HOUSING:

With gaming help, union puts owning a home within members’ reach

Friday, Nov. 21, 2008 | 2 a.m.

Real Estate in Crisis

Culinary Union Local 226

When the Culinary Union opened contract talks with Strip casino operators last year, labor leaders came to the table with one overarching complaint: Homeownership, a core promise of union membership, had fallen out of the reach of many members.

So the Culinary asked the gaming industry to chip in to a fund that would help its workers buy homes.

On Thursday, after months of seed work, the union announced the launch of a housing program, making $2 million in loan assistance available to first-time homebuyers who are covered under Culinary contracts. Half the money comes from casino company contributions and half comes from a state grant.

Under the program, members can get up to $20,000 in down-payment assistance but must first qualify for a mortgage, contribute 1 percent of the purchase price and complete an eight-hour homebuyer education course. Borrowers must repay the down-payment loan when the home is sold or refinanced.

The Culinary says the program, modeled on the state’s own first-time homebuyer program, could help stabilize the Las Vegas housing market, estimating it will leverage as much as $80 million in new mortgage lending. Nevada has had the highest foreclosure rate in the nation for the past 20 months.

“This is exactly the medicine our ailing housing market needs,” Assembly Speaker Barbara Buckley, who advanced the state matching grant in the last legislative session, said in a statement.

The program has a director and will be housed at the nonprofit Nevada Partners in North Las Vegas.

MGM Mirage, the state’s largest private employer, had tried to address the union’s worries about homeownership last year, planning a community of affordable single-family homes and condominiums for industry workers, retail and a casino on a 166-acre site in Jean. The residents would have been able to take company shuttle buses to work in Las Vegas. But the plan fell through when the real estate market collapsed.

Since then, the economy has taken its toll on casino workers. The union says its members have been hit particularly hard by the subprime mortgage crisis and is looking for ways to help those who were victims of predatory lending. The Culinary estimates that up to 10 percent of its 60,000 members have lost jobs or had their work hours reduced in the economic downturn.

The housing program is a bright spot.

“Our goal is to have people buy homes,” Culinary Secretary-Treasurer D. Taylor said. “And if you have the potential, there is no better time to buy” because of falling prices. The median house price is down 32 percent from last year.

Taylor said he expects the fund to grow over time, with gradually increasing employer contributions.

“It’s a start. It’s the Volkswagen before you get into the Cadillac,” he said. “We’ll work out the kinks, we’ll learn, we’ll grow and we’ll get better.”

Discussion: 5 comments so far…

By martel3

11/21/08 at 8:45 a.m.

Suggest removal

Lending money for down payments...isn't this part of what got us in trouble last time? Will they be required to pay PMI on their mortgage or do the banks take the hit when they default? I thought you weren't allowed to borrow your down payment to purchase a home? This is a dumb idea that is going to start the cycle we are on the bottom of all over again. A better idea is to set up tax exempt, interest paying accounts where money is automatically deducted from the employees check, matched by the union and then used for the down payment. That way the money is not a loan and it instills the habit of saving instead of depending on loans to purchase homes.
By azsk8fan

11/22/08 at 9:35 a.m.

Suggest removal

I think as long as they get a loan with a fixed rate and buy a house with a payment they can afford (no more and possibly even less than what they are paying for rent) then I see no problem with this plan. It's when people get adjustable rate loans on homes with payments that they can perhaps afford 'at the time' and then when the rate adjusts upwards is when people find themselves in a world of hurt. People just need to be smart, stick with a fixed rate and buy a little LESS house than you can actually afford and then they may be ok. If not then they continue to pay rent and pay off someone elses house.
By davidwayneosedach

11/22/08 at 11:34 a.m.

Suggest removal

The Culinary Union - like other Unions is fighting a losing battle. What will they offer when unemployment hits 10%?
By nevpat

2/3/09 at 6:32 p.m.

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This program is crap! I am a culinary member and they cut our 2008 raise almost in half to pay for this program that I cannot participate in because I have a house already. I am losing some of my pay raise under the contract to help other members to buy a home! Only first time home buyers are eligible! This is not what unions are for!