Module 3 - National Association of Realtors

Types of EAH Benefits and Plan ImplementationModule 3

3.1Community and Political Affairs

Module 3: Types of EAH Benefits and Plan Implementation

Our third module describes the various types of employer-assisted housing benefits and reviews some real-life examples. We also look at some issues related to the administration and management of an EAH benefit plan.

Module 3: Learning Outcomes

At the conclusion of module three, you should be able to describe and discuss:

• ThetypesofEAHbenefits,includingeducation,counselingandfinancial assistance;

• Theemployer’sandteam’sroleinimplementingeachbenefit;

• Thelogisticsinvolvedineachbenefit;

• SeveralexamplesofemployerswhohaveimplementedEAHbenefits.

Key Types of EAH Benefits

Therearethreekeytypesofemployer-assistedhousingbenefitsthatthisclass will focus on:

• Homebuyerandhomeownershipeducation;

• One-on-onecounseling;

• Financialassistance.

Other Type of EAH Benefits

In addition to homebuyer and homeownership education, counseling and financial assistance, there are other techniques employers can use to helptheiremployeesobtainhousing.Theseincludevendordiscounts,shared equity, mortgage payment assistance, loan guarantees, interest rate buy-downs, rental assistance, land donation, employer-constructed hous-ing, loans for housing construction and contributions to a community housing fund.

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3.2 NATIONALASSOCIATIONOFREALTORS®

EMPLOYER-ASSISTED HOUSING

Vendor discounts can also be utilized as part of an employer-assisted housingbenefit.Theemployer,orthenonprofitpartnerwhoadmin-isters the programs, negotiates with the service providers on the home purchasetransactionforreducedfees.Forinstance,theymaynegotiatewith a lender for reduced loan origination fees or for low cost or no cost creditreports.Theymayalsonegotiateforreducedappraisalfeesorhomeinspection costs. Vendor discounts can help an employer reduce the homebuying costs of an employee without a financial commitment from the employer. You will see an example in Module 4 of how the Maryland RealEstateTeamusesvendordiscountsinanemployer-assistedhousingprogram that they developed.

Under a shared equity program, an employer and employee would share theequityinahouse.Forinstance,inaveryhigh-costmarket,suchasaresort community, the employer might not be willing to provide a loan or grant, but would be willing to make a co-investment with the em-ployee on the property and share any equity appreciation of that prop-erty. When a property is sold, or the employee leaves, the equity in the property is split according to a predetermined formula with the employee receiving a share based on his or her investment and the employer re-ceives a share based on its investment.

One technique employers have used to attract and retain employees is mortgagepaymentassistance.Thiscantaketheformofamortgageguar-antee, where the employer guarantees payment of a mortgage in the event the employee cannot make the loan payments. It can also take the form of an interest rate buy-down where the employer makes an upfront payment to the lender in exchange for a reduced interest rate for the employee.

In some instances, the employer may offer rental assistance to its em-ployees.Thisrentalassistancemaytaketheformofmoneyforsecuritydeposits, or of a monthly payment to assist the employee with the rent payment.Thisisoftenusedinresortcommunitieswhereseasonalrentscan be very expensive.

OneexampleofacompanythatoffersrentalassistanceisCVSCaremark.CVSoffersfinancialassistancetohelpemployeeswithcriticalskills(suchaspharmacists and store managers) live near the stores in which they work.

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Therearealsoothertypesofemployer-assistedhousingbenefitsthatcanbemoreexpensiveandmorecomplicatedtosetupandadminister.Theseinclude such programs as land donation, employer-constructed hous-ing, loans for housing construction or purchase and contributions to a communityhousingfund.Theseprogramsofteninvolvetheemployermore directly in the housing development process and are often used by employers in very high-cost housing markets and resort communities, where it is difficult and expensive to attract and retain employees.

In a high-cost housing market, an employer such as the school district or the town, might donate land on which workforce housing for their employees can be developed.

In some instances, such as a resort community, the employer might actu-ally contract for the construction and management of housing for the workforce.AnexampleofthisistheColoradoresortcommunityofVail,where the employer is required to construct new housing when adding new jobs in the community.

Theemployermightalsomakedirectmortgageloanstodeveloperscon-structing workforce housing or contribute to a community housing loan fund that lends for workforce housing. An example of this is the Housing TrustofSantaClaraCounty(California),wherelocalemployerscontrib-ute to the housing fund and the housing fund in turn provides loans to developers of workforce housing, downpayment assistance loans and rental assistance payments to the employees of the contributing employers.

Homebuyer and Homeownership Education

In the real estate world, there was one word that used to be the cardinal rule: location, location, location. That was then, before the Great Recession. This is now, and the new cardinal rule of real estate is information, information, information. - MichelleSingletary,The Washington Post,Thehot-test housing market: Information, http://www.wash-ingtonpost.com/wp-dyn/content/article/2010/08/06/AR2010080606255.html?nav=rss_opinion/columns

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Buying a home can be a confusing process. A buyer must wade through mounds of paperwork at the closing, followed by the daunting respon-sibilitiesthatcomewithbeingahomeowner.Themoreinformationhomebuyers and homeowners have, the more prepared they will be for these responsibilities.

Homebuyer education and homeownership education are two valuable EAH benefits. Homebuyer education can help prepare potential home-buyers for homeownership, while homeownership education can help current homeowners protect their investment.

Homeownership education offers many benefits to consumers, including improving financial health and money management skills and reducing loandelinquenciesanddefaults.TheUrbanInstituteconductedananaly-sisin2009and2010ofNeighborWorks®AmericaNationalForeclosureMitigationCounseling(NFMC)Program.The2009reportfoundpositiveeffectsforhomeownersreceivingNFMCcounselingin2008in avoiding entering foreclosure, successfully curing an existing foreclo-sure,andobtainingamorefavorableloanmodification.The2010report(http://www.urban.org/uploadedpdf/412276-prelim-analysis-program-effects-Sep-2010.pdf )suggeststhattheprogramishavingitsintendedeffect of helping homeowners who face loss of their homes through fore-closure. In subsequent analyses, to be presented in a third update and in a final evaluation report, the Urban Institute will estimate the program's impact on clients over a longer period of time, which will allow a better summativemeasurementoftheoverallimpactoftheNFMCprogram.

Accordingtothe2010NationalAssociationofRealtors®ProfileofHomeBuyersandSellers,80percentoffirsttimehomebuyersand66percentofall buyers say the benefit they receive from their agent is help understand-ing the homebuying process.

Homebuyer and homeownership education is not only a value to em-ployees but also an easy and inexpensive EAH benefit to implement.



Homebuyer and Homeownership Workshops

Homebuyer workshops help an employee to purchase a home, while homeownership education workshops help an employee maintain a home he or she currently owns. If an employer indicates that most employees own a home, you could suggest a homeownership workshop. If the em-ployees do not own homes, suggest a homebuyer education workshop.

Theworkshopscantakemanyforms.Workshopscanbeputonbythereal estate agent or by a combination of the agent, lender and nonprofit partnerorganization.(Wewilltalkaboutpartnerswhenwediscussform-ing a team in Module 4.)

Workshopscanbeofferedasaseriesofworkshops.Thisapproachpro-vides information over a period of time and can help build a relationship with the employer and employees.

