By BECKY GILLETTE
MBJ Staff Writer
What would you say to a benefit that can build tremendous goodwill with employees, greatly reduce attrition, and can actually save the company money?
In today’s tight labor market, employers are looking at every available option to attract and retain a quality workforce, including improving benefits. One such benefit is the Employer Assisted Housing (EAH) program offering by Fannie Mae, the nation’s largest source of home mortgage funds.
“The biggest deterrent to home ownership in Mississippi is a down payment,” said Bruce Crain, director of the Mississippi Partnership Office of Fannie Mae. “One way to overcome that is to utilize the resources of our employers in the state to assist the employee in purchasing a home. When you consider the costs of recruiting and training new employees, the Employee Assisted Housing program can be a benefit that actually saves a company money instead of costing money. That is because you have decreased costs for recruitment and training, and have less loss of productivity.”
Under EAH, employers agree to help employees pay for a down payment and closing costs. The employee pay-back can be structured several ways. One popular option is to forgive the loan to the employee if they stay on the job an agreed number of years. This is referred to as “golden handcuffs.” If the employee leaves before the pay-back period is up, part of the loan would have to be repaid.
Crain said the program has the following advantages.
• Helps attract motivated employees by providing a competitive edge in a tight labor market.
• Improves employee morale.
• Can help employees avoid long commutes that can take a toll on morale and productivity.
• Is a creative way to invest in the community where the company resides.
• The home mortgage deduction on income tax returns can actually result in more take-home pay for employees.
Crain said that when EAH was offered to employees of Fannie Mae in the early 1990s, it cut employee attrition by 50%.
“This program is ideal for Mississippi,” Crain said. “You have certain markets like the Gulf Coast where you have a very tight labor market, and it is very competitive. This is a way to stabilize your workforce. There is a lot of goodwill that can be bought by employers for helping an employee to realize the American dream of home ownership. Benefits include savings accrued from reductions in turnover, recruitment/relocation costs and training budgets.”
The program can be structured several ways. One is to make the assistance available in the form of a grant. Or, the downpayment can be in the form of a second mortgage program administered by the lender on behalf of the company. Crain said the version of the program that has the most appeal is that of a forgivable note where the employee works for the company for a designated period of time before becoming eligible for the program, and then assistance is offered on the condition that the employee stay with the firm an agreed number of years, usually three to five.
Crain has made presentations to major companies throughout the state. While the program is a new one that hasn’t been used a lot yet, response has been enthusiastic.
“We have made presentations to the top employers in Jackson County, and this program is a natural over there because there are a lot of problems retaining a stable workforce,” Crain said.”We have not had any company we have talked to that doesn’t believe this has merit. It is ideal for employers, employees and communities in Mississippi in doing what everyone wants to do: attract and retain a quality workforce.”
The program can be structured to meet the needs of the company, and is flexible about how it can be developed and administered. Different levels of assistance can be provided for different types of employees. Employees can be required to have worked for the company for a certain period of time before being offered the program, or it can be offered in lieu of a signing bonus.
The advantage of that is that a company might pay a signing bonus only to have the employee quit after a year. But with the EAH program, employees have a vested interest in staying with the company until the requirements for having the loan forgiven are met.
The EAH program can also dictate how far away from the place of employment the home can be. That can be helpful because employees who are living close by are more likely to stay with the company than those who face long commutes. This can also help rebuild the company’s surrounding neighborhoods.
For interested employers, Fannie Mae can assist them in developing their own program. Through Home Buyer seminars, Fannie Mae can work with the employer to educate employees on how the program works and the benefits of homeownership.
When employers decide to participate in the program, Fannie Mae puts on Home Buyer Fairs to explain to employees how the program works. Fannie Mae and participating lenders also work with local credit counseling agencies that can provide credit counseling for employees in need of counseling.
The EAH program can be used with all of Fannie Mae’s mortgage products. The mortgage loans are run through Fannie Mae approved lenders. The loans are made by the lenders, and then purchased from them by Fannie Mae. EAH can be used for public as well as private sector employees. For example, an EAH program was developed by Fannie Mae and the state legislature to attract teachers to targeted rural school districts in the state.
For more information about Fannie Mae’s Employer Assisted Housing program, contact the Fannie Mae Mississippi Partnership Office at 1-800-601-1194.