- The Washington Times - Friday, September 21, 2001

Back in the days when employers wore watch fobs stretched across ample bellies, employer-assisted housing came in the form of the company town.

Not all employees were convinced that modest homes on neat streets was the best way to ensure worker loyalty.

Today, however, employer-assisted housing programs are popular on all fronts, growing in scope and complexity to meet the needs of both employers and employees.

Employer-assisted housing programs typically provide assistance through a grant or forgivable loan used to cover a down payment or closing costs. But other programs exist, as well, including savings plans and programs that provide ownership counseling in partnership with local financial institutions.

"There are a multiplicity of employer-assisted housing [EAH] programs available today," says H. Beth Marcus, director of Community-Based Lending at Fannie Mae. "And they are easily customizable to suit any business."

For employees, EAH programs function as another benefit, such as health insurance or a pension plan. But EAH benefits employers, as well, as employees with homes tend to be more loyal, more stable and more settled than those without. Plus, EAH helps local jurisdictions by injecting private funds into the local economy.

Fannie Mae, the nation's largest provider of home mortgage funds, is perhaps the largest developer of EAH programs.

"We want to help Americans achieve the dream of homeownership," says Judith Dale, director of the Health and Work/Life Center at Fannie Mae. "And we want to bring as many partners into homeownership as possible."

Working locally through three partnership offices in Northern Virginia, Baltimore and the District, Fannie Mae works closely with area employers to design plans that will meet specific needs.

Fannie Mae is not the only player. By focusing on earned income and working households, EAH programs have sparked widespread interest among employees and a variety of partners, including state and local governments and financial institutions.

In Maryland, the state Department of Housing and Urban Development's "Live Near Your Work" program seeks to combat the commuting nightmare while promoting regional economic development. "Live Near Your Work" provides a minimum $3,000 grant, split among the employer, employee and Maryland to be used toward a down payment or settlement expenses.

What makes such programs as "Live Near Your Work" so attractive is that they use state resources to leverage private funds and inject them into the local economy. Meanwhile, the program's emphasis on redirecting growth to areas within the existing infrastructure means that growth in the outer suburbs is controlled while property values in the city can appreciate.

Such targeted programs as the Department of Housing and Urban Development's "Officer Next Door," in place since 1997, and "Teacher Next Door," in place since 2000, offer up to a 50 percent discount on the purchase of a HUD house.

The HUD program has proven effective in placing these professionals within neighborhoods, providing a sense of community and cohesiveness sometimes lost with suburban sprawl.

In Baltimore, an EAH program once open only to police officers and firefighters has been expanded to all city workers.

In the Washington area, EAH programs are particularly attractive to the health care industry as it tries to cope with a shrinking worker base.

The core of just about any EAH program, says Mrs. Dale, can be any one or more of the five R's: Recruitment, retention, return, revitalization and recognition. Attracting employees, making sure that they will stay, minimizing turnover, injecting new life into old communities and, of course, being recognized as a leader in employee benefits, all help to ensure a stable, happy and productive work force.

In the Washington region, for example, Howard University offers assistance to employees interested in buying a home in the surrounding Le Droit Park neighborhood.

Approaches differ from employer to employer and market to market, which can make EAH difficult to characterize.

Some programs, for example, are designed for first-time home buyers. Others are targeted for employees with specific income levels. Still others work to support smart growth and homeownership in designated areas.

What forms can EAH programs take? Perhaps the most basic option is the simple grant, a one-time employer cash contribution that can cover the employee's down payment, closing costs or a permanent interest-rate buy down.

Another common option is the forgivable loan. For employers in retaining their employees, the availability of quality, affordable housing can be a determining factor in deciding to stay in the area. With forgivable-loan programs, retention is built in. If a worker leaves, the loan automatically reverts to a fully amortizing loan.

Other companies may offer a deferred or repayable loan, similar to the forgivable-loan option but with a specified repayment period. With the assistance of Fannie Mae, Providence Hospital came up with a $5,000 repayable loan program with a special emphasis on purchases in the District.

Still another option is a loan guarantee where the employer will co-sign a loan for a predetermined amount and assume responsibility for the loan should the employee default.

Finally, home buyer education programs, usually offered in conjunction with area banks and lending establishments, offer information, materials and advice to employees interested in buying a home. Recently, Sibley Memorial Hospital, in partnership with Fannie Mae and area financial institutions, provided on-site, one-on-one counseling to its employees.

"In many cases, home buying education is the critical benefit," Mrs. Marcus says.

In some situations, particularly when dealing with lower income employees, employers may opt for a matched savings program that allows them to match the employees savings (to a predetermined amount) to cover a down payment or closing costs.

Fannie Mae offers its own employees one of the more liberal EAH programs around. All 3,800 employees below the director level are eligible, whether they are first-time home buyers or not. All that is required is that the home is used as the employee's primary residence. Fannie Mae has made more than 1,700 such loans since the program's inception in 1991.

Heidi Cox, who joined Fannie Mae in June 2000, took advantage of the company's forgivable loan program when she bought a house recently in Ashburn, Va.

"I was living with my parents in Odenton, Md., and commuting to Herndon or D.C. every day," Miss Cox, 23, says. "I was very familiar with my car."

Minimizing the costs and hassles of commuting can help to maximize employee productivity, Mrs. Dale says. Plus, redirecting housing to targeted areas can help revitalize old neighborhoods and the existing infrastructure.

"Washingtonian magazine cited Fannie Mae as the area's No. 1 employer," says Mrs. Dale proudly. "And it's that kind of recognition that makes people want to work for us."

Having your own home by age 23 is an achievement in itself.

"My mortgage and fees are less than what other people are paying for rent," Miss Cox says. "And my place is nicer."

Plus, her friends keep asking her how they can get the same deal.

"They can't," she says. "Not unless they work for Fannie Mae. I wouldn't have been able to buy my house without the EAH program."

Fannie Mae's program for its employees allows participation after only 90 days of employment, with loans given up to 7 percent of the purchase price up to a set maximum for the geographic area.

If they are buying a home in the District, for example, Fannie Mae employees can request up to $12,614, says Mrs. Dale, while a special initiative with the District allows them an additional $3,000.

"Other than a 401(k) program or stock options if the business is good, there is no other benefit out there with as strong a retention focus as an employer-assisted housing program," Mrs. Marcus says.

Plus, there's nothing like really going home after a long, hard day.

"I love it," Miss Cox says. "I get to come home and look at the lake and think about how beautiful it is. It's home."

For information on EAH programs, go to the Fannie Mae Web site (www.fanniemae.com).

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