Suppose you live in a nice four-bedroom colonial ($150,000 market value) on a tree-filled lot within an easy commute of work.
But you're bored with your job and one day you get an offer from a Seattle firm that sounds interesting and at a salary 20 percent higher than what you're making now.It all sounds great until you visit Seattle and look at the housing prices. You realize you'll have to pay about $190,000 to get as much house as you have now.
Your potential employer is willing to help out with housing costs but isn't sure how to go about it.
Enter the Federal National Mortgage Association, known as Fannie Mae, a big secondary lender. It has just announced a program designed to make it easier for employers to give workers a hand with housing costs.
Fannie Mae buys mortgages from banks, mortgage companies and savings and loans - $115 billion worth last year from 1,400 lenders. When it sets up a new program, many lenders participate because they know they'll be able to sell the loan in the secondary market as long as they follow Fannie Mae's rules.
The new program won't really make it any cheaper for employers to assist workers with housing - they still must come up with the money in some form or other - but it should make it easier.
Under the plan, employers can help an employee with the down payment, closing costs or monthy payments on a house. They can do this through a one-time gift payment, a loan that must be repaid, a loan that won't have to be repaid if the employee stays on the job long enough or a deferred payment loan.
Employers can do all these things already, of course, but they might not know how to structure the aid. What the Fannie Mae program will do is make employer-assisted loans standard and thus easy to do.
Bart Harrington, manager of residential lending for the First Interstate Bank of Washington in Seattle, said he thinks the program will be especially popular with smaller employers who have trouble getting and keeping workers.
"We've had a tremendous run-up in prices here in Seattle," he said. "Affordability has become a problem and employers are concerned."
Under the special Fannie Mae rules, middle-income employees can make a down payment as low as 3 percent of the purchase price, with the employer putting in another 2 percent and covering the closing costs as well.
Normally, Fannie Mae won't buy a loan unless the purchaser puts in at least 5 percent of his own money. But under the new rules for employer-assisted housing, that requirement is waived as long as the purchaser doesn't earn more than 115 percent of the median income in an area.
In Seattle, Harrington said, the income limitation would still allow workers with incomes as high as about $50,000 to qualify for the low down payment.
"That's the part of the program that's most usable," he said. "The biggest market is the small employer who is having a difficult time finding employees who can afford to live in the work area. People are commuting an hour and a half."
The income restrictions don't apply to other parts of the program. If a company wants to lure a high-paid worker by helping with housing costs, it has a number of options, as long as the worker pays at least 5 percent of the down payment himself.