Therearelittleornocostsassociatedwithconductingaworkshop.Often,theworkshopscanbeconductedattheemployer’soffices,sometimesaf-ter work or on weekends. When it is not practical to conduct a workshop attheemployer’soffice,scheduleitoffsiteatanotherconvenientloca-tion, such as the office of the nonprofit partner or one of the EAH team members. In general, it is not a good idea to conduct the workshops at yourofficeorthelender’soffice. One strategy is to structure the workshops as “lunch and learn” sessions, with the workshops conducted in a company conference room during the lunchhour.Therealestateagent,oneoftheteammembers,theem-ployer. or perhaps a sponsor may want to provide sandwiches, pizza, or a snack for workshop attendees.

How the workshops are structured, the content, and when they occur should be based on the requirements of the employer and on the needs of the employees. You should discuss the requirements and needs with the employer. In Developing an Employer-Assisted Housing Benefit Plan: Step by Step Guide,you’llfindanemployeehomeownershipsurveythatwillindicateanemployee’shomeownershipeducationalneeds.

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Homebuyer Workshops

Participation in a homebuyer workshop provides the employees with the confidence and knowledge they need to purchase a home. Typically, a homebuyer workshop does not help the employee with financial barriers. Financialbarriersareaddressedduringone-on-onecounseling,whichisdiscussed next.

Homebuyer workshops typically include information on how to select a real estate professional and other team members and on the financial aspects of homebuying – such as determining how much you can afford, how to improve your credit position, and how to obtain a mortgage.

Theseworkshopsmayalsoincludeinformationonbudgetingandsav-ing for a downpayment and closing costs and what to expect during the homebuyingprocess.Theyshouldalsopresentinformationonfinancialassistanceprogramsavailableinyourarea.Financialassistanceprogramscan be leveraged with an EAH financial assistance benefit to stretch an employee’shomebuyingdollarsevenfurther.Nonprofitorganizationsarea great resource to find out about these programs.

Homeownership Workshops

There’snothinglikethefeelingofbeingahomeowner.Butowningahome is an ongoing commitment – new issues and responsibilities can come up at any time. Designed for employees who already own homes, these workshops should focus on the responsibilities of homeownership. Topics could include home improvement and ongoing maintenance, taxes and incentives, and finances and insurance.

You can find a variety of information for a homeownership workshop onHouseLogic,NAR’swebsiteforconsumers.Thissiteincludestheinformation, resources, and tools consumers need to maintain, protect, and increase the value of their home. You can use the information from HouseLogic to create the content for the homeownership workshops.



NAR HouseLogic Website

Refer homeowners to the HouseLogic website (www.housel-ogic.com) so they can make smart and timely decisions about their homes. With content covering home improvement, main-tenance, taxes, finance, insurance, and even ways to become involved in and enrich a community, HouseLogic can help hom-eowners increase and protect the value of their home by helping them make confident decisions.

Home Ownership Matters

NAR has launched the Home Ownership Matters campaign to remind consumers that homeownership not only benefits families but also helps build strong communities and creates jobs. The Home Ownership Matters information on Realtor.org (www.realtor.org/topics/homeownership) is designed to help REALTORS® and brokers communicate easily and effec-tively about the positive benefits of homeownership. Resources include a free MID Calculator so homeowners can estimate the tax-savings value of their mortgage interest deduction.

TOOLS

TheTools&ResourcessectionoftheParticipantGuidecontainsthefol-lowing tools to help you conduct a workshop:

• HomebuyerWorkshopPowerPoint:Customizethisandthenuseitasamodelforahomebuyerworkshop.Thereisalsoahome-buyer workshop flyer you can customize to include the work-shopdate,topics,employer,andyourcontactinformation.ThePowerPointandflyercanalsobefoundonRealtor.org. (pp.TR.57andTR.55)

• HouseLogic:TheHouseLogicwebsitehasanoverviewofthecontent,plusinformationonhowyoucanusetheREALTOR®ContentResourcetosustainrelationshipswithclients.(p.TR.53)

• Homebuyer&HomeownershipResources:SeethecompletelistingintheTools&Resourcessection.(p.TR.47)

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Foreclosure Prevention Education

Homeowners often state that, within their community, they do not know whom to turn to for foreclosure prevention and intervention assistance. FannieMaeresearchshowsthatmanyhomeownersstilldonotknowabout – or understand – their options to avoid foreclosure.

Generalinformationandresourcesonhowtopreventforeclosuresshouldbepartofthehomebuyerandhomeownershipworkshops.Foreclosureprevention education provides valuable information to families facing financialdifficultyandhelpshomeownersavoidforeclosure.Thismaybeparticularly relevant to employers with employees concerned about losing their homes. However, new homeowners can also benefit from being aware of how they can prevent foreclosure.

When fear and desperation set in, distressed homeowners will do any-thing to save their homes for their families. Unfortunately, this is also a timewhenpeoplearemostvulnerabletoscammers.ByCongressionalmandate, NeighborWorks America launched a national campaign to edu-cate the public about loan modification scams and how to report them. TheLoanScamAlertcampaignprovidesreal-lifescamstories,fliers,postcards, posters, print advertising, and social media activity.

Homeowners who currently have, or expect to have, difficulty making their payments should contact their loan servicer or reputable counseling agency as soon as possible to discuss options. Troubled borrowers should be careful in dealing with organizations that encourage borrowers to cease making payments or walk away from their home while also promis-ing to repair their credit. If it sounds too good to be true, it may well be ascamthatwilldamagetheborrower’screditandcostmoreinthelongrun. Working directly with the servicer or legitimate nonprofit organiza-tions is the best approach for troubled borrowers.

You can provide information on how to find a foreclosure counselor or legitimate nonprofit organization to assist a homeowner. If the human resources staff finds that the employee needs additional counseling, the employeecantakeadvantageofthenonprofitorganization’scounselingand intervention services.

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While a workshop on foreclosure prevention can educate employees on foreclosure prevention, it may not be the best format for disseminating the information; concerned that their co-workers may think they are in financial trouble, some employees may not want to attend a workshop attheworkplace.Discussthispossibleconcernwiththeemployer.(See“HomeFinancingCenter’sForeclosurePreventionEducationBenefit.”)

In lieu of a workshop, you can create a package of foreclosure preven-tion resources for the employer to distribute to employees in a more confidential manner. A variety of information and assistance is available, includinginformationonthefederalgovernment’sforeclosureresponseprograms, working with the lender, and ineffective foreclosure assistance programs and scams.

TheNewJerseyAssociationofREALTORS®(NJAR)conductedaneducational webinar and marketed it to people who were in fear of losing theirhomesorhavingtroublepayingtheirmortgage.SpeakersincludedrepresentativesfromtheNewJerseyJudiciaryForeclosureMediationProgramandtheConsumerCreditCounselingServiceofDelawareVal-ley.ThewebinarisavailableonNJAR’swebsiteathttp://njar.na6.acrobat.com/p17338855.

Most nonprofit organizations that assist homeowners offer a variety of resourcesonforeclosurepreventionthatyoucandownloadand/ororder,most of which are free. You can then prepare packages of materials on foreclosurepreventionresourcesanddeliverthemtoemployers.Theemployee can meet privately with human resources personnel to receive thematerials.(SeeTools&Resourcesforalistingofforeclosurepreven-tion resources.)

