Location-Efficient Mortgage

Michael Quinn Dudley

Location-efficient mortgages (LEMs) are a financial instrument that allows homebuyers to shift a portion of the savings gained through reduced transportation spending over to their housing expenses. They are intended to reward homebuyers for choosing to live in walk-able, transit-oriented communities, rather than electing to live in automobile-dependent outlying suburbs. As such, they are seen as a means to simultaneously address issues of sprawl, automobile overuse, unaffordable housing, and resource overconsumption. Rather than simply focusing on the price of the housing unit itself, LEMs approach housing affordability in a more holistic fashion, taking into account the overall affordability associated with living in particular regions of a city over others, based on likely transportation needs and associated expenses. In the spring of 1996, three nonprofit organizations—the Center for Neighborhood Technology in Chicago, the Natural Resources Defense Council in San Francisco, and the Surface Transportation Policy Project in Washington, D.C.—formed a research ...

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