Despite federal financing shakeup, land trust model offers some protections to keep affordable housing secure
Published 1:30 am Sunday, July 12, 2026
Federal changes to mortgage financing have forced San Juan County’s affordable housing partner, OPAL Community Land Trust, to adjust how some of its homes are financed, according to discussion at the Eastsound Planning Review Committee meeting held July 2. In an email reply to the Islands’ Sounder, OPAL Executive Director Lisa Byers confirmed several details and added context to other points brought up at the meeting. Byers did not participate in the meeting.
According to San Juan County Council member Justin Paulsen, OPAL had come to the County Council asking to modify its housing assistance contract, a request he attributed to the breakdown of OPAL’s USDA financing. According to Byers, the request was not related to the USDA, but instead stemmed from a new requirement from Fannie Mae and Freddie Mac concerning county and state affordability covenants.
According to Paulsen, OPAL’s affordability protections were part of a “USDA model,” under which OPAL had been able to write a lifetime, or 99-year, affordability covenant into a home’s deed because of its USDA financing. According to Byers, the affordability protections are not tied to USDA at all, but instead come from OPAL’s community land trust model, which operates independently of any single mortgage lender. Under the CLT model, Byers explained, OPAL acquires land debt-free, using grants and donations, and commits to holding that land permanently. OPAL then leases the land to homeowners, nonprofits or businesses under 99-year ground leases. For a homebuyer, the lease passes on the rights and responsibilities of traditional homeownership along with additional provisions: buyers purchase the house — not the land — at a price substantially below the cost of delivering it, and a formula built into the lease caps the future resale price, allowing the affordability to “pay forward” to the next buyer while the seller still receives a modest equity gain. Byers said about 80% of OPAL’s homes carry funder-based income restrictions, while the remaining 20%, funded by private donations, are unrestricted; homeowners must live in the house and may not sublet or profit from renting it.
According to Byers, until 2025, USDA loans financed about 60% of OPAL’s homebuyers and were the best available option for lower-income households — those at or below 60% of the area median income. She said the USDA is no longer viable, because its mortgage processing times now stretch to three years or longer — a slowdown tied to federal-level changes, as Paulsen also said.
According to Paulsen, OPAL’s only remaining mortgage options are loans backed by Fannie Mae and Freddie Mac, and those lenders would not accept mortgage terms controlling a home’s future affordability or price. According to Byers, this was only part of the picture. She explained that Fannie Mae and Freddie Mac purchase loans on the secondary market; OPAL itself works directly with retail banks, which may keep a loan in the bank’s own portfolio or sell it to Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac set some loan terms, but not price restrictions — that limit comes from OPAL’s ground-lease formula, not the lender.
According to Paulsen, the County had authorized removing the affordability covenant from OPAL mortgages, meaning a foreclosed home could be sold without that restriction attached. According to Byers, the authorization applies only if a home goes fully through foreclosure — meaning OPAL couldn’t step in to buy it back first. Only in that specific circumstance may the lender then sell the home to a buyer whose income is higher than the County’s funding-based restrictions allow.
That scenario remains rare. Paulsen said OPAL has never had a foreclosure. Byers confirmed this, adding that two homeowners have defaulted over the years, and OPAL intervened both times to prevent foreclosure. Paulsen also cited a statewide figure at the meeting — that Washington’s land trust model has seen just one foreclosure in roughly 30 years across about 2,400 homes — which he attributed to another source. According to Byers, that figure is accurate.
According to Byers, OPAL retains control of the land lease and its restrictions, including a rule that a house cannot be relocated off its lot, regardless of what happens to the mortgage — a point also raised at the meeting. She also confirmed that land trust homes tend to be unattractive to outside or speculative buyers at auction, since the ongoing land-lease restrictions make the properties illiquid, discouraging outside bidders.
Taken together, the record suggests the land trust model’s core protections — permanent land ownership, an affordability-preserving resale formula and OPAL’s track record of preventing foreclosures — remain intact, even as financing tools for individual homebuyers continue to change.
