HARP 2.0 and What It Means to Your Employees, Whether or Not They've Relocated

Many employees who have been relocated within the past several years may now find themselves "under water" -- or owing more on their mortgages than their homes are currently worth. This can not only render them unable to refinance, but can also bring stress and financial concerns that can undermine productivity.

The new Home Affordable Refinance Program, or HARP 2.0, seeks to address part of this problem by removing loan-to-value ratio restrictions entirely so that under water home owners can take advantage of historically low rates. The program will also encourage homeowners to take on shorter amortization loans so that they build equity faster and pay less over the life of the loan.

Needless to say, the program could be valuable not only to employees who have relocated within the past 3-5 years but non-mobile employees as well.

Many details are still being fine-tuned but in this episode of "Ask the Relocation Experts," Vince Carida, SVP of Weichert Financial Services, offers a brief overview of the program and what it means to your home-owning employees.

Sharing Subject Matter Expertise

Beyond serving as a Trusted Partner to our global clients and their mobile employees, one of our ongoing objectives is contributing to the betterment of workforce mobility through research, knowledge sharing and industry leadership. So we were happy to learn that two of our colleagues were recently selected to lend their expertise to distinctive relocation industry initiatives.

First, David Fennell, our Vice President of Business Development for Canada, has been named to the Executive Committee of the Canadian Employee Relocation Council (CERC) as Treasurer, joining some of the Canadian relocation industry’s most respected advocates and thought leaders. Dave brings over twenty years of relocation experience to the Committee and, as CERC President Stephen Cryne explained, "This appointment reflects David’s numerous and long-standing contributions to CERC and to the workforce mobility industry. His valuable advice and insights will continue to help us chart the future of our organization.”

Additionally, Kathy Trachta, Regional Vice President in our Houston office, was named to the Program Planning Committee for Worldwide ERC's 2012 National Relocation Conference. This Committee is tasked with identifying subjects, developing programming and securing speakers for the relocation industry's flagship event for knowledge sharing and trends forecasting. Kathy's inclusion on this prestigious panel is further testament to her subject matter expertise.

Congratulations to David and Kathy!

New GSA Rates Impact Lump Sums

The U.S. General Services Administration's (GSA) lodging per diem rates for fiscal year 2012 have just gone into effect. Although these rates impact government employees, many companies base their lump sum or temporary living per diems on the GSA rates, making it a good idea to familiarize yourself with the new data.

Across the board, most city rates didn't change by much. But among a few key destination cities, transferees can expect to have a little more spending money. For example, in Chicago, the rate jumped from $173 in 2011 to $190, while Dallas rose from $107 to $113 and Boston spiked from $206 to $221.

The full list and other details can be found at the GSA's site.

The Mysterious World of Payback Agreements

If you spend a couple thousand on a new flatscreen TV and it short-circuited right out of the box, you'd want to recoup your losses. Same goes for your relocation program. With the cost to move an home-owning employee forever rising -- $90,081 according to Worldwide ERC's latest survey -- companies are more eager than ever to see return on their relocation investment. In many cases, this means toughening up their payback agreements.

Payback agreements are "contracts" between an employer and employee that require an employee to refurbish the cost of their relocation if they decide to leave the company that moved them within a specified time period.

No company wants to be left empty-handed if the high-priced and highly prized talent they paid to relocate skips off for a competitor. Payback agreements deter this; they allow companies to recoup some or all of their original investment if the employee leaves prematurely. With the cost of relocation continuing to escalate, payback agreements (or “clawback” agreements, the far more menacing-sounding term to which they are sometimes referred) have become a critical component of any comprehensive talent management strategy.

They also make sense for employees because they communicate to the transferee population (particularly high-level moves that incur steep relocation costs) that the company expects long-term retention and mutual commitment. In a job market filled with uncertainty, this is a good thing.

