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Housing help from the boss

Employer-assistance plans counter high prices

NORTH PALM BEACH, Fla. (Bankrate.com) -- You would be hard pressed to find a prettier mountain community than Asheville, N.C. Surrounded by the Great Smoky Mountains, home to such writers as Thomas Wolfe and O. Henry, Asheville is that rare town that actually looks better than its postcards.

So why is Mission Hospital , Asheville 's top-notch medical facility and Buncombe County 's largest employer, having so much trouble attracting high-caliber clinicians? High housing prices.

"We have no trouble attracting people here. Our hospital is ranked among the top 100 in the country," says Janet Moore, marketing communications director. "But Asheville also has the highest housing market in the state, and that is proving to be more and more of an issue for us as an employer, both for attracting and keeping people."

Case in point: Mission spent two years recruiting a top-tier physicist. A candidate had all but committed -- until he and his wife arrived to scout out a home. Sticker shock killed the deal.

Three years ago, Moore caught wind of a Fannie Mae initiative called employer-assisted housing, or EAH, designed to help employers establish mortgage assistance programs for their employees.

With the help of Fannie Mae and the local Affordable Housing Coalition, Mission designed a program that includes home-buyer education, debt counseling, an employee-savings program and a dollar-for-dollar company match of up to $2,500 toward a down payment. It even requires that first-time buyers remain in the program for six months after closing to protect them from predatory lenders.

There are stipulations. Participants must have worked for the hospital for at least one year, make less than the $46,800 salary cap (although their household income may exceed that), complete the mortgage education classes, save for 10 consecutive months and buy a home within Buncombe County. Habitat for Humanity homes are eligible; mobile homes are not.

The program is designed to keep employees at the facility. By the time an employee is ready to close, they will have been in the program three years, the point at which vesting kicks in. So far, more than 30 employees have signed on.

"We look at this more as a retention tool than a recruitment tool," says Moore . "It's very different from a sign-on bonus. If they come to you for the money, they will leave for money. We help them into a home. How likely is it that they are going to want to leave at that point?"

Bullish on benevolence

Fannie Mae's EAH program is a four-way partnership between the employer, the employee, a local lender and Fannie Mae:

  • The employer offers the benefit, often in the form of a forgivable, deferred or repayable loan, grant or savings match.
  • The employee applies for the program, meets the criteria set by the employer (which often includes homebuyer education and credit counseling) and meets the financial qualifications to buy a home.
  • The lender provides first mortgage underwriting and origination and manages the relationship with the employee.
  • Fannie Mae helps the employer create the program by running cost-benefit analyses and providing loan documents and survey forms to help get the program started.

Fannie Mae knew from the outset that it had to make a business case for employer-assisted housing. Not only are employers unlikely to part with money out of the kindness of their hearts, they are certainly not interested in burdening already-swamped human resources staff with administering something as foreign as a mortgage lending program.

The business case is attractive. In addition to aiding recruitment and retention (thus reducing training, hiring and relocation costs), EAH can help reduce tardiness and absenteeism, revitalize the surrounding neighborhood, improve employee performance, strengthen families by addressing their debt issues and enhance the company's reputation.

"It provides stability for the community and the business," says Michelle King of Fannie Mae's Community Lending Center . "When businesses get involved, it enables employers to retain their work force as well as provide a very much needed asset: housing. It's a great exchange."

And one that is growing in popularity. According to the Society for Human Resources Management, 12 percent of companies offered EAH in 2003, up from 7 percent in 2002. Nine percent of employers provided down-payment assistance in 2003, up from 4 percent the previous year, and 15 percent offered rental assistance, compared with 5 percent in 2002.

Fannie Mae started its own EAH program in 1991. Employees must work 180 days to become eligible and remain with the company for five years to receive full forgiveness of the loan. So far, more than 2,500 employees have taken Fannie Mae up on its offer.

Many employers choose to outsource the EAH program, often to a lender or counseling agency better positioned to offer homebuyer education and guidance. Some employers offer time off to attend homebuyer classes or will pick up the cost of such programs. Some offer both.

The cost of an EAH program to the employer is more than offset by the savings accrued from reducing turnover, recruitment, relocation and training. Fannie Mae estimates that a 1-percent reduction in the turnover rate for a company of 5,000 employees can save the cost of hiring and training 50 new employees.

Sweetening the deal

The Chicago-based Metropolitan Planning Council , a 70-year-old nonprofit organization that focuses on land use and policy issues, has helped establish more than 20 employer-assisted housing programs since it took up the cause in 1999.

MPC helped convince the State of Illinois to sweeten the incentives for employers by offering to return 50 percent of the costs of a company's EAH program in the form of tax credits. Nonprofits such as public universities and hospitals that do not need the tax credits are free to sell them. At least two other states, Missouri and Connecticut , also offer tax credits to companies that invest in employer-assisted housing.

MPC housing associate Samantha DeKoven says the tax credits make a good deal even better.

This is a Scripps Howard News Service article that appeared elsewhere, including Redding.com - Business News

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