Note: Before providing any loss mitigation consulting, foreclosure preven-tion,mortgageloanmodification,orsimilarservices,checkyourstate’sregulations.Forexample,theMarylandOfficeoftheCommissionerofFinancialRegulationsetsforththeseregulationsintheMarylandCreditServicesBusinessesAct(MCSBA)andtheProtectionofHomeownersinForeclosureAct.(Seehttp://ww.dllr.state.md.us/finance/advisories/advi-sory9-08.shtml.)



Inaddition,theFTChasissuedthe“MARSrule”whichaffectsrealestate professionals who become involved in short sale negotiations or otherwise represent consumers who are seeking a loan modification from alender.NARisworkingwiththeFTCtomodifythisruleandwillissueanyupdates,newsandguidanceonthe“MARSrule”.

Home Financing Center’s Foreclosure Prevention Education Benefit

One hospital in Florida was finding that their employees were spending time on the telephone talking to lenders and others with concerns over foreclosure of their homes. This was tak-ing away valuable time from their duties and decreasing their productivity. The Home Financing Center, which launched an Employer-Assisted Housing initiative in 2004, was asked to provide a foreclosure workshop to all the branches for the staff of this hospital. However, very few employees attended these workshops. The employees were uncomfortable about attend-ing these workshops and did not want anyone to suspect they were having financial problems. The Home Financing Center produced a DVD on foreclosure prevention. Within a week, the hospital had over 400 requests for the DVD.

NAR Foreclosure Assistance Programs

Realestateagentsareoftentimesthefirstcallwhenahomeownerishav-ing financial problems with their home loan and as such are optimistic, resourceful and sensitive to homeowners facing financial hardship and the pain of foreclosure.

In response to the increase in foreclosures, the National Association ofREALTORS® has developed several programs and resources to help REALTORS® develop the skills required to respond to the challenges of foreclosures and to assist local and state associations in developing local foreclosure prevention and response strategies. Programs and resources includeaForeclosurePreventionandResponseToolKitforREAL-TORS®, training courses, educational resources, community outreach opportunities, and resources for troubled home owners and buyers. More informationisonRealtor.orgatwww.realtor.org/foreclosure.



NARlaunchedanewShortSalesandForeclosureCertificationProgram(SFR)tohelpRealtors® meet the needs of homebuyers and sellers who needservicesrelatedtoforeclosures.Theprogramincludestrainingonhow to manage short-sale, foreclosure and real-estate owned transactions, and provides resources to help real estate agents stay current on national and state-specific information as the market for these distressed proper-ties evolves.

In2009,NARlaunchedtheForeclosurePreventionandResponse(FPR)Program(www.realtor.org/government_affairs/foreclosure_prevention/fore-closure)toprovidegrantsandservicesthathelpstateandlocalREALTOR®associations develop coordinated plans of action to prevent foreclosures and respondtoitsadverseimpacts.ThegrantprogramendedonDecember31,2010. However, you can find details on all the grants awarded under this program. You may want to contact your state or local association to see if they can provide any resources on foreclosure prevention.

AspartoftheForeclosurePreventionandResponseProgram,NARhaspartneredwiththeNationalCommunityStabilizationTrust(Stabiliza-tionTrust)todeveloptheREALTOR®NeighborhoodStabilizationProject(http://www.realtor.org/government_affairs/foreclosure_preven-tion/realtor_neighborhood_stablization_project),whichwillhelpcom-munitieseffectivelyimplementtheNeighborhoodStabilizationProgram(NSP).ThroughtheNSP,thefederalgovernmenthasprovided$6billiontoassistcommunitieshardesthitbyforeclosurestoacquireandrehabilitate foreclosed and abandoned properties.

REALTORS®—who are best equipped to market properties and promote neighborhoods—provide invaluable information that can enhance local deliberations on strategies for identifying and reclaiming neighborhoods devastated by high concentrations of foreclosed and abandoned prop-erty.Throughthisproject,theStabilizationTrustandNARwillenableREALTORS® and their state and local Associations to play active roles in foreclosure recovery efforts in their communities.



TheNAR/StabilizationTrustpartnershiphasestablishedthefollowinggoals:

• IncooperationwithtargetedstateAssociations,StabilizationTrustandNARstaffandconsultantswilldevisestrategiesforprovidinghigh-impact training and tools necessary for success in mitigating the negative effects of foreclosures on local communities.

• TheStabilizationTrustwilluseitshousingindustryrelationshipsin cities severely impacted by foreclosures to establish connec-tionsforREALTORS® in local government, allowing them to influence program strategies.

• NARandStabilizationTruststaffandconsultantswillprovidehands-onassistanceininitiatingandmaintainingaREALTOR® presence in local planning and implementation of neighborhood stabilization efforts.

One-on-One Counseling

One-on-onecounselingisoftenofferedfollowingtheworkshops.Thenonprofit partner typically conducts the one-on-one counseling sessions. One-on-one counseling offers the opportunity for employees to discuss their individual situations with a counselor in a private setting. One of the outcomes of the counseling session should be an employee who is prepared both financially and emotionally for the homebuying process.

Theemployeesmayconsultwithacounseloronpastcreditissues,theircurrentcreditsituationandtheircurrentfinancialsituation.Thecounselor will offer specific advice and recommendations based on the employee’ssituation.

In cases where the employee already owns a home, counseling can help homeowners avoid foreclosure via foreclosure intervention counseling. Followingtheforeclosureworkshops,thehomeownerscanoftenhaveanindividual meeting with a foreclosure counselor, where they can privately discuss their personal situation.

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A study conducted by the Urban Institute indicates that troubled hom-eownerswhoreceivehousingcounselingare60percentmorelikelytoavoid foreclosures and have their mortgage payments lowered signifi-cantlythenborrowerswhonavigatetheprocessthemselves.ThestudycanbefoundontheUrbanInstitute’swebsiteat:http://www.urban.org/publications/411982.html.

When a real estate agent refers employees to a nonprofit organization for counseling, it is important for the real estate agent to conduct follow-up. You may want to have an understanding with the nonprofits you work with that they will refer the employee back to you upon completion of the counseling if he or she is considering purchasing a home. However, the em-ployee is under no obligation to use you or your firm to purchase a home.

One way to facilitate this process is to act as a point of contact for the employer and employee, taking their phone calls, maintaining lists of nonprofits and lenders, and providing the contact information for these organizations to the employers and employees upon request.

Thecounselingsessionsaretypicallyconductedatthenonprofit’sofficeorat the home of the employee. However, the workplace may offer another potential location for the sessions if a private location cannot be provided.

Theemployercanalsoassistemployeesbyallowingtheemployeetimeoff from work to attend counseling sessions, providing information to allow the employees to contact the counselors, and assisting with any counseling fees.

Theupcomingmoduleonformingateamdiscusseshowtofindandcontact non-profit counseling organizations.

Nonprofit Counseling Fees

Depending on how the nonprofit organization is funded, fees may be applied to the educational and counseling services they provide, or they may be able to provide the services to the employers at no cost. If fees are applied, they are typically very reasonable.



Many nonprofit housing counselors are funded through government or private grants to provide education and counseling services. In these instances, the nonprofits are often able to provide their services at no cost to the client or the employer.

In other instances, it may be necessary for the nonprofit to charge a fee for the education and counseling services. A fee may be charged for each par-ticipant, or employers may negotiate a flat annual fee with the nonprofit.

Forexample,thepartnernonprofitmaychargeaminimalfeeperem-ployeetotheemployerfortheservices.Theemployermightalsone-gotiate an annual fee arrangement with the nonprofit for an estimated number of employees.