According to the results of our 2011 Mobility and the Current Real Estate Market Survey, 82% of companies require current and new hire transferees to sign payback agreements. The amount of time covered by payback agreements has been increasing, too; 45 percent cover one year but 42% cover two years and 3% cover three.

But are payback agreements effective? And are they truly enforceable? It's a question I tackled in an article in the most recent issue of Mobility, talking to some of our clients and other industry experts. Here's an excerpt:

“With respect to legal ramifications, payback agreements, in general, are enforceable in all states based on the contract law of the state,” explained Peter Scott, tax counsel to Worldwide ERC®. “That said, they must be sufficiently specific about what the terms are and the amounts that are subject to repayment, be signed by both parties—including the spouse, if the transferee is married—and not be so onerous as to constitute a one-side ‘contract of adhesion.’ In some states, there are also issues as to whether the payback can legally be collected by withholding from a final paycheck or other distribution.”

For international assignments, enforcing payback agreements can be decidedly more complicated, according to Richard Mansfield, general counsel to Worldwide ERC®.

“In my experience, there are some payback agreements used for international moves, especially regarding lump-sum payments,” he said. “However, they are not as common as they are in U.S. relocations. They are generally considered a contract between the employer and the employee and are enforceable. However, the issue of withholding from a final wage payment is more complicated. For example, in EU countries, it may be against local law, requiring advance consultation with legal experts to be certain that withholding is permissible.In most EU countries, it cannot be done. That’s why most companies that I am aware of do not withhold, but rather make demands of payment from the offending employee.”

In any case, both Scott and Mansfield recommend that companies consult with their internal counsel or legal partners before developing or acting on a payback agreement.

Check the complete article here.

Weichert Relocation Resources Participates in the FEM Global Summit

Last week, a team of subject matter experts from our UK office attended the Forum For Expatriate Management (FEM) Global Summit in London. WRRI was an exhibitor at the show, giving us a chance to chat, brainstorm and share ideas with clients, prospects and other relocation professionals from across the world.

We also attended FEM's gala Expatriate Management and Mobility Awards (EMMAs), which concluded the conference. As reported here, WRRI was nominated in several categories of the European EMMAs, and we are proud to announce that we received the “Highly Commended” accolade in the category of Relocation Company of the Year -- a reflection of ongoing commitment to serve as a Trusted Partner to our clients.

Baking for the Cure

At WRRI, one of the things we pride ourselves on is the commtiment our colleagues exhibit in making a difference in the lives of others. Doesn't matter if it's a family relocating across the country, or people in need within our local communities--our colleagues rise to the challenge every time.

This commitment was on display again in October, when the entire Weichert campus in New Jersey held a month long fund-raising event for Susan G. Komen for the Cure. Weichert Relocation organized a bake sale, with colleagues volunteering to run everything, from baking a wide range of delectables (they had us at cupcakes, frankly) to advertising to working the tables and rustling up customers during the sale.

Thanks to their efforts, $1,100 was collected and added to the campuswide total of close to $8,000 for this most worthy cause. Congrats to our colleagues!

Protecting Your Relocation Investment

Worldwide ERC estimates the average cost of relocating a current employee homeowner to be approximately $90,081. So what are you doing to protect that investment? In the inuagural episode of "Ask the Relocation Expert," WRRI's Manager of Consulting Services discusses pre-decision services and payback agreements--two tools that today's HR and corporate relocation managers can use to preserve mobility ROI.

Millennials: The Most Mobile Generation?

Depending on which statistics you research, family concerns are responsible for anywhere from 60 to 90 percent of employee refusal to take a relocation. Against those odds, there's little surprise that a growing number of companies are courting millennials, AKA Gen-Yers, AKA workers born between the mid '80s and late '90s who are typically unencumbered by families, to join their mobile workforces.

According to the recent Kelly Global Workforce study, a staggering 85 percent of millennials indicate that they'd be willing to relocate for the right job--and 40 percent would be willing to relocate to another country or continent.

