Saturday, November 6, 2004

More employers offer home-buying help as new benefit

A story published today in the Courier Journal reports that with the encouragement of Fannie Mae, more employers are adding home buying assistance as a new employee benefit.

The story focuses on Charles Watkins Jr. of Valley Station as an example of how a cafeteria approach to benefits can help workers meet their personal and family needs.

Watkins, the story says, can tap into several benefits as an employee of Bank One, from health insurance to adoption assistance to a stock plan.

But one benefit that has made a difference in his life was a $2,500 grant that helped him move out of his parents' home and buy his first house.

In Fern Creek, Allisa Gossman was able to buy a fixer-upper with the help of a forgivable loan from her employer, Norton Healthcare.

Watkins and Gossman cashed in on a special type of employee perk housing-related financial assistance, a growing trend in the workplace, according to the Society for Human Resource Management.

In its latest annual survey on employee benefits, the Virginia-based society found that 12 percent of respondents in 2004 offer some type of mortgage assistance, up from 6 percent in 2000, while 8 percent offer down-payment assistance, up from 3 percent four years ago. In addition, 19 percent offer rental assistance, up from 5 percent two years ago.

"These benefits may be part of a relocation package or offered as a general employee benefit," the society's report said. "By providing this benefit, organizations hope that homeowners may feel more rooted in the community and are therefore less likely to leave."

Employer assistance is a fairly new initiative from Fannie Mae, the nation's largest source of mortgage financing. In 1991 it started an internal Employer Assisted Housing program, which in 2000 was expanded to public and private employers.

More than 650 employers, representing more than 1.5 million employees, now offer some version of the program, said Lesia Bullock, a Fannie Mae spokesperson in Washington. "Our goal is to have 1,000 employers by 2010."

The most common benefits include grants, forgivable or deferred loans, matched savings, interest-rate buydowns, rental assistance and homebuyer education. Each plan can be structured differently, with money usually earmarked for the down payment or closing costs. Rental assistance can help offset a security deposit.

Aside from Fannie Mae, some companies, such as banks, offer their own programs.

Republic Bank & Trust offers discounts of one-fourth to one-half of a percentage point on its mortgage interest rate, a benefit that has attracted more than 300 employees the past several years, said Steve Trager, chief executive.

National City Bank's incentives include a discount of one-half of a point on a loan, free pre-approvals and special mortgage counseling, said spokeswoman Terri Wilson. On a $100,000 mortgage, the discount would be worth $500.

In the past three years, Bank One provided $2,500 grants to about 260 employees, according to spokeswoman Nancy Norris. "A barrier is coming up with the down payment," she said, "and the program was a way to get over that hurdle."

Watkins, who works in check processing, said his grant "helped me a great deal" when he bought a ranch house a year ago, just two doors down from his parents' home. "I didn't have to dip into my savings."

Bank One also gave him a quarter-point discount on his mortgage rate, he said.

The grant program ended recently when Bank One merged with JPMorgan Chase, but Norris said replacement programs are being considered. Meanwhile, employees can get reduced interest rates on mortgages, generally one-quarter of a percentage point.

Presbyterian Church (USA) offers retirement housing for eligible ministers, missionaries and lay workers, who pay according to their financial ability, as well as grants to other eligible retirees who cannot afford adequate housing.

Some companies don't offer direct aid but have ties with those that do.

Wells Fargo and Citibank offer discounted mortgage rates for employees of Ford Motor, while United Parcel Service has an arrangement with several national lenders to offer UPS employees discounts on rates as well as fees.

Fannie Mae's Employer Assisted Housing program, meanwhile, "has taken off across Kentucky," said Brenda Weaver, director of Fannie Mae's Kentucky Partnership Office.

In 2002, Louisville's Norton Healthcare became the first Kentucky employer to offer an employer assistance housing program, with $5,000 loans that can be forgiven in full if the employee stays at Norton for four years. Employees who don't stay the full four years have to reimburse the company on a pro-rata basis.

Last year, programs offering forgivable loans of up to 5 percent of a home's purchase price were established on behalf of employees of Lexington-Fayette Urban County Government, the University of Kentucky and Samaritan Hospital. The "Live Where You Work" initiative is designed to encourage workers to buy homes in the downtown area, close to where they work, and to promote urban revitalization.

Covington, Ky., joined the bandwagon in June, with a program aimed at firefighters, police officers, municipal workers and teachers, who could get as much as $7,000 in deferred-payment, interest-free loans.

An education-oriented program was launched at Lourdes Hospital in Paducah last week, Weaver said, and another program may get off the ground in Bowling Green by year end.

Norton has put up almost $1million so far to fund its housing program, which "has been successfully used in recruiting and retaining full- and part-time employees," said Melissa Nord, benefits manager.

She said 292 employees have enrolled in the program, and that so far 105 have bought homes.

"People have bought homes who never thought they could own a home," Nord said. "We have people who have rented for years, a lot of single people, and a lot of single mothers coming out of divorce, leaving a terrible situation and building a new life."

Gossman, a benefits representative for Norton's Kosair Children's Hospital, said, "I was living in an apartment, saving up for a house, and it was taking me forever. I was afraid I couldn't do it."

She said she used the Norton loan money to cover the down payment and closing costs, and her savings to fix up the house.

The house, she said, "has meant the world to me."