User Perspectives on Location Efficient Mortgages and Car Sharing

Project summary:

A new and progressive mortgage lending product called the Location Efficient Mortgage (LEM) is currently available in a handful of cities nationwide. In many instances, the LEM program is jointly marketed with car sharing programs to maximize its potential. Together, these programs allow households to purchase homes in transit- and pedestrian-accessible neighborhoods that would otherwise be unobtainable due to cost. Such neighborhoods (aka location efficient neighborhoods) require less driving; the availability of car sharing makes it easier for households to have lower rates of automobile ownership and use, thereby leading to lower household transportation costs. The transportation savings are then folded into the mortgage calculation to allow a household to purchase a home in a transit-friendly neighborhood. The newness of these programs have provided little opportunity for empirical analysis. As nearly four dozen households have purchased homes using LEMs-many of whom have also bought into the car sharing program-these programs are now ripe for investigation. This research surveyed and interviewed LEM recipients to better understand the efficacy of both the LEM and the car sharing programs. The units of analysis primarily consisted of households who recently purchased a home with a LEM mortgage. Households completed a mail-back survey asking them to respond to questions about factors influencing the decision of homeownership, the location of home purchases, experiences with car sharing, and household travel behavior. To better understand behavioral motivations and decisions, the research conducted focused interviews with between one and two dozen households from both the test and control group. In addition, interviews were conducted with LEM loan officers and car-sharing personal/officials to gain a better understanding of how the programs could and should be modified.