Workshops and Counseling as the First Step

Educational workshops and one-on-one counseling benefits can be a good phaseoneforanemployer-assistedhousingbenefit.Thesebenefitsareeasyandinexpensivetoimplement.Thereisnoneedfortheemployertomakeasignificantfinancialinvestment.Financialassistancebenefitscanbe added later. Education and counseling can be used to demonstrate the benefits to the employer and can generate positive publicity for the employer. Ultimately, offering these benefits as a starting point can help employers get their feet wet before moving to a financial assistance benefit.

Financial Assistance

Financialassistancebenefits may help employees overcome a financial barrier,someofwhichwerediscussedinModule1.Theyareusedtoprovide employees with additional funds for downpayments and closing costs.Financialassistancebenefitstypicallyprovidetheadditionalfundsneeded to get the employees over the hump of financial restraints and allow them to purchase a home.

ThebasictypesofEAHfinancialassistancebenefitsareloans,grantsandmatchedsavingsaccounts.Thesebenefitscanbeleveragedwithotherfinancialassistanceprogramsasyouwillseelaterinthemodule.Finan-

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cial assistance benefits can be structured to encourage retention by adding a requirement that the employee needs to stay with the company for a certain amount of years or to assist with neighborhood revitalization by requiring that the house be purchased in a certain neighborhood.

Unlike the educational workshops and the counseling, a financial as-sistance benefit requires resources from the employer to administer and manage the benefit. Also unlike the educational workshops and one-on-one counseling, which have almost no cost to an employer, loans, grants andmatchedsavingsdorequireavisiblecosttotheemployer.Financialassistancetypicallyrangesfrom$1,500to$10,000peremployee,de-pending on the goals and the market. Typically, $3,000 per employee is ideal for a financial assistance benefit.

Thekeyhurdletoimplementingafinancialassistancebenefitisthatitrequiresafinancialcommitmentonthepartoftheemployer.Someemployers may be very willing to make this financial commitment; others mayneedtoseethecost/benefitanalysisandothersmaywishtowaitandsee how effective the homebuyer education and counseling programs are before committing additional money.

In addition to the costs of providing financial assistance, additional costs mayoccurinadministeringafinancialassistanceprogram.Theremaynotbe staff resources or staff expertise available to administer financial assis-tance. In many cases the employer can use the nonprofit partner to admin-ister the program, paying the nonprofit a fee for the services it provides.

If the employer is not providing a direct financial assistance benefit, theycanstillprovideemployeeswithinformation(viatheworkshops)on where to find out about financial assistance monies that are available throughothersources(city,state,nonprofitprograms,etc.).Theem-ployermaywanttoposttheseresourcesonthecompanywebsiteand/orin the employee manual.

Employers may be reluctant, particularly at first, to provide actual monetaryfinancialassistance.Thismaybeduetofinancialconstraintsorbecause they are not sure of the value of the program. If this is the case,



homebuyer education and one-on-one counseling may be the options to implement. Many employers first start with the homebuyer education and counseling programs and add financial assistance at a later time.

Loans

Thefirsttypeoffinancialassistanceisanemployer-providedloan.Typi-cally, the employer provides a small loan to the employee to assist with thedownpaymentandclosingcosts.Theseloanstypicallyrangefromapproximately$1,500to$10,000.

Loans may be available to all income levels and property locations, or the employer may limit the loans to certain income levels, such as below 120 percent area median income and may limit property locations to the local community or specific revitalization areas.

To meet the goals of the employers, they may want to include eligibil-ityrequirementswhentheyofferaloan.Thesecouldincludespecifyingwhere the employee can purchase a home, such as within 10 miles of the workplace; the length of time the employee needs to stay with the company in order for the loan to be forgiven; or the income level of the employee, which targets those most in need.

Loans are typically secured with a lien on the property to prevent the employ-ee from selling the property and moving without repaying the loan. Employ-er-provided loans are typically structured as repayable, deferred or forgivable.

With a repayable loan, the loan is structured to be repaid to the employer with regular scheduled payments.

With a deferred loan, the payment on the loan is deferred until some pointinthefuture(oftenfiveyears),oruntilsomeeventoccurs(theproperty is sold, the employee changes jobs, etc.).

Forgivableloansaresimilartodeferredloans,exceptnopaymentisrequired in the future, provided certain requirements are met, such as theemployeeremainswiththeemployerforasetperiodoftime.For

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example, an employer might forgive 20 percent of the loan balance each year for five years provided the employee remains with the employer and continues to live in the house.

Grants

Anemployer-providedgrantissimilartoaforgivableloan.Theemployerprovides a grant to the employee in order to assist with downpayment and closing costs.

Typically, grants do not have to be repaid unless the employee leaves the companybeforeasetperiodoftime(suchasfiveyears)haspassed.

An employer might prefer a grant to a loan simply because a grant may be easier to administer.

As with loans, employers may want to include eligibility requirements whentheyofferagranttomeetsomeoftheirbusinessgoals.Thesecouldinclude specifying where the employee can purchase a home, such as within 10 miles of the workplace; the length of time the employee needs to stay with the company; and the income level of the employee, which targets those most in need.

Aflac’s EAH Grant Program

Aflac presented its grant program at the 2008 EAH Confer-ence sponsored by NAR. Aflac offers downpayment grants to employees of either $5,000 or $1,000. All applicants are at or below 80 percent of the area median income and must go through intensive financial counseling and education. Neigh-borWorks conducts the counseling and administers the grants. You can see the presentation by going to Realtor.org at http://www.realtor.org/government_affairs_secured/employer_as-sisted_housing/session_materials

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Matched Savings

Matched savings plans are often used by employers to encourage employ-ees to save money for a specific purpose, such as the purchase of a home. Thisisaparticularlyeffectivetoolforlower-wageemployeeswhodonothave savings for a downpayment.

With a matched savings plan, employee savings, up to a specified dollar amount,arematchedbytheemployeratastipulatedratio(1-to-1,forexam-ple) and placed in a fund that can only be used for the purchase of a home.

Theconceptofanemployer-matchedsavingsplanissimilartoemployermatchesprovidedforretirementplans,suchas401Ks,wheretheemploy-er matches the amount invested by the employee up to a set level.

Matched savings plans can be used to encourage employees to save for home purchases.

An employer will often tie their contributions to a matched savings ac-counttoanemployee’stenurewiththecompany.Forexample,offeringa limited match for new employees and a full match for employees who have been employed for a longer period.

EAH Plan Implementation, Administration, and Management

We have discussed three EAH benefits an employer can implement: homebuyer and homeownership education, one-on-one counseling, and financial assistance. Before implementing a benefit, however, an employer first needs to determine which type of EAH plan to offer.

ThereareseveralstepsanemployershouldtaketoimplementanEAHbenefit:

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EAH Benefits – Planning Steps for the Employer

1. Determine Business Goals–First,theemployerneedstoseehowanEAHbenefitcanhelpmeetsomebusinessgoals.Theemployer can conduct a needs assessment to determine its com-pany’sgoals,suchasrecruitmentandretention,buildingstaffloyalty, or generating positive publicity for the employer.

Many employers offer work-life benefits as a way to help em-ployees deal with life demands that can impact their work. If, for example, employees worry about their ability to purchase a home, offering a homebuyer workshop or one-on-one counseling may ease those concerns. If an employer has retention needs, it may want to offer a financial benefit with a requirement that the employee must stay at the company for a set amount of years.

