Housing Program Inspires Imitators

By Laine Crosby

Since 1994, HomeStreet Bank, Seattle, has sponsored a program to assist middle-income households in buying affordable housing in a high-cost market. The housing program is unusual in that the bank partners with more than 150 employers to provide both financial training and homeownership benefits to participating employees.

The program, called HomeStreet Hometown Home Loan Program, is so successful that the bank regularly gets inquiries from banks with mortgage-origination capabilities asking for advice on how to replicate the program. “It is recognized nationally as one of the most successful employer assisted housing programs in the country,” notes Dianne Wasson, the bank’s affinity lending manager.

The program was started in Seattle because of that city’s high cost-of-living combined with an ongoing housing boom.

According to the Council on Economic and Community Relations, Seattle is about 24 percent more expensive than the typical U.S. city. That means someone earning an annual income of $50,000 in the rest of the U.S. would need to earn about $62,000 in Seattle to maintain the same standard of living (smartasset.com). But one thing is clear––Seattle’s housing market is one of the hottest in the country, and it is not slowing down.

While this isn’t such bad news if you own a home already in Seattle, it is bad news if you are new to the area and looking for a home. Buying or refinancing a home can be a daunting process, and combined with housing that is not affordable can be overwhelming.

Originally targeted at municipal employees

HomeStreet Bank originally created the program to assist the city of Seattle, which wanted to help police officers and fire department employees qualify to buy homes in neighborhoods close to where they worked. The goals were to improve emergency response time, reduce commute times, and increase homeownership opportunities in Seattle.

The program was so popular that it was expanded, first, to include all municipal employees, and, second, to include employees of participating private-sector business and nonprofit organizations. The program currently partners with businesses and organizations that have more than 250,000 employees.

The bank notes that many individuals and families do not have the financial skills and knowledge needed to achieve the goal of homeownership—a goal that is widely viewed as promoting family stability. The program was developed to address those needs in conjunction with local employers, through a combination of:

  1. Comprehensive financial education.
  2. A credit of 0.5 percent toward closing costs.
  3. Downpayment assistance.

The Hometown Home Loan Program provides classes and seminars on developing and using a budget, learning to pay down debt, investing in a savings plan and building stronger credit scores. These skills are important in helping families to lead more stable and rewarding lives as well as for financing a home. Partner organizations benefit when their employees gain financial skills and stability, and by attending the class, employees of partner organizations can save $1,300 to $1,700 in closing costs and fees, depending on their loan amount. HomeStreet also works with local real estate agents and other service providers to reduce closing costs and assist with homeownership education.

For many, the goal of becoming a home owner is a multi-year process. Employees of partners begin by attending program classes and then they can use their new financial knowledge to work towards qualifying for a loan.

Program management and resources

HomeStreet’s Affinity Lending Center developed and manages the Program, with 25 full time employees dedicated to developing new partnerships, conducting educational classes, making home loans and developing relationships with other resources. Affinity loan officers are noncommissioned, and their most important job is to act as advocates in the mortgage process.

In addition, the program has garnered executive support from the beginning, and executives continue to support expanding benefits and partnerships. Partnerships not only include businesses, but multiple resources for saving money such as municipalities and nonprofit agencies providing down payment assistance, and others giving discounts such as realtors, title companies and other service providers.

Success

In 2014, the program’s comprehensive financial skills training supported the following successes:

  • 504 program Loans made.
  • 60 percent were first time home buyers.
  • 50 percent were low or moderate income.
  • $215,000 average loan size.
  • 20 percent of loans to clients of community housing organizations.
  • Borrowers saved $429,000 in closing costs/fees, excluding real estate broker discounts.
  • 137 of the homebuyers received an additional $2,291,121 in principal reduction and downpayment assistance from community and governmental partners.

Since 1994, the program has helped thousands of individuals achieve their home ownership goals, the bank says. The bank currently offers the program, which is scalable, in the states of Washington, Idaho, Oregon, California and Hawaii.

Laine Crosby is the editor of ABA Bank Compliance magazine.

HomeStreet Bank won the American Bankers Association 2015 ABA Community Commitment Award in the category of “Affordable Housing.”

 

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