New worker perk: help buying a home
In Illinois, 70 employers offer assistance with everything from down payments to credit counseling.
By most measures, Edna Williams-Foreman shouldn't be a homeowner.Skip to next paragraph
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When she bought her condo four years ago, she was making $29,000 a year, was a single mother with three kids, and, just one year prior, had a low credit rating of 499.
But a University of Chicago program designed to encourage employees to settle in the developing neighborhoods around the school gave her a $7,500 forgivable loan toward her down payment and put her through a homeownership consulting program that helped her bring up her credit rating, taught her about the housing market and how to budget, and helped her avoid a tempting adjustable-rate mortgage that would have almost certainly ended up in foreclosure.
"My dream came true," says Ms. Williams-Foreman, bursting with pride as she shows off her three-bedroom condo that she's painted and decorated exactly as she wanted.
In the midst of dim news about the housing market, including a wave of foreclosures, sinking prices, and dwindling rates of home ownership, advocates tout employer-assisted housing (EAH) programs like the one that helped Williams-Foreman as a boon for both middle-class workers and employers.
A small but growing phenomenon, such programs usually combine counseling services with some sort of down-payment assistance – typically in the form of a loan that's forgiven if the employee stays with the company a certain amount of time. EAH efforts can often be the extra boost needed to help people buy their first home in an area near where they work. For employers, the programs help reduce turnover and encourage loyalty.
"It's a win-win for both companies and employees," says Michelle Olson, director of external and government affairs at the University of Chicago, who says the university began the program five years ago in an effort to better support middle-income employees and to help with the redevelopment of certain neighborhoods around Hyde Park, where it's located. Employees who purchase in some of those targeted neighborhoods – like Woodlawn, where Williams-Foreman bought her condo – have a higher household income limit and a higher purchase-price limit as an incentive.
Since the university began its program, it's had 600 employees go through the counseling program, 160 of whom eventually bought a home. Just one home went through foreclosure, says Ms. Olson, and that belonged to an employee who ignored the counselor's advice on a loan package.
What began as a rare phenomenon got a boost in Illinois when the state approved a law giving employers a tax credit of 50 cents for every dollar they invest in EAH. A handful of other states have since enacted similar laws, and federal legislation modeled on Illinois's law has been introduced.