This generation's eagerness to relocate was the subject of a recent article in Human Resource Executive, and we're proud to note that two of WRRI's subject matter experts, Dave Bencivengo, Executive Vice President and Jennifer Connell, Manager of Consulting, were quoted extensively throughout the piece.

A few of their observations:

As the first generation practically weaned on the Internet and social media, Gen-Yers possess a more global view. Not only has social media made them comfortable going virtually anywhere, it has instilled in them a sense of confidence that they can easily stay in touch with loved ones regardless of their actual physical location.

While there's certainly a role for technology -- and self-service -- in relocation processes, experts caution employers not to simply hand the reins over to Gen-Yers and let them handle the move entirely on their own.

"Millennials tend to think they can handle their whole relocation through their own prism of how they gather information from the Internet and leverage those tools," says Dave Bencivengo, executive vice president at Weichert Relocation. "Companies have to strike a balance between allowing the professional companies to administer the move, while, at the same time, maintaining flexibility for the employees so they can feel like they are driving their own outcome."

Connell says it's critically important for companies to provide them with guidance and a "human component." Having never coordinated a move before, millennials may not necessarily realize how expensive it can be to get set up in a new location, how much it costs to ship household goods or how long it may take for their property to arrive in the new location. Because they are unlikely to call and ask questions, it's important to have a counselor check in with them frequently.

Likewise, Bencivengo cautions employers not to simply refer expats to a "cross-cultural app on an i-Phone."

"Even this group, as tech-savvy as they are," he says, "should not endeavor too far down the path of not having that level of control and confidence that they've got somebody to reach out to when they need support."

You can read the complete piece here.

The Power of Global Partnerships

Spent the better part of last week in Denver for Worldwide ERC's Global Workforce Symposium, and before the event, WRRI was honored to host our annual Weichert Global Representative Summit. This event brings together members of our Global Representative network -- seasoned relocation professionals who are carefully trained and accredited to deliver WRRI's services to international assignees -- to undergo training, discuss regional market challenges and review trends.

This Summit also pays dividends to our clients, ensuring that our WGRs have the latest tools, information and resources to extend our service delivery scope across more than 165 countries; continue to offer the best possible cost; and adhere to the strictest risk management guidelines.

After this year's Summit, some of our Representatives were kind enough to take a turn in front of the video camera and offer a few words on working with WRRI. We present the results here for your viewing pleasure:

Charting the Future of Global Relocation

During this week’s Global Workforce Symposium in Denver, we were proud to have our President, Aram Minnetian, invited to participate in the Global All-Stars panel, a research and brainstorming session featuring some of the brightest minds in workforce mobility and international business. This panel, which also featured Cathy Loose of Mercer HR Consulting, Lars Iversen, CEO of the Santa Fe Group, and William Colbourn, senior VP of HR, Blue Cross & Blue Shield, was moderated by Worldwide ERC CEO Peggy Smith.

Chief areas of concern among panelists were talent management, unemployment and the world economy. On the latter issue, Aram noted that while low interest rates and stock market rejuvenation are good things, overall, it doesn’t really “feel” like we’re in the midst of a recovery. The gulf between large corporations that are prospering and smaller companies that are struggling -- with access to global markets and large capital reserves being key differentiators – has never been wider. Meanwhile, Gross Domestic Product rates in emerging markets such as India are outpacing “established economies” like Europe and the United States, which continue to struggle through slow growth periods. That said, even though the US national debt has been running at close to 93 percent of the GDP and public sector woes impact and stunt recovery throughout the private sector, according to Aram, “that doesn’t mean we can’t grow.”

On a more positive note, Aram pointed out that a new generation of employees – millennials and early-career professionals – are fastly becoming the most mobile generation ever, actively seeking out opportunities for international assignments. Assignment volume numbers are also up among VIPs being relocated overseas to spur new business growth and employees with specific critical skills to fill talent gaps. To that end, he and other panelists cautioned that strict immigration policies could obstruct companies from attaining the global talent they need to expand and prosper, which will lead to even broader skills gaps.