Employer Assisted Housing
You've just received job offers from two different companies. The job duties and salaries are comparable. How will you decide which offer to accept? Would Employer Assisted Housing (EAH) make your decision any easier? To attract and retain the best employees, many employers are now adding Employer Assisted Housing to their employee benefits packages. In an EAH plan, an employer offers an employee a grant, loan or forgivable loan to be used toward home ownership. An employer may custom design its plan to provide the greatest benefit to itself, its employees and its community.
Stipulations an employer may use to customize its EAH plan include:
- Standing of employee,
- Location of eligible property,
- Maximum number of times an employee may use the benefit,
- How the employee qualifies for a mortgage through a participating lender,
- Whether an employee must be a first-time homebuyer,
- Whether an employee must use the property as a primary residence,
- Income limit,
- Length of past or future employment,
- Minimum employee contribution,
- Maximum employer contribution,
- Training participation, and
- Use of plan funds.
Fannie Mae, one lender that is working with employers to create customized EAH benefit plans, also used this program to help rectify its own employee retention problems.
In 1991, Fannie Mae's head office in Washington, D.C. was experiencing a 25-percent employee-turnover rate. So, the company instituted its own EAH plan and offered it to its employees who had been with the company for at least two years. Since the EAH program has been in operation, Fannie Mae's turnover rate has been reduced to single digits. As an added benefit, many of Fannie Mae's employees now have practical experience to draw upon when helping other companies set up their own EAH plans.
In the Eighth Federal Reserve District, several companies have started EAH programs. The Fannie Mae Partnership Office in St. Louis has helped several, including BJC Health System, Washington University and Concordia Publishing House.
Although both BJC's and Washington University's EAH programs are managed by the WUMC Redevelopment Corporation, each has its own funding. Washington University employees can use the funds to buy a house in the Skinker-DeBaliviere and Forest Park Southeast neighborhoods, while BJC's program covers employees who choose to live in the Forest Park Southeast neighborhood. BJC started the program to improve the area around Barnes-Jewish Hospital. The neighborhood is a mixed-income area where all employees (from the lowest to the highest paid) can live close to the hospital. The program has been a great success, greatly reducing the available property inventory in the neighborhood.
BJC employees can receive up to $4,000 or 5 percent of the purchase price of the house (whichever is less) for closing costs, points or the down payment. If the employees stay in the house and with the company for a full five years, the loan is forgiven. If they move from the house or leave the company, the loan is forgiven at a rate of 20 percent per year.
Also in St. Louis, the Concordia Publishing House started its program, Operation H.O.M.E. (Home Ownership Made Easy), about a year ago to stabilize and revitalize its surrounding neighborhood. It offers up to $5,000 as a one-time interest-free loan. The loan is forgiven in five years or at a rate of 20 percent per year.
In Mississippi, the state has established an EAH program for those who are willing to teach in areas where instructors are at a shortage. Mississippi Home Corporation (MHC) is administering the Employer-Assisted Housing Teacher Program, which is funded through the Mississippi Department of Education. For qualifying teachers under the Mississippi Critical Teacher Shortage Act of 1998, EAH provides down payment and closing cost assistance to ease the initial financial burden of home ownership.
A promissory note is converted to an interest-free grant if the approved applicant is participating as a licensed teacher. The teacher also must agree to employment with a school district designated by the State Board of Education in a location experiencing a critical shortage of teachers.
Fannie Mae Partnership Offices are more than willing to work with companies that would like information on how to start an EAH program. To find the location of the office closest to you, call Carol Laslo, deputy director of the St. Louis Partnership Office, at (314) 421-6444.