A New
Benefit
Employer Assisted
Housing in the
21st century
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ON COMMON GROUND WINTER 2008
By Mike Lehrman
I
n his work entitled “The World is Flat,” Thomas Friedman explained how
astounding advances in technological collaboration combined with the global
spread of capitalism have fundamentally altered the way businesses operate.
In a growing global economy, companies are now facing more fierce competition
for business and resources both locally and around the world. This competition
extends to recruiting and retaining a productive workforce.
As the business landscape continually evolved, the median home price in
the United States increased from $126,000 in 1997 to $228,900 in July of 2007,
an increase of more than 80 percent. As business practices have changed at
an ever increasing rate, so have demands on space in America’s urban areas,
and housing prices have risen dramatically as a result. Skilled workers are
now in higher demand at a time when the price of owning a home is the
highest in history.
Employers have begun to recognize that in order to remain competitive in
the changing business landscape of the 21st century, they must attract and
retain skilled employees. One way that businesses have increased their
recruitment and retained more employees is by enacting various housing
benefit programs.
Employer Assisted Housing (EAH) is a term that describes an employer
benefit program that helps employees attain housing in both the rental and
home ownership markets. A financial EAH program can take many different
forms, but is most commonly administered as downpayment assistance,
rental/mortgage assistance, shared equity, forgivable loans, matched savings
or upfront grants.
According to the Society of Human Resource Managers (SHRM) annual
benefits survey, the number of employers who offer their employees
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downpayment assistance has increased greatly in
the past seven years. In 2000, only 3 percent of all
employers offered a downpayment assistance
benefit program. In 2007, that number increased
significantly to 11 percent of all employers.
Rental and mortgage assistance programs have
experienced similar increases during the same
period. In 2000, only 6 percent of all employers
offered rental assistance. In 2007, that number
increased to 19 percent, dropping slightly from the
high of 22 percent in 2006. Mortgage assistance
programs doubled during this time period as well,
increasing from 6 percent to 12 percent.
Employers in the most competitive fields with
highly skilled workers have turned to these tools as
a way of increasing recruitment efforts and
retaining employees for a longer period of time,
thus increasing productivity and limiting costs.
Employers have found that offering a benefit like a
forgivable loan can greatly increase retention rates,
as employees have a financial incentive to remain
with the company until the full balance of the loan
is forgiven. These programs have the potential to
improve the bottom line of employers who face
high turnover rates and engage in competitive
employee recruitment.
Act,” originally proposed in 2005, provides a
federal tax credit to companies for a portion of the
expenses that they incur by offering a housing
benefit to their employees. Furthermore, this
legislation treats housing assistance benefits of up
to $10,000 as nontaxable income for the employee.
Lastly, the legislation creates a competitive
grant program whereby nonprofit organizations
that assist in the administration of EAH programs
can apply for federal grants to fund their efforts.
Many times nonprofit organizations offer free
credit counseling services to employees who
participate in an EAH program.
Enacting such a bill would create a large
incentive for employers to offer EAH benefit
programs to their employees. Despite having
numerous cosponsors, the legislation did not make
it to the Senate floor for a vote, but future prospects
for the bill remain promising.
As policymakers have become more aware of the
increasing value of EAH programs, so also have
federal regulators. In August of 2007, the Office of
the Comptroller of the Currency released a report
entitled
“Understanding
Employer-Assisted
Mortgage Programs: A Primer for National Banks.”
The study was released as a response to the
SHRM Benefits Survey, 2000-2007
Employers have found
that offering a benefit
like a forgivable loan
can greatly increase
retention rates.
Benefit
Mortgage
Assistance
Rental
Assistance
Downpayment
Assistance
Yes/No
2000
2001
2002
2003
2004
2005
2006
2007
Yes
No
6%
89%
9%
88%
7%
94%
12% 88%
12% 88%
13% 87%
12% 89%
12% 88%
Yes
No
6%
90%
8%
89%
5%
95%
15% 86%
19% 81%
21% 79%
22% 78%
19% 81%
Yes
3%
5%
4%
9%
8%
9%
11%
11%
No
93%
92%
96%
91%
92%
91%
89%
88%
As the popularity of EAH expands, it is
beginning to be recognized among policymakers as
an important tool which helps to expand home
ownership and revitalize communities. Despite
this, currently there is no federal incentive for
companies to offer employees a housing benefit.
Companies do not receive any tax incentive for
offering this kind of benefit program, and unlike
health, dental or life insurance benefits, employees
must pay tax on all housing related benefits that
they receive.
Senator Hillary Clinton (D-NY) introduced a bill
in April of 2007 that would change this portion of
the tax code. “The Housing America’s Workforce
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ON COMMON GROUND WINTER 2008
REALTORS® have taken important
roles to promote EAH programs.
increasing popularity of EAH programs, and was
intended to explain to bankers their responsibility
when issuing a loan to a homebuyer who is
participating in an EAH benefit program provided
by their employer.
In addition to politicians and federal regulators,
REALTORS® have also taken a leadership role by
promoting EAH in their own communities. In 2006,
the NATIONAL ASSOCIATION OF REALTORS®
(NAR) launched Home From Work™, an outreach
and educational campaign that teaches
REALTORS® how to assist employers in creating
their own EAH program for their employees.
Home From Work™ encourages REALTORS® to
get involved with lenders and nonprofit groups in
their communities to help promote employer
assisted housing and increase home ownership
opportunities. Dawn Lane, a REALTOR® from Las
Vegas, Nev., has done just that.
In 2002, Lane founded the HOPE program
(Housing Opportunities, Programs, and Education).
The HOPE program is a partnership between
REALTORS®, local lenders and nonprofits to supply
HUD-approved home ownership education and
funding to prospective homeowners. Since 2002 the
HOPE program has helped prospective homeowners
find funding from nonprofits and affordable
financing to achieve the dream of home ownership.
To date, Lane and the HOPE program have helped
more than 300 families become homeowners, and
have never lost one to foreclosure.
When Lane heard about the Home From Work™
program, she thought it was a great fit for her efforts
in Las Vegas, and she traveled to Denver in late
2006 to participate in an NAR sponsored Home
From Work™ training session. Lane recognized
“bringing the employer into partnership with
nonprofits and lenders creates another source to
help potential homeowners achieve the dream of
home ownership.” She adds, “the program is about
building goodwill by educating the employers and
educating the public.”
Lane has successfully achieved that goal,
working with the city councils of Henderson and
Las Vegas along with a statewide title company to
organize eight-hour HUD approved homebuyer
educational courses for employees who are
interested in home ownership. Lane is currently
working with these employers to construct an EAH
financial benefit program that meets their
individual business needs.
Policymakers, regulators, nonprofits, lenders
and REALTORS® have taken important roles to
promote EAH programs as viable ways for
employers to improve their bottom line while
remaining competitive in the market and
promoting home ownership and vibrant
communities. EAH employee benefit programs are
a growing trend among companies and can be a
valuable tool to help employers recruit and retain a
highly skilled workforce in an ever changing
business environment.
Mike Lehrman is an associate in the Housing Opportunity
Program of the NATIONAL ASSOCIATION OF REALTORS®.
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