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October 7, 2004

Workers get homes, with help from their bosses

By DIANNE WASSON and LEIGH BEZEZEKOFF
HomeStreet Bank

 Wasson
Wasson

Jonathan Stanley, his wife and two young children lived in a studio apartment in Seattle so they didn't have to spend valuable family time commuting. They always dreamed of owning their own home, but couldn't afford to buy in the city.

Though Stanley had spoken with various mortgage brokers and lenders, no one was able to qualify him for a loan amount large enough to buy a home in Seattle. After seeing a poster in his union hall about a special program for union members offered through HomeStreet Bank, Stanley decided to give the bank a call.

Stanley and his wife took a free homebuyer class and applied for the program, thinking they'd give it one more try.

"As an apprentice, I have an unusual pay structure and ran into problems when I spoke to other lenders," Stanley said. "Because of HomeStreet's partnership with my union, my loan officer was familiar with my pay structure and was able to help me qualify for a higher loan amount."

Using the bank's employer-assisted housing (EAH) program, Stanley and his family were able to buy a three-bedroom home in Ballard. "If my union didn't participate in HomeStreet's program, we would still be renting," said Stanley.

Jonathan's union, along with all AFL-CIO-affiliated unions, is one of many organizations and employers offering an EAH program. With the rising cost of homeownership, many employers are now beginning to recognize the link between affordable housing and their ability to attract and retain good employees.

A need for assistance

A shortage of local affordable housing can significantly impact a company's bottom line. The lack of affordable housing options near the workplace can mean employees have to commute long distances to work, resulting in increased absenteeism, tardiness and decreased productivity.

While this affects employers all across the United States, employers in high-cost urban areas are hardest hit.

During the 1990s, many employers began to establish housing-assistance programs as a way to set themselves apart in a very tight labor environment. Companies who could offer an EAH program had a competitive edge over other employers when recruiting, especially those in high-cost areas.

In today's slower labor market, an EAH program can still be a valuable tool. Since the cost of providing healthcare is rising significantly, many companies are faced with the difficult decision to increase the employee contribution to healthcare coverage. To offset this, employers are seeking alternative, low-cost benefit options.

Adding an EAH program can be an efficient way to tackle issues surrounding workforce housing, while providing a valuable, cost-effective benefit that can help to attract and retain good employees.

Creating a successful program

Nationally, Seattle lags behind other cities of its size in its homeownership rate, largely due to the high cost of housing in the area, making it an increasingly difficult city in which to live and work.

In 1994, the city developed a solution by piloting the Hometown Home Loan Program, an EAH program for the city's police and fire departments. The goal of the program was to make homeownership more affordable for public service personnel and decrease emergency response time.

The success of the Hometown Home Loan Program with the city of Seattle led to its expansion to other leading employers, school districts, and municipalities in the Puget Sound region.

One of the largest participating employers is the University of Washington. Through the Hometown Home Loan Program, UW employees enjoy a substantial reduction in loan fees and closing costs, which saves a typical borrower $1,500 or more. Closing costs can add several thousand dollars to the amount needed to close a home loan. For first-time buyers, this means that they can consider homeownership much sooner and use more of their saved funds for down payment.

UW employees and other Hometown Home Loan Program participants also have access to innovative loan programs, down payment assistance and free homebuyer education. This includes informational seminars held at the place of employment, making it convenient for employees to learn about homeownership issues and available resources. Employees who need more individual attention also have access to one-on-one credit and budget counseling provided by nonprofit housing partners.

"The Hometown Home Loan Program has been a very successful partnership for the university," said Kathleen Dwyer, director of benefits for the UW. "The fact that over 1,800 of our employees have used the program tells us it's working. While this program is not the only answer to the high cost of housing in the Puget Sound area, it is a great solution for a lot of people."

Stephanie Timm is a UW employee who took advantage of the Hometown Home Loan Program. The high-cost of living in Seattle had Timm believing that she would have to save for years before owning her own home. Then she learned about the Hometown Home Loan Program at a benefit fair for UW employees.

Timm knew she wanted to buy a home in Seattle near the Seattle campus where she works, but did not think she could afford it on her own. "I wanted to find a home where I could walk or ride the bus to work. I also wanted to find a community I could become part of. Living in apartments never made me feel part of a community because there was no commitment," Timm said. "With the help of this program, I found a home that was worth staying in, without having to live beyond my means."

Partnership in action

In the 10 years since the Hometown Home Loan Program was first created, it has grown to include more than 30 employers and membership organizations in three states, including Seattle Community College, Northshore School District and the Fred Hutchinson Cancer Research Center. In that time, the program has helped over 5,000 borrowers finance homes and has saved them over $5 million in closing costs.

The program is the recipient of several prestigious national awards, including recognition from the Pioneer Institute for Public Policy in its 2001 "Ideas for Better Government" competition.

The success of HomeStreet Bank's Hometown Home Loan Program is due to its many partners, including Fannie Mae, the Washington State Housing Finance Commission, HomeSight, the city of Seattle and the many employers who participate.

When a community pulls together towards a common goal, great things can happen.


Dianne Wasson is vice president and manager of HomeStreet Bank's Affinity Lending Department, where she oversees the Hometown Home Loan Program in Washington, Oregon and Hawaii. Leigh Bezezekoff is senior outreach coordinator for HomeStreet Bank's Affinity Lending Department, where she manages outreach for the program.



 

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