On July 7th, there was a huge reaction to this ruling by IMPACT Group. IMPACT Group is a worldwide career management firm which dedicates itself to providing career and relocation transition support services. IMPACT Group addressed many concerns they have and forecast numerous problems that will arise from this new ruling.
In the Fannie Mae Income Selling Guide (Version B3-3.2-07), under the ‘Trailing Secondary Wage Earner’s Anticipated Income’ section, it states that Fannie Mae has made the decision to eliminate the trailing secondary wage earner income policy from the Selling Guide for the reason that a trailing secondary wage earner’s income is based on “projected employment” and “income that a borrower may earn in the future (but is not currently earning).”
IMPACT Group foresees is that this is going to cause much apprehension amongst transferees. The President and CEO of IMPACT Group, Lauren Herring, asserts that because the transferee’s family is already “scaling back on the home in the new location due to loss of equity in the old home.” IMPACT Group fears that one of the chief concerns will be that families would re-evaluate whether they want to relocate at all.
Reasons Employees are Unwilling to Transfer
The Worldwide Employee Relocation Council did a Benchmark Study in 2009 of the problems organizations are experiencing with employees transferring. From the study results, approximately 35 percent of organizations studied are facing temperate issues regarding their employees’ aversion to transfer.
The organizations alluded to some of the key reasons for their employees’ unwillingness to transfer.
These include:
- Slowed Real Estate appreciation/ depressed housing market at old location.
- Employee/ family resistance to move.
- Spouse reluctant to leave his/her job.
- Due to bad economy, spouse less likely to find job at new location.
- High housing costs.
- High cost of living areas.
Lauren Herring of IMAPACT Group indicated that having the help of an organization that focuses on providing relocation job search support to trailing spouses can significantly increase the speed at which the trailing spouse can land a job as the organization arms the trailing spouse with a “personal, dedicated career consultant and access to tools and information.”
As a consequence of the new ruling put in to place by Fannie Mae, trailing spouses will be under even more pressure to secure stable work at the new location. There is no longer the safety net of the older policy in applying for mortgage loans. By using the resources and programs at organizations like IMPACT where support is given to increase the chances of trailing spouses getting employment, it will decrease the strain of the relocating family when applying for a mortgage.
Consequences of the Change in Policy
By changing the policy, there will be many trickle-down effects. The change in the policy will display an array of results.
These are a few of many consequences and outcomes of the recent change to the long-standing policy:
- Companies may not be able to relocate top talent, which can affect the company negatively.
- Transferees who are already struggling with selling their current home will have less money to purchase a new home.
- Families will take on more renters due to less money, which may cause families to feel unhappy and unsettled.
- Less money and inability to buy home of choice may cause families to feel unhappy and unsettled.
- More employees will make the decision not to relocate, which will result in a loss for the company.
- A sluggish economy results in a slow job market, which can hinder ability to find second source of income.
There is no doubt that organizations like IMPACT Group significantly improve the ability and efficiency to securing employment. That being said, the resistance of employees to relocate is ever-present.
Resources:
http://www.reuters.com/article/pressRelease/idUS192226+07-Jul-2009+BW20090707
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0919.pdf
http://www.worldwideerc.org/Resources/Research/Pages/2009-US-Benchmarking-Survey.aspx
http://www.tradingmarkets.com/.site/news/Stock%20News/2408937/
http://www.impactgrouphr.com/index.htm
http://www.impactgrouphr.com/KnowledgeCenter.nsf
