Location Efficient Mortgages - LEMs

Wed, 2010-03-03 11:46

I came across this idea yesterday while looking at the green legislation currently in congress. The Location Efficient Mortgage® (LEM) is a mortgage that helps people become homeowners in location-efficient communities. These are convenient neighborhoods in which residents can walk from their homes to stores, schools, recreation, and public transportation. People who live in location-efficient communities have less need to drive, which allows them to save money and improves the environment for everyone. 

It's a pretty neat idea, and it ties in with an NPR program (Urban vs. Suburban) that I heard the other day that reviewed the particulars of the housing downturn. In that analysis, homes and properties within walking distance of mass transit have held up much better than the traditional car-only suburb. Here in Charlotte, there is a big debate about low-income housing and where it should be located. Right now there is a push to put affordable housing in the exurbs; however, there is a strong contingent against this policy, as the affordable housing residents (mostly elderly in this case) will essentially be stranded at many of these locations because there is limited bus and no train service.

Anyways, Jeff Michael from the the Charlotte Urban Institute, noted the sea change that has happened in local communities. Throughout the country, former bedroom communities are clamoring for mass transit. In Virginia, the Tysons Corner area is lobbying hard for a subway line. In Charlotte, the northern towns are coralling growth and building very high density along future light rail stops. Just 15 years ago, local communities seemed to have mixed feelings about mass transit, fearing that it would bring crime and congestion. However, study after study has shown that communities with mass transit actually have less congestion (Arlington, VA) than communities where only the car rules.

For Location Efficient Mortgages, homeowners might be able to apply some of the costs of owning and commuting with a car against their mortgage, which would allow them to afford a higher mortgage (which would be required in a location efficient community).

What do you think? Should location-efficient communities be recognized for their societal benefits?


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