TheemployermaywanttheEAHbenefittodomorethanatypicalbenefit.Forexample,theemployermaywanttomakethelocation of the home an eligibility requirement to help reduce commuting time or encourage neighborhood revitalization.

2. Determine the Needs of Employees – Employers can assess the needs of their employees using a tool such as a homeownership survey.Thiswillprovideinformationoncurrenthousingneedsand help them gauge how many employees might participate in an EAH benefit.

If the survey shows that most employees already own a home, the employer might want to provide a workshop on home maintenance or foreclosure prevention. If the survey shows a small number of interested employees, the employer can plan ap-propriatelyandsetupasmallprogram.(The Step-by-Step Guide includes an example of a survey.)

3. Conduct a Cost/Benefit Analysis – Employers considering a financialbenefitshouldconductacost/benefitanalysis.Itwillhelp them understand how much of an EAH benefit they can of-ferbasedonlowerturnovercosts.Acost/benefitanalysisshouldconsiderfactorssuchastheemployersize,employees’salaries,recruitmentexpenses,turnoverrate,andsoforth.(TheStep-by-Step GuideincludesaCBAworksheet.)



Employee turnover and lost productivity cost money. If the em-ployer can reduce turnover and increase productivity through an employer-assisted housing benefit, the company can save money. Employers and human resource departments will be familiar with turnovercosts.Thecostsoftrainingnewemployersmaybehigh,as we saw in the Policy Link report referred to earlier, and employ-ers should see if an EAH benefit might help decrease these costs.

4. Implement the Benefit Plan – After taking the three previous steps, the employer can select and implement the right EAH benefit plan for the company. You and your team can help to implement the benefit, especially the homebuyer and homeown-ership education component. Employers should also have both legal and accounting staff review the benefit plan and any associ-ated documentation.

5. Evaluate the Plan –Thefinalstepistosetupaprocesstomea-sureandevaluatetheplan’ssuccess.

TOOL

You can find details on these steps in Developing an Employer-Assisted Housing Benefit Plan Step-by-Step Guide, which includes a sample survey and CBA worksheet. Make sure you review the Step-by-Step Guide on Realtor.org before meeting with the employ-er, and refer the employer to the guide at the meeting. (p. TR.63)

EAH Plan Administration and Management

You are not expected to administer or manage the EAH benefit plan, especiallyifthebenefitprovidesfinancialassistance.Thisistheem-ployer’sresponsibility.

ThetimeandeffortinvolvedinmanaginganEAHbenefitplandependson what type of benefit the employer chooses. A simple plan, such as pro-viding onsite homebuyer workshops conducted by you and your team, requires minimal time and staff resources. A more extensive plan, such as a forgivable loan, generally involves more time and staff resources.

Slide 43



Employer-assisted housing financial assistance benefits can be complex foranemployertosetupandadminister.Mostemployers’humanresources staff have experience in creating a new employee benefit plan. However, it is often more cost effective for an employer to partner with a nonprofit organization or a for-profit company to set up and administer financial assistance benefits, just as may be done with the management of health benefits.

Note: NARispartneringwithNeighborWorkstointroduceemployer-assisted housing to them and their member organizations. A workshop was held at the 2010 NeighborWorks Training Institute in Washington, D.C.,togiveattendeesanoverviewofEAH.

Coastal Housing Partnership EAH Services

For example, in California, employers pay an annual fee to become a member of Coastal Housing Partnership, a nonprofit housing organization. The fee is based on the size of the compa-ny and the number of employees who might take advantage of an EAH benefit. This allows employees to access the discounts and other services (including homebuyer education) provided by Coastal Housing Partnership. Coastal Housing has a sliding dues scale for these services based on the size of the employer. For 2009, these dues range from $750 for an employer with under 26 employees to $11,000 for an employer with more than 2,500 employees. Total annual dues for a company of 51-100 employees are at $2,100, and annual dues are $3,400 for a company with 101-250 employees.

Home Financing Center EAH Services

In 2004, Home Financing Center launched an Employer-Assisted Housing initiative that addresses the challenges of a high-cost housing market and the effect it has on employers and employees alike. To help South Florida hospital employers recruit and retain professional employees, Home Financing Center offers a turnkey solution for corporations, schools, hospitals, governments and other major employers. The Home Financing Center also helps to administer and manage EAH benefit plans for employers.

If a financial assistance benefit is implemented, the employer may need to certify the employee’s eligibility, provide documentation and funds at closing to first mortgage lenders and, if appropriate, provide the employee with the necessary tax documentation.



Select Milwaukee

Select Milwaukee has a national reputation for its Employer-Assisted Homeownership (EAH) initiative. Since 1991, sev-eral Milwaukee employers have retained Select Milwaukee to administer their employee homeownership fringe benefit programs. EAH program services for employers include pro-gram administration, such as benefit processing and monitoring of employee participation, as well as marketing and outreach services. Select Milwaukee services and resources that encour-age and support sustainable homeownership among employees include qualification assessments, homebuyer/homeowner education, and information sessions on financial wellness and market-related trends (www.selectmilwaukee.org/services/EmployerAssisted.aspx).

TOOL

The Step-by-Step Guide provides model documents for employ-ers such as templates for loans, grants, and matched savings; an employee loan application; and a certification of employee eli-gibility. Make sure you review the Step-by-Step Guide on Realtor.org before meeting with the employer, and refer the employer to the guide at the meeting. (p. TR.63)

Public Programs Help Leverage EAH Benefits

Employer-provided EAH financial assistance can often be leveraged with public money to create a greater benefit for the employee.

Federal,state,andlocalgovernmentsmighthelpwithaffordabilitybyof-fering downpayment assistance programs, special homebuying programs, or below-market interest rate loans. As long as the EAH benefit meets financial assistance program requirements, it can be combined with these programs to leverage an EAH benefit from an employer.

Federalagenciesofferhousingassistanceprograms,includingtheVAHomeLoanprogram,HUD’sGoodNeighborNextDoorprogram,andFHALoans.

Slide 44



Note:Youmayrememberthat,aspartofitsplantostimulatetheU.S.housing market and address the economic challenges facing our nation, Congresspassedlegislationin2009thatgrantedataxcreditofupto$8,000tofirst-timehomebuyers.Thistaxcreditwasabletobeleveragedwith employer EAH benefit plans.

TheVAHomeLoanprogramenablesveteransandactivedutyperson-nel to get a loan from a private lender, but the VA will “stand behind” theloan.ThelendinginstitutionworkswiththeVAtocoveranylossesit might incur. Most loans are handled entirely by lenders. VA rarely getsinvolvedintheloanapprovalprocess(seewww.benefits.va.gov/homeloans/lp.asp).

HUD’sGoodNeighborNextDooroffersasubstantialincentiveintheformofa50percentdiscountfromthelistpriceofthehome.Inreturn,thehomebuyermustcommittoliveinthepropertyfor36monthsastheirsoleresidence(seewww.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm).

