee approval discussed elsewhere in this Handbook applies to these
      loans. 13.3 LOANS FOR UNITS IN A COMMUNITY LAND TRUST [7 CFR 3555.206] Loans
      to finance the purchase of dwellings located on land owned by a community land
      trust may be guaranteed if the conditions described in this paragraph are met,
      and if the applicants and the property otherwise meet the requirements outlined
      in this Handbook. A. Definition A community land trust is defined as a private
      nonprofit community housing development organization that owns and leases land
      at affordable prices. A community land trust sells the property improvements
      (i.e., buildings, streets, sewers) that normally increase the land’s value,
      but leases the land under a long-term ground lease to low- and moderate-income
      households. The organization must: x Be organized under State or local laws.
      x Have no part of its net earnings benefiting any member, founder, contributor,
      or individual. HB-1-3555 (03-09-16) SPECIAL PN 13-2 Revised (05-05-25) PN 640
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. x Comply with financial accountability. x Maintain,
      through significant representation on the organization’s governing board, accountability
      to low-income community residents regarding decisions on the design, siting,
      development, and management of affordable housing. x Have its corporate membership
      open to any adult resident of a geographic area specified in the by-laws of
      the organization. x Be established to carry out all the following activities:
      x Acquire parcels of land, held in perpetuity, primarily for conveyance under
      long-term ground leases. x Transfer ownership of any structural improvements
      located on such leased parcels to the lessees. x Retain a pre-emptive option
      to purchase any such structural improvements at a price determined by a formula
      that is designed to ensure that the improvement remains affordable to low- and
      moderate-income people in perpetuity. The lender must ensure that the lease
      contains provisions for continued use of the land for low- and moderate-income
      housing. x The lender’s mortgage file must contain documentation that the community
      land trust has received local market acceptance, as evidenced by market acceptance
      of comparable community land trust projects in the area. x The lender must verify
      that the community land trust has broad-based community representation, and
      that the community land trust has a two-year record of providing affordable
      housing. B. Protection Of Lender Rights And Lien Position The relevant legal
      documents must contain language that ensures all restrictions relating to community
      land trusts will automatically and permanently terminate upon foreclosure or
      lender acceptance of a deed in lieu of foreclosure. Language that merely subordinates
      the restrictions to the mortgage is not sufficient. The restrictions also cannot
      be forced upon subsequent purchasers following resale by the lender. If the
      Lender acquires title to the home through foreclosure or acceptance of a deed
      in lieu of foreclosure, the Lender shall give the community land trust written
      notice of such HB-1-3555 (03-09-16) SPECIAL PN 13-3 Revised (05-05-25) PN 640
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. acquisition, and the community land trust shall
      then have an option to purchase the home from the Lender for the full amount
      owed to the Lender under the Mortgage. To exercise this option to purchase,
      the community land trust must give written notice to the Lender of the community
      land trust''s intent to purchase the home within thirty (30) days following
      the community land trust''s receipt of the Lender’s notice. The community land
      trust must then complete the purchase of the home within sixty (60) days of
      having given written notice of its intent to purchase. If the community land
      trust does not complete the purchase within this 60-day period, the Lender shall
      be free to sell the home to another entity. C. Appraisals A property located
      on a site owned by a community land trust must be appraised as a leasehold interest.
      D. Title Policy The leasehold estate must constitute real property, be subject
      to the mortgage lien, and be insured by a title insurance policy. Refer to title
      insurance policy requirements outlined in Chapter 16 of this Handbook.'
  judgment: false
