Bremer launches program to address housing needs

Northwestern Financial Review, May 1-May 14, 2003 by Bengtson, Tom

Hoping to set a trend among employers, Bremer Financial Corp., of St. Paul, Minn., has launched a program to help employees rent or buy a home. Teaming with the Greater Twin Cities United Way and the Greater Metropolitan Housing Corp., Bremer will lend renters up to $2,000 and firsttime homebuyers up to $5,000 at below market rates. If the employees stay at Bremer, the loans are eventually forgiven.

"In these challenging times, it takes a collaborative effort to make a real impact on an issue as complex as affordable housing," said Stan Dardis, president and CEO of Bremer Financial. "We wondered what we could do as business to affect the pressing issue of rising home ownership costs in the Twin Cities and its impact on our employees. Creating the REAL/HELP program is our response."

REAL stands for "rental employee assistance loan" program, while HELP means "homebuyer employees loan program."

St. Paul Mayor Randy Kelly participated in an April 10 press conference Bremer conducted to announced the effort. "Bremer is a wonderful corporate asset," he said. "They are an asset to our city."

Bremer employs about 600 people in the Twin Cities area. Dardis said about half of those might meet the household income eligibility requirements for the program. At other companies where similar programs have been implemented, the participation rate has run about 3 percent to 4 percent of those eligible, Dardis said. Bremer is the first company in the Twin Cities area to offer a housing assistance program for employees. Dardis said the company hopes to expand the program to include other communities throughout Minnesota, North Dakota and Wisconsin serviced by Bremer Financial.

In the Twin Cities, the median house price is $188,700, Dardis said. The typical three-bedroom house sells for $148,000. Bremer's homebuyers' program is open to employees living in households with income up to $60,240. The loan of up to $5,000 is to be used for the down payment. Bremer makes the loan payments for the employee until the loan is paid in full or until the person leaves Bremer's employment. The loan is considered forgiven for participants who remain employed for five years after getting the loan. Participants are not required to obtain their mortgage from Bremer, although they may qualify for other programs which waive origination fees if they work with Bremer.

The rental program is open to employees earning up to $30,700. Participants can borrow up to $2,000 to be used to pay the first and last months' rents, and the security deposit.

The loans carry an interest rate of 1.5 percent below prime, which on the announcement date put the rate at 2.75 percent. The housing participants only pay the interest on principal they return in the event they leave Bremer's employment. Rental participants are responsible for the interest payment. When they leave their rental property they may keep their returned security deposit and any interest it may have accrued from the property owner.

Jim Colville, CEO of the Greater Twin Cities United Way, said his organization's role in the program is to encourage other corporations to offer housing assistance programs to their employees. He said Bremer is offering a template for a program that other companies could offer.

The program is being administered by the Greater Metropolitan Housing Corporation, started in 1970 by the business community.