Also,HUD’sHOMEprovidesformulagrantstostatesandlocalitiesthat communities use – often in partnership with local nonprofit groups –tofundawiderangeofactivitiesthatbuild,buy,and/orrehabilitateaffordable housing for rent or homeownership or provide direct rental assistancetolow-incomepeople.Theprogram’sflexibilityallowsstateand local governments to use HOME funds for grants, direct loans, loan guarantees or other forms of credit enhancement, or rental assistance or securitydeposits.TheHOMEProgramcanbeusedeffectivelytosupportEAHprograms(seewww.hud.gov/offices/cpd/affordablehousing/library/modelguides/2000/2019.cfm).

FHAloanshavebeenhelpingpeoplebecomehomeownerssince1934.MostFHAprogramsrequiretheborrowertomakeaminimumdown-paymentintothetransactionofatleast3.5percentofthelesseroftheappraised value of the property or the sales price. Additionally, the bor-rower must have sufficient funds to cover borrower-paid closing costs and feesatthetimeofsettlement.Fundsusedtocovertherequiredmini-mum downpayment, as well as closing costs and fees, must come from acceptable sources and be verified and properly documented.



A gift from an employer is considered an acceptable source of borrower fundsandiseligibleforusetowardthebuyer’s3.5percentinvestment.Forfundstobeconsideredagift,theremustbenoexpectedorimpliedrepayment of the funds to the donor by the borrower – so only a grant, not a loan, from the employer is eligible. However, there are some excep-tions to this, for example, if the employer is a government entity or the employeeisover60yearsofage.

Even if the employer-assisted housing financial assistance cannot be used towardthe3.5percentdownpayment,theemployeecanstillapplyforanFHAloan.And,theEAHbenefitmaybeacceptabletoFHAtouseto-ward closing and settlement costs, assuming the EAH benefit plan allows the funds to be used beyond the downpayment.

Formoreinformation,seewww.hud.gov/buying/loans.cfmandwww.fhaoutreach.gov/FHAHandbook/prod/contents.asp?address=4155-1.5.B.

StateHousingFinanceAgencies(HFAs)haveprovidedaffordablemort-gagesto2.6millionfamiliestobuytheirfirsthomesthroughtheMort-gageRevenueBond(MRB)program.UsingHousingBonds,theHous-ingCredit,HOME,andotherfederalandstateresources,HFAshavecrafted hundreds of housing programs, including homeownership, rental, andalltypesofspecialneedshousing(seewww.ncsha.org/about-hfas).

Pennsylvania Housing Finance Agency’s Employer Assisted Housing Initiative

Participating employers that offer a monetary home purchase benefit to their staff can partner with PHFA to stretch their em-ployees’ homebuying dollars even further. Although the employ-ers’ benefits do not have to be contingent on a PHFA mortgage, if the employee is approved for a PHFA mortgage through a par-ticipating lender, the borrower will receive additional financial advantages, at no cost to the employer.

Stateandlocalgovernmentscanmaximizethelikelihoodoflocalemploy-ers offering an EAH benefit by offering financial incentives to augment or offset private contributions and by facilitating collaboration with nonprofit organizations that work with interested employers to plan and



manageEAHbenefitprograms.Theseinitiativescanincludeprovidingmatching funds for downpayments, giving tax credits to employers that provide housing assistance financing as employee benefits, administering programs targeted to municipal employees, and partnering with nonprof-ithousingorganizations.Communitieswithlimitedfundscanencourageemployers to take a leadership role in advocating for new development and policy changes that can help meet local needs.

Philadelphia “Home Buy Now” Program

The Philadelphia “Home Buy Now” program provides government matching funds that boost the purchasing power for employees who buy or renovate a home in Philadelphia. An employer’s con-tribution to an employee (at a minimum of $500 per employee) is matched dollar-for-dollar by the city up to $5,000 and can be used to defray homebuying costs. See more about this program at www.gpuac.org/programs/documents/HBNFinal.pdf

Long Island Housing Partnership Leverages Public Funds

The Long Island Housing Partnership (LIHP) shows how various financial resources can be leveraged. LIHP has access to a vari-ety of federal and state housing dollars and is able to combine this money with employer financial assistance to help employ-ees purchase homes.

130% AMI

$3,000

Not eligible Not eligible

$9,000 $12,000

Not eligible

$20,000 $20,000

$32,000

120% AMI

$3,000

Not eligible $5,000 $9,000

$17,000

$15,000 $20,000 $35,000

$52,000

80% AMI

$3,000

$12,000 $5,000 $9,000

$29,000

$15,000 $20,000 $35,000

$64,000

Employer Grant Federal HOME $$ New York State AHC $$ NYS "HELP" $$ (3 x $3,000) Total Downpayment $$ NYS Rehab $$ "HELP" Rehab $$ Total Rehab $$ Total Assistance

Long Island Housing Partnership Bundling Employer Financial Assistance and Public Funds



The example displayed here shows the total assistance that might be available to an employee for home purchase and rehabilitation under the Long Island Housing Partnership’s pro-grams. A $3,000 grant from the employer can be leveraged up to $64,000 for an employee earning up to 80 percent of area median income (AMI), up to $52,000 for employees earning up to 120 percent of AMI, and up to $32,000 for employees earn-ing up to 130 percent of AMI.

For families earning up to 80 percent of AMI, a $12,000 fed-eral HOME grant is available for home purchases. Additionally, $5,000 is available from the New York State Affordable Housing Corporation (AHC), and a three times matching grant is available from the New York State HELP program. HELP stands for Hom-eownership and Economic Stabilization for Long Island Program, a special program the state legislature set up for Long Island.

Additionally, for families who purchase and rehab their homes, an additional $20,000 of HELP funds are available as well as $15,000 of New York State rehab funds. You can read more about the LIHP program at www.lihp.org/HELP.aspx

Thisisanexamplefromonecommunity.Conductresearchtofindex-amples from your own community and state. When you meet with local employers, present the data you found.

TOOL

The State & Local Housing Assistance Programs resource in the Tools & Resources section will list some examples of state and local financial assistance programs. You should find out what programs exist in your community. (p. TR.23)

EAH Tax Incentives for Employers

As a way to encourage employers to offer an EAH benefit, individual states may offer tax advantages to employers that provide EAH benefits.

ThestateofIllinois,forexample,haslegislationthatallowsemployersto receive a tax credit for contributions to a qualifying employer-assisted housingproject.Thelegislationoffersatwo-partincentivepackageforemployersthatimplementemployer-assistedhousingbenefits.Thepack-

Slide 45



age includes a state dollar-for-dollar match of employer housing assis-tancecontributions(upto$5,000,basedonhouseholdincome)anda50-centtaxcreditforeachdollartheemployerinvestedinEAHbenefits.Theemployerinvestmenteligibleforthetaxcreditincludesnotonlydownpayment assistance grants provided to the employees but also the costs of outsourced program administration and homebuyer education.

Other states may be considering similar legislation, so follow and moni-tor any possible legislation that your state may introduce and pass.

Unfortunately, no federal regulations give favorable tax treatment to employer-assisted housing financial contributions as of the beginning of 2010.TheHousingAmerica’sWorkforceActlegislationwasintroducedin2007inCongresstoprovidethisfavorabletaxtreatment,butthelegislation was not passed.

WhileanynewfederalinitiativeswillfaceachallengingCongress,anEAHworkinggroupthatincludesNARstaffisworkingonawrite-upoftheHousingAmerica’sWorkforceActasaprogramtostrengthenbusi-nessesandpromoteeconomiccompetitivenessbystabilizingworkers.Thelanguage could be attached to a jobs bill or other pro-business legislation.

