Shared
appreciation
mortgages,
a
loan
product
that
gained
some
popularity
three
decades
ago
before
fading
away,
could
be
making
a
comeback
of
sorts
as a
tool
that
will
allow
local
communities
to
provide
affordable
housing
that
will
remain
affordable
over
time.
Shared
appreciation
mortgages,
or
SAMs
as
they
became
known,
are
loans
in
which
someone
puts
up
all
or
some
of
the
cash
for
a
home
buyer's
downpayment
in
return
for
a
portion
of
whatever
amount
of
appreciation
takes
place
in
the
value
of
the
property
between
the
day
it
is
purchased
and
the
day
it
is
sold.
In
the
1970s
and
'80s,
SAMs
were
used
as a
way
to
make
housing
more
affordable.
But
in
those
days,
it
was
often
a
friend
or
family
member
who
put
up
the
cash.
Now,
the
idea
has
resurfaced
in a
somewhat
different
form.
Now,
a
local
housing
authority
or
another
city
agency,
or
perhaps
even
a
nonprofit,
puts
up
the
dough
and
shares
in
the
profits
when
the
house
is
sold.
But
instead
of
pocketing
the
gain,
so
to
speak,
it
uses
the
profits
to
help
another
worthy
family
buy
a
house
or
keeps
the
return
in
the
house
so
it
remains
affordable.
That
way,
according
to
the
Center
for
Housing
Policy,
it's
"one
generation
helping
another."
Jeff
Lubell,
who
is
executive
director
of
the
Center,
calls
shared
equity
"a
unique
approach
to
affordable
housing"
because
it
permits
communities
to
provide
for
people
over
time
while
at
the
same
helping
families
build
individual
wealth
"in
a
predictable
and
potentially
life-altering
way."
In
return
for
providing
funding,
moreover,
the
public's
share
of
the
appreciation
can
be
used
in
one
of
two
ways
--
either
by
returning
it
to
the
government
in
the
form
of a
cash
payment
that
can
be
used
by
another
family
having
difficulty
raising
enough
money
for
the
downpayment
or
by
keeping
it
with
the
house,
thereby
reducing
the
cost
of
that
home
for
the
next
purchaser.
"By
sharing
the
gains
in
home
price
appreciation
with
the
public
investor,
shared
equity
results
in
substantial
benefits
now
and
for
years
to
come,"
says
the
Center,
which
is
the
research
arm
of
the
National
Housing
Conference
in
Washington.
"Home
buyers
benefit
from
a
substantially
lower
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home
price
and
the
opportunity
for
significant
home
equity
gains.
Local
communities
benefit
by
retaining
vital
workers
who
otherwise
couldn't
afford
to
live
in
the
communities
they
serve.
And,
by
ensuring
that
the
public's
investment
keeps
pace
with
the
housing
market,
shared
equity
strategies
allow
governments
to
help
generations
of
families
achieve
homeownership
with
a
single
initial
investment."
Another
term
for
shared
equity
is
"subsidy
retention,"
meaning
that
every
time
a
subsidized
owner
sells
his
house,
the
subsidy
he
received
is
returned
to
the
jurisdiction.
In
some
cases,
the
original
buyer
also
agrees
to
give
back
a
percentage
of
the
appreciation
in
the
house.
Consequently,
cities
and
counties
can
serve
more
families
with
the
same
amount
of
funds.
And
if
home
prices
rise,
they
get
back
more
money
so
there
may
be
no
need
to
increase
their
funding.
Or
at
least
by
not
as
much.
Say,
for
example,
someone
buys
a
$200,000
with
the
help
of a
$25,000
subsidy.
When
the
buyers
sells
five
years
later,
he
gives
back
the
subsidy
so
the
jurisdiction
can
use
the
money
to
help
someone
else
who
is
short
on
cash.
And
in
some
cases,
the
first
buyer
also
gives
back
some
of
the
gain.
So
if
the
$200,000
house
sells
for
$300,000
in
five
years,
a
percentage
of
the
gain
goes
back
to
the
city,
too.
Shared
appreciation
schemes
can
take
on
many
forms.
The
city
of
Santa
Cruz,
Calif.
collects
1
percentage
point
of
home
price
appreciation
for
every
percentage
point
of
the
purchase
funded
by
funded
by
its
second
mortgage
program.
In
Vermont,
the
Champlain
Housing
Trust
uses
an
appraisal-based
formula
in
which
the
seller
get
25
percent
of
the
appreciation
and
the
trust
gets
the
rest.
The
Center,
which
works
to
broaden
understanding
of
America's
affordable
housing
challenges
and
examines
the
impact
of
policies
and
programs
developed
to
address
these
needs,
has
worked
with
Rick
Jacobus
of
Burlington
Associates
to
develop
an
online
tutorial
on
shared
appreciation
and
several
programs
that
have
worked
for
various
localities.
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