FAMILIES ACROSS AMERICA STRUGGLING TO FIND AFFORDABLE HOMES, WORKFORCE HOME BENEFIT ONE SOLUTION

June is National Homeownership Month

McLean, VA – Working families across the country earning the median or less than median income for their area are struggling to find homes that they can afford, while the cost of housing is making it difficult for employers to recruit and retain workers who face long commutes because they can’t afford to live near where they work. In addition, lack of information about the home buying process, less than perfect credit and insufficient funds for a down payment are keeping some individuals from even pursuing their homeownership dreams. One solution that is increasingly being utilized is employer-assisted housing programs.

"Employer-assisted housing programs are becoming an increasingly attractive way to provide a valuable benefit to employees and create more new homeowners," said Bob Tsien, senior vice president of Freddie Mac. "Mayors and other public officials see workforce home benefits as an effective tool to engage their local business communities in affordable housing and community revitalization efforts. Employers recognize the benefits of employer-assisted homeownership programs in workforce recruitment, retention and reliability, as well as in promoting the stability of the economic environment in which they are located."

According to the Society for Human Resources Management 2004 Benefits Survey, 12 percent of employers offered home ownership assistance programs in both 2004 and 2003, compared to 7 percent in 2002. In addition, 8 percent of employers offered down payment assistance in 2004, compared to 9 percent in 2003 and 4 percent in 2002. The organizations most likely to offer mortgage assistance are in the finance and manufacturing sectors, and employ more than 500 employees.

In the last two years, Freddie Mac has been working with employers around the country to make home ownership possible for their employees. Freddie Mac’s signature Workforce Home Benefit solution can be structured and customized to fit the needs, budget and future growth of a company. This turnkey solution, typically for companies with at least 1,000 employees, can be structured to include many features such as homebuyer education and counseling, financial literacy training, and down payment and closing cost assistance. Freddie Mac can link employers with lenders, local non-profit housing counseling agency and local down payment assistance programs.

Each Workforce Home Benefit offered by an employer is unique to its own needs. Any combination of the following options can be used by the employer: home buyer education, repayable loan, deferred loan, forgivable loan, matched savings account, grant and loan guaranty. The benefit can be administered by the employer or by a third party. Freddie Mac provides tools and information to help employers make these decisions.

The Workforce Home Benefit option are accepted with loans originated to employees who have received the benefit by most lenders and the secondary mortgage market although there may be additional requirements and restrictions when certain options are used.

A major tool that may be used with certain workforce Home Benefit options is Freddie Mac’s new Home Possible® suite of mortgage products. The Home Possible mortgage features zero and three percent down payments and flexible credit requirements to help low-and moderate-income borrowers qualify for a conforming conventional mortgage for a single family property with as little as $500 of the down payment or closing costs coming from their own funds. These and other mortgage products are offered by numerous lenders across the country. Freddie Mac will buy eligible mortgages from lenders.

Some employers choose to offer down payment assistance while others may choose only to work with a local non-profit to offer home ownership financial counseling to employees or utilize down payment assistance programs that may already be offered by housing agencies or nonprofits in their community.

Topics covered in the homeownership education sessions include: credit and why it's important, managing money, goal setting, budgeting and the mortgage process.

"The benefit to employees goes beyond buying a home," said Tsien. "They take ownership not only of their new house, but also in their job and the company they work for."

Listed below are examples of how employers have worked with Freddie Mac to implement workforce housing benefits for their employees.

Tysons Foods

In 2004, Tyson Foods worked with Freddie Mac to design a plan for their employees. The Tysons’ plan allows many of the 120,000 Tysons staff to obtain financial assistance to purchase a home and provides homeownership education and credit counseling to all employees who want to become homeowners. About 35 loans have been approved since the program’s inception.

Allegheny General Hospital

Allegheny General Hospital in Pittsburgh offers its program to employees who have worked there for at least two years full time. A local non-profit, the Northside Leadership Conference, created a special down payment assistance fund and can grant between $1,000 to $5,000 per eligible employee. And the Neighborhood Housing Services of Pittsburgh is conducting pre- and post-purchase homebuyer education and counseling at the hospital. Through a collaboration with Action Housing of Pittsburgh, Workforce Home Benefit will offer a matched savings account option in which eligible employees can make contributions to an account set up with the hospital's credit union earmarked specifically towards the cost of buying a home. Once an employee's specific savings goal is reached, the employee will receive a state grant in the exact same amount up to $2,000 to assist with a down payment or closing costs.

"The Workforce Home Benefit is also a further example of our deep commitment to the health and revitalization of the Northside community, which is so critical to the success of our organization and the people we serve," said Connie Cibrone, AGH president and chief executive officer.

Jackson State University

Jackson State University in Mississippi is the first historically black college or university (HBCU) in the nation to offer the Freddie Mac workforce solution. The program is supported by the City of Jackson's Homebuyer Assistance Program, which will provide funds that JSU employees will use for downpayment, closing costs and other costs toward the purchase of a home.

"We are thrilled to be a part of the Workforce Home Benefit Initiative," said Jackson Mayor Harvey Johnson Jr. "This program, combined with the city’s ongoing efforts to revitalize and increase the housing stock, particularly in West Jackson, will go a long way in boosting homeownership in Jackson."

Freddie Mac

Freddie Mac is helping its own employees achieve the dream of homeownership with its affordable Home Benefit Program announced. The Freddie Mac Home Benefit solution is offered to both full and part-time employees who are first-time homebuyers making less than $75,000 in annual base pay, and who have completed at least one year of service to the company. The program provides an interest-free, forgivable benefit of up to $12,000, which may be used to cover down payments, closing costs or loan origination fee and/or discount point(s) to first-time homebuyers. Twenty percent of the benefit is forgiven each year over a period of five years of continued service to the company.

Freddie Mac also offers eligible employees homebuyer education and counseling sessions throughout the year, which walks them through the homebuying process. In addition, qualified employees will receive a "closing time off" benefit, which will give them up to four hours off – with pay – to attend the closing on their new home.

"Helping people realize their dreams of homeownership is what Freddie Mac does, and this includes helping our own employees," said Tsien.

He added, "Homeownership affects so much that is important: the quality of our schools; the safety of our neighborhoods; the condition of our cities; the cohesion of our communities; the health of our economy. And it is the most widespread means for families in America to build lasting wealth."

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage pass through securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America.

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