REACH Illinois Tax Credit Incentive

In this example, an investment of $22,000 yields a program valued at $34,000 with a net cost of less than $3,000. A program of this size could be suitable for a company with 200 to 400 employees.

Budget Cost

Counseling/administration: 15–20 employees $10,000

Downpayment assistance: 4 employees at $3,000/employee $12,000

Gross investment by employer $22,000



Budget Cost

Less state tax credit -$11,000

Less federal tax deduction* -$8,360

Net cost of program $2,640

Program Value Cost

Employer investment $22,000

Matching funds** $12,000

Total financial value $34,000

*Figure is based on the 38% tax bracket [(full investment) × .38].

**If employees meet state income requirements, they will be eligible for up to $5,000 in matching downpayment assistance.

Tax Implications for Employees and Employers

An EAH financial assistance benefit from an employer to an employee can have tax implications for the employee. Employees should consult with their tax advisers for counsel on their specific situations.

TheIRSconsidersforgivableloansandgrantsascompensation.Assuch,they are taxed as income to the employee and are deductible as a business expense to the employer.

A grant would be taxable to the employee in the year in which it was provid-ed and would be deductible as an expense to the employer in the same year.

Forgivableloanswouldbetaxablewhentheyareforgiven.Forinstance,ifanemployerprovidesa$5,000forgivableloanandforgives$1,000of this loan each year, the $1,000 forgiven would be considered taxable compensation to the employee in that year and would be deductible as

Slide 46



abusinessexpensefortheemployerinthatyear.Theprincipalportionofloansthatarerepaiddoesnotaffecttheemployee’staxsituation.

Additionally, deferred or reduced interest on loans over $10,000 may re-sultintheIRStreatingthedeferralorreductionininterestasincometothe employee, creating additional tax liability for the employee. In these instances,theIRSwillimputeinterestincomebasedonthedeferredor reduced amount versus the market interest rate and will include this imputed amount as income to the employee.

In some instances, employers “gross up” the loan or grant amount to compensatetheemployeefortheincreasedtaxliability.Forinstance,ifthegrantforthedownpaymentwas$5,000,theemployermightgrossupthe$5,000to$6,250(where$1,250aretheassumedtaxeson$5,000)tocompensate the employee for the increased tax liability.

Mississippi passed legislation in 2009 that allows an employer to give workers up to $10,000 toward the purchase of a home and to give work-ers a one-time gift of up to $2,000 for rental assistance or security depos-its.Thebillexemptsanemployeefromstateincometaxonthosefunds.

Other states may be considering similar legislation, so follow and moni-tor any possible legislation that your state may introduce and pass.

Employers Offering EAH Benefits

Let’slookatsomedataonemployer’swhoofferemployer-assistedhous-ing benefits.

Accordingtothe2010EmployeeBenefitssurveyconductedbytheSoci-etyforHumanResourceManagement:

• 6percentofemployersofferhousingcounselingaspartofanEAHorrelocationbenefit(downfrom11%in2008and9%in2009).

• 2percentofemployersofferdownpaymentassistanceaspartofanEAHorrelocationbenefit(downfrom9%in2008and6%in 2009).



• 3percentofemployersoffermortgageassistance(downfrom10%in2008and7%in2009).

According totheMetropolitanPlanningCouncil,notallemployeeswilluse an employer-assisted housing benefit, and not all of those will use this benefit at once. Typically only 10 percent of employees actually partici-pate in counseling, and of those, only 1-to-2 percent utilize a financial assistance benefit when the benefit is offered to employees.

Thisisanimportantpointtonotetoemployers.Notalltheemployeeswill utilize the employer-assisted housing benefit, and typically employers will not have a significant demand for financial assistance benefits all at the same time.

EAH in Action

We have some examples of employer-assisted housing at a small em-ployer, at a government employer, at a place-based employer, at a midsize employer and at a large employer. In these examples, you will see the application of employer-assisted housing in different types of housing markets, what goals the employer had and how the different programs can be blended together.

EAH at a Small Employer

Let’sstartoffwithacaseofBrownstein,Hyatt,FarberandSchreck.BrownsteinHyattisasmalllawfirmwith82employeesbasedinSantaBarbaraCalifornia.

SantaBarbaraisaveryexpensivehousingmarket,andtheemployerhashad difficulty attracting and retaining workers. Additionally, it has been difficult to replace employees who leave, so when an employee leaves, there is a significant cost to the company.

Brownstein Hyatt created an employer-assisted housing benefit with two components: homebuyer education and discounted rates on home-purchase andmortgageservicers.Theydonotprovidedirectfinancialassistance.

Slide 47



To create the program, Brownstein Hyatt partnered with a local nonprof-it,theCoastalHousingPartnership,whichadministerstheprogramandconducts the homebuyer education.

CoastalHousingisanonprofitthatbringstogetherrealestateprofession-als who provide a variety of discounted services to individuals buying or rentingahomeintheSantaBarbaraarea.TheseservicesareavailabletotheemployeesofthecompanieswhojoinCoastalHousingPartnershipby paying their annual membership fee. Employers refer employees to CHP.EmployeesfilloutaformtogettheauthorizationletterfromCHP.Thatiswhattheytaketotheserviceproviderstogetthediscounts.

ThroughthepartnershipwithCoastalHousing,BrownsteinHyattisable to take advantage of an already established program for discounts on home purchase and mortgage services.

Thesediscountsincludediscountedlenderfees,appraisalfeesandinspec-tion fees, as well as a quarter point mortgage interest rate reduction for individuals who have completed the homebuyer education programs.

Brownstein Hyatt has had a very favorable outcome from the employer-assisted housing benefit.

Through2007to2009,45employeesparticipatedintheprogram,and24 employees actually purchased homes after completing the program.

As a result, the company has become a strong advocate for employer-assistedhousinginSouthernCalifornia.Thecompanyfeelsthattheemployer-assisted housing benefit has set it apart as an employer of choice in the minds of prospective employees.

EAH at a Government Employer

Thenextcaseisanexampleofemployer-assistedhousingatagovernmentemployer.TheemployeristheChicagoPublicSchoolSystem.Thecaseis designed to demonstrate the use of a homebuyer education program in conjunction with a forgivable loan and demonstrate the use of financial assistance to effect neighborhood revitalization.

Slide 48



TheChicagoPublicSchoolsystememploys44,400peopleandneedstorecruittoptalentandretainnewteachers.TheyalsoarelookingtoprovidearesourcetosupportthecityofChicago’sresidencyrequirementandpromotecommunitydevelopmentinChicagoneighborhoods.

TheChicagoPublicSchoolsemployer-assistedhousingbenefitincludeshomebuyer education and counseling, monthly fairs and seminars to educate teachers about the housing market and how to get started in an employer-assisted housing program, and forgivable loans.

A $3,000 forgivable loan is available for a home purchase anywhere in thecity,whilea$7,500forgivableloanisavailabletothoseemployeespurchasing homes in a Plan for Transformation community, which is a communityinadesignatedredevelopmentarea.Thereisnohouseholdincomelimitforthisprogram,sotheincomeofateacher’sspousehasnoimpactoneligibility.Themajorityofteacherswhotakeadvantageoftheprogram are low- and moderate-income households of 1-2 persons.

ChicagoPublicSchoolspartnerswithlocallenderstoprovidethemort-gagesfortheparticipantsandhaspartneredwithRogersParkCommunityDevelopmentCorporation,alocalnonprofit,forprogramadministration.

