location-efficient mortgages (LEM)
Description
LEMs are a type of mortgage that increases the amount homeowners can borrow by taking into account the savings they accrue from living
in an area where they can walk to shops and services and easily access public transit, instead of driving a private vehicle. The non-profit
Institute for Location Efficiency (ILE) and government-chartered Fannie Mae have partnered to pilot LEM programs in Seattle, Chicago,
the San Francisco Bay Area and Los Angeles and Orange Counties, with the first one launched in Seattle in 2000. Other LEM programs are
operating in Minneapolis-St. Paul (2001) and Boston (2002).
Participants
Individual homeowners and mortgage lenders; $127 million in mortgage funds made available by Fannie Mae for the pilot project
SOV Impact
Reported
In 2001 survey (one year after the start of the program) of 21 out of 27 participants in the Chicago LEM program, survey respondents
indicated their driving had decreased and transit use was increasing.
Transit Impact
Reported
In 2001 survey (one year after the start of the program) of 21 out of 27 participants in the Chicago LEM program, survey respondents
indicated their driving had decreased and transit use was increasing.
Other Impacts & Co-Benefit
Reported
Studies carried out in 2001 and 2002 indicated that there was no reduction of mortgage defaults in more accessible locations and location-based
mortgage savings were not significant to affect the propensity to default.
Reference
National TDM and Telework Clearinghouse, National Center for Transit Research, University of South Florida. “Smarter Commuting:
Fundamentals About Applications of a Location-Based Mortgage Strategy.” TDM Review Issue One (2003).
