Employer-assisted housing: Part 2, the why
[Continued from yesterday's Part 1.]
Yesterday we explored how employer-assisted housing payments work, at least in the specific case of
With the inversion in housing policy innovation, advances in workforce housing finance are being led by employers who cannot find employees willing to work for what the employer wants to pay, unless the employer tops up the pay packet with place-based assistance, most commonly but not exclusively in the form of down payment help structured as a soft loan.
Laying a path to your Amityville front door
Those most likely to benefit from employer-assisted housing programs are workers who:
Plan to stay with an employer for a while and
Have a good financial track record.
Because the employer wants the employee to stay, it can’t be an immediate grant:
Like Loyola and the
What if the employee is fired? Does the loan accelerate or is it forgiven?
Your loan is not forgiven!
The housing loan’s velvet handcuffs also represent a form of forced savings.
To think I used to have labor mobility!
To participate, a worker usually contacts the employer’s human resources department, which does a preliminary screening. The worker then is referred to an outside organization, such as Neighborhood Housing Services of Chicago or Affordable Housing Corp. of Lake County.
Both of these are solid, committed agencies with expertise.
A name you can trust
Those organizations, not the employer, decide who receives the loans and works with applicants on financial education and counseling.
Real service for real properties
The university employers are wise to outsource credit decision. It’s a specialized activity, done only occasionally by any given employer and constantly by a homeownership counseling agency, a discrete part of the value chain. And moving the credit decisioning and counseling out of the employer makes it disinterested but not uninterested, and therefore more defensible whether the applicant is rejected or accepted.
“Most HR people don’t consider themselves housing experts, and they want to protect the confidentiality of the applicant,” Snyderman says.
Stephanie Henry, program manager for Northwest Housing Partnership, which has worked with programs in
Notice the value of a robust, diversified, healthy housing finance ecosystem. In one part of one city, we have three agencies all of whom do housing affordability. That’s extraordinary economic speciation, which fosters innovation and continuous quality improvement.
– says the outside agencies must “educate [buyers] to make sure they make intelligent decisions. … We go through their budget, their credit rating.”
Homeownership requires financial literacy.
The counselors will advise those not yet in a position to buy on how to achieve that goal, but Henry says there are no financial handouts.
A little symbiosis here between specialists: the agencies do the credit decisions, the employers provide the carefully calibrated handouts.
“If there is a [financial] problem, you have to fix it yourself,” she says. “You may have some money saved but not enough.”
Some advocates say the buyer education and counseling are the most valuable part of the program.
‘Most’, who knows? Money tends to matter, doesn’t it?
Any money for Eddie Money
But ‘very’ is indisputable.
They help ensure potential homeowners don’t make the missteps of so many in the recent housing bubble. Since 2001, only five foreclosures have occurred in the 1,700 Illinois EAH closings, Snyderman says.
Admirable track record, and a benefit to all concerned.
Benefiting all concerned
For employers, offering assistance can be a win-win proposition, says Michael Rummel, former mayor of
The tax credits are soft equity, adding to the soft debt and hard equity we’ve already observed above.
On top of that, employers often use the programs to attract and keep employees or to invest in an urban area near an employer.
Ah! Another benefit to the employer: by ringing their campus or work neighborhood with satellite homeowners who are both committed to improving their own property and working in their factory/ university/ office, the employer protects the value of all its property.
We feel better with your little houses at our base
Homeownership is the hillside sod of society; housing is the linchpin of cities. Ring your castle with homesteads and you have a loyal militia to defend it.
Loyola’s program, for example, helps workers buy in a neighborhood around the school’s
Surrounded on three sides by unknown
Loyola on the North Side, and Chicago on the South Side, have been in the same locations for decades upon decades, during times good and bad. With so much of their wealth is tied up in immovable infrastructure, they have to make the city work – and if they can’t fix the whole city, they want a viable Potemkin village around the campus. Similar thinking motivates Yale in
Designed to encourage staff at all income levels to live near the campus, the school lends up to $10,000 depending upon the home location and the applicant’s household income.
If we can’t directly influence the neighborhood, at least we can directly influence who lives there.
Michelle Olson, the school’s director of external and government affairs, says the program was “launched to promote home ownership and investing in targeted redevelopment neighborhoods surrounding the university and to address home affordability concerns in the more established communities near campus.”
Now if we can fill in the neighborhood with an orchard of homeowners …
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