An in-house resource center was opened in 2003, two years before the launchofthefinancialbenefits.Sincethen,1,300employeeshavere-ceived counseling, and 900 have purchased homes.

In addition, the school system received employer tax credits from the StateofIllinoisforimplementinganemployer-assistedhousingprogram.Sincetheschoolsystemdoesnotpaytaxes,theywereabletosellthesetaxcreditsfor$500,000.

EAH at a Place-Based Employer

Thenextexampleisaplace-basedemployer,theJohnsHopkinsUniversi-tyandHospital.Thisexamplefocusesontheuseofanemployer-assistedhousing benefit by an employer to improve the quality of life of its em-ployees and redevelop the surrounding neighborhoods. It also provides an example of leveraging matching funds from other programs.

Slide 49



Johns Hopkins University and Hospital are located in Baltimore and havemorethan45,000employees.

Theuniversityandhospitalwantedtostrengthenthecommunityintheneighborhoods surrounding the university and to encourage employees to live neartheirwork.Theemployer-assistedhousingbenefitfocusesonthesegoals.

Theprogramincludesahomebuyereducationandcounselingprogramandalsohasafinancialcomponent.Thefinancialcomponentisagrantofbetween$2,500and$17,000,whichvariesdependingonneighborhood.

Duringthefirstfiveyears,iftheemployeeleavesJohnsHopkinsordoesnot live in the property, they are required to repay all or part of the grant. Therepaymentrequirementsare100percentforthefirstthreeyears,50percentduringthefourthyear,and25percentduringthefifthyear.

JohnsHopkinshaspartneredwithseveralorganizationstostructurethisEAHbenefit.ThefinancialassistancecomponentisfundedprimarilybyJohnsHopkinsandthroughamajorgrantprovidedtoJohnsHopkinsbyTheRouseCompanyFoundation.Thefinancialassistancecomponentalsoincludesa$1,000matchfromtheCityofBaltimore’sLiveNearYourWorkprogram.ReadmoreontheLiveWhereYouWorkprogram.http://www.livebaltimore.com/resources/incentives/employerprograms/livenearyourwork/

Thisisanotherexcellentexampleofhowanemployer-assistedhous-ing benefit can leverage funds from other sources to help employees purchase a home.

JohnsHopkinsadministerstheprograminternallyandcontractswithanonprofit housing organization for homebuyer education and counseling.

JohnsHopkinshashadpositiveresultsfromitsemployer-assistedhousing benefit.

To-date, more than 400 employees have been awarded grants and pur-chased homes. Additionally, the university increased the vibrancy of the neighborhoods nearby their campuses and hospital.



EAH at a Midsize Employer

OurnextexampleisSystemSensor,amanufacturerbasedinSt.Charles,Illinois,with500employees.Thecompanywashavingdifficultyattract-ing and retaining well-paid manufacturing workers and was experiencing higher than normal absenteeism due to the long commutes many of the workers experienced on a daily basis.

SystemSensor’semployer-assistedhousingbenefitincludestwocompo-nents:ahomebuyereducationprogramanda$5,000forgivableloanfromthe company.

Inorderfortheemployeetobeeligibleforthe$5,000loan,theemployeemustpurchaseahomewithin15milesoftheworkplace.Theloanisfor-given over five years provided the employee remains with the company.

SystemSensorpartneredwithtwononprofitstodevelopandimplementtheprogram.TheMetropolitanPlanningCouncilofChicagodesignedtheprogramanddevelopedameasurementmetrics.JosephCorporation,a local nonprofit, administers the program and provides the homebuyer education and counseling.

SystemSensorhashadapositiveexperiencewiththeiremployer-assistedhousing benefit. Of the 122 employees who have completed the home-buyereducation,67havepurchasedhomes.

Inaddition,SystemSensorestimatesthatitsavesapproximately$100,000 per year through increased workforce stability.

EAH at a Large Employer

Our last employer-assisted housing example is the UniversityofChicagoandtheUniversityofChicagoMedicalCenter.Combined,theseorgani-zations have more than 14,000 employees.

Theuniversityandmedicalcenterneededtoimprovetheaffordabil-ity of housing in the established neighborhoods nearby and wanted to



improve the quality of life for their employees by having them locate closertowork.Theyalsowantedtoredevelopsomeoftheneighborhoodssurroundingtheuniversity.Theestablishedemployer-assistedhousingbenefit focused on these goals.

Theprogramincludesahomebuyereducationandcounselingbenefitandalsohasafinancialcomponent.Thefinancialcomponentisaninterest-freeforgivableloanofupto$7,500thatisforgivenoverfiveyears,provided the employee remains employed by the university and medical centerAdditionally,matchingfunds(upto$5,000)areavailablefromtheStateofIllinoisforcertaintargetedneighborhoodsandincomeranges.Intheseinstances,thehomebuyersreceiveacombined$12,500toassistintheirhomepurchase.SomeemployeesreceivedadditionalbenefitfromChicago’smortgagecreditcertificateprogram,aswellasothercity,state,foundation and private lender programs.

Thisisanexcellentexampleofhowanemployer-assistedhousingbenefitcan leverage funds from other sources to help employees purchase a home.

TheuniversityandmedicalcenterpartneredwiththeMetropolitanPlan-ningCouncilforthedesignoftheprogramandpartneredwithNeigh-borhoodHousingServicesinChicagotoadministertheprogramandprovide homebuyer education and counseling.

Theinvolvementofthesetwononprofitpartnersfacilitatedtheleveragingof the matching state funds.

Theuniversityandmedicalcenterhavehadpositiveresultsfromtheiremployer-assisted housing benefit.

Ofthe450employeeswhoreceivedcounselingandhomebuyereduca-tion,158purchasedhomes,and11receivedamatchinggrantfromtheStateofIllinoisandpurchasedahomeinthetargetneighborhoods.

Additionally, the university increased the vibrancy of the neighborhoods nearby and also contributed $1 million to a nonprofit loan fund to reha-bilitate neighborhood rental properties.



TOOL

You can see more examples of employers implementing EAH benefits on a list located in the Tools & Resources section of your guide (p. TR.19). You may want to give this list to the employer during your meeting.

Using EAH Benefits to Overcome Barriers

Let’slookatthebarrierswediscussedinModule1andtheemployer-assisted housing benefit type that addresses the barrier.

Homeownership barriers include lack of knowledge; mortgage qualifica-tion;lackofconfidence;creditscores;fears/myths;andlackoffundsfordownpayment and closing costs.

Homebuyer education can be used to address the lack of knowledge about the homebuying process as well as the fear and myths about the process.

One-on-onecounselingcanbeusedtoimproveanindividual’sconfi-dence in their ability to purchase a home, as well as to address credit score issues and mortgage qualification.

Financialassistanceisdesignedtoaddressalackoffundsfordownpay-ment and settlement costs.

Slide 51

Slide 50



Module 3 Summary

Module 3 introduced the different types of EAH benefits: homebuyer and homeowernship education; one-on-one counseling; and financial as-sistance, including a discussion on loans, grants and matched savings.

Also included in the module were examples of how public funds can be used as part of an EAH financial assistance package, and examples of EAH at a small employer, a place-based employer, and a government employer.

Slide 52

Module 3 - National Association of Realtors

Documents

Transcript of Module 3 - National Association of Realtors