Billion-Dollar Plan Launched by Fannie Mae : Real estate: The employer-assisted home purchasing plan should especially help buyers in Los Angeles and Orange counties.

In a new program that could benefit thousands of home buyers in high-cost areas--including Los Angeles and Orange counties--the Federal National Mortgage Assn. said Wednesday that it has set aside $1 billion to help employers assist their workers in buying homes.

The program is aimed at helping moderate-income employees who have been squeezed out of the housing market as the supply of affordable homes shrinks, according to James A. Johnson, chief executive of the federally chartered association, known popularly as Fannie Mae.

As many as 20,000 home buyers will be assisted by the program, according to Fannie Mae. Johnson said it will be especially beneficial in expensive urban areas such as Los Angeles and Orange counties, where the average cost of a single family home is more than $200,000.

“Employers will find housing benefits a valuable tool in attracting and retaining workers in increasingly competitive labor markets,” he said.

The mortgage association won’t directly lend money to employees or employers but instead will attempt to stimulate employer housing assistance programs by broadening the kinds of employer-subsidized loans it will purchase from banks, thrifts and other lenders.

Fannie Mae and other investors influence mortgage lending, because they are the major purchasers of home mortgages on the so-called secondary market. Primary lenders such as banks and thrifts sell their mortgages to the two organizations, allowing them to raise cash, replenish their portfolios and make more loans.

Currently, at least eight employee housing-assistance programs--including the association’s plan for its own employees--could qualify for help from Fannie Mae, according to Martin D. Levine, a senior vice president.

Colgate Palmolive, for instance, has assisted nearly 400 employees by paying a portion of the closing costs for expensive homes. Seattle Pacific University also offers closing cost assistance, as well as providing down payments on mortgages, which employees repay at cut rates over 10 years.

The University of California provides low-cost mortgages and subsidizes closing costs for faculty members. Jerrick Woo, head of faculty housing programs, said Fannie Mae’s new program could help UC expand its efforts, because in the past, the university has been unable to resell its loans in the secondary market.

“We briefly pursued the secondary market some time ago, but we didn’t get any bites, because of the low interest rates we had on our mortgages,” Woo said.

Fannie Mae said mortgage loans of up to $191,250 can qualify for its program. Workers will be able to buy homes with a minimum down payment of 5%. The employee will provide 3% of the down payment; the remaining 2% will come from the borrower’s employer.

Qualifying mortgage loans can be one of six types:

* A direct grant from employer to employee to cover closing or other costs.

* A fully repayable loan from employer to employee.

* Loans in which the employers allows workers to defer the repayment of principal.

* Loans in which the employer assists workers in making their monthly mortgage payments.

* Loans that the employer guarantees, even if the worker fails to make payments.

Ironically, the announcement of the housing-assistance program comes as both Fannie Mae and Freddie Mac are clamping down on ordinary mortgages, in response to the slumping economy and government regulatory pressure directed at shoring up the nation’s financial system.

The two organizations have said they would stop buying from lenders mortgages for which the borrower’s income and employment information have not been verified with documentation. Experts say the requirement may hurt some self-employed home buyers.

Indeed, Fannie Mae’s Levine said the agency’s support for employer-assisted housing programs does not signal an easing of tight credit among the nation’s financial institutions. Instead, he said, it indicates faith in employers’ ability to determine which borrowers in their work force are good credit risks.

“We are very satisfied that these will be good loans, in part because of the commitment made by the employers,” Levine said. An employer’s commitment, he said, “makes a borrower a better borrower.”