Program will help workers buy homes
By Athena D. Merrit
Philadelphia Business Journal
Updated: 8:00 p.m. ET Aug. 15, 2004

The reasons for not buying a home are many: the inability to afford the down payment or transaction costs involved, poor credit rating or even just the simple lack of an incentive to settle in an area. The Philadelphia Home Buy Now program, a partnership between the city of Philadelphia and the Greater Philadelphia Urban Affairs Coalition, hopes to remove them all.

The city hopes the initiative will make Philadelphia, which boasts 60 percent home ownership, even more attractive.

The new housing benefits program matches dollar-for-dollar one-time contributions by employers of between $500 and $3,000, which can be used to offset employees' home buying expenses, such as closing costs, pre-paid interest or points, down payments and mortgage insurance. Employers who participate also have access to funding to provide free workshops for employees on such topics as buying a home, home inspections, improvement projects and credit counseling.

"The idea is not only to go after that 40 percent that may want to be homeowners, but for some reason or another aren't at this time, it's also to get those people who are coming new into the community and new into this market to really consider the city a place where they would like to put down roots," said Sharmain Matlock-Turner, president of the Urban Affairs Coalition.

Turner and those involved said the hope is the employee benefit will serve as a tool to attract and retain workers in the city, which is why in setting it up the program was loosely structured to appeal to the needs of a wide range of employers.

"You want to have a program that you have broad parameters. You're really clear on your objectives and what you want to accomplish, but you don't want to over-regulate it to a point that you end up excluding more employers or making it more difficult," said Patricia Smith, director of the city's Neighborhood Transformation Initiative (NTI).

The goal is to get at least 15 employers on board in the first year of the program, which will make $1 million available this year. Funding is being provided through the five-year $275 million NTI, which has two years remaining.

No income restrictions are being placed on the program, which will offer more competitive first purchase mortgages through the participation of seven area banks, Smith said. In addition, the Philadelphia Council for Community Advancement, Orleans Technical Institute and Value Home Inspections have signed on to provide education on the topics of buying a home, maintenance and inspections.

"The real goal is to try and make Philadelphia, and continue to make Philadelphia, an attractive place for people to not only work, but to live," Turner said.

"For every sector they can see a benefit, whether it's a small business or nonprofit or even a large corporation. ... It's really meant to reach all aspects of the community," said Tamara Grossett,
manager of HomeBuyNow.

Each company has the flexibility to tailor the program to its own needs, establishing the criteria for which employees will be eligible and the amount of funding offered to them. Fannie Mae, which has helped more than 650 employers set up employee housing benefit programs, is on board.

"Our employee housing benefit is one of the most desired benefits that Fannie Mae offers our employees. It is very well used, so any employee at Fannie Mae in Philadelphia I'm sure will look at the Philadelphia program very seriously," said Beth Marcus, director for Fannie Mae's national community lending center.

Under Fannie Mae's existing employee housing benefit program, employees below management level are eligible for loan forgiveness and the lesser of 7 percent of the sale price of the home or the median price of a home in the area. The Philadelphia program will serve as a supplement to the existing program, Marcus said.

"That additional $3,000 could be a big difference. It could be very important if they are thinking about buying a home in Philadelphia]. It could be what drives them over."

For information, call 215-851-1774.