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You take a job with a high flying company in Los Angeles, Thousand Oaks to be precise. You are coming from Atlanta where the housing costs are low and ending up in Southern California where $700,000 was buying a house half the size you had back East.

So the company offered you a deal, we will give you a loan for your new home to help bridge the cost of housing. Was this a good idea?

For those working for Amgen it probably was not. Many of these housing loans were made at the top of the market. Adding more to the misery of the borrowers is that in addition to losing 30 percent of the housing value, they have now been laid off by Amgen as the company took a downturn and cut 2,000 jobs.

Amgen is waiving the 30 day payback policy for these employees on their loans when they leave the company, not because they are the greatest people, but because the odds of the loans being paid back are slim to none.

Let’s go back to the $700,000 home in the example at top. If trends hold firm it is worth about $210,000 less than if it was bought at the top of the market. So now you have an out of work employee who has a home that is worth a third less, and you are going to attempt to call in a loan that will hit your books? And the loan is secondary to the first mortgage?

It makes sense for Amgen to continue giving extensions probably into 2012 before the homeowner is whole again and can get out of the hole they are in.

The lesson of the story, if a deal looks too good to be true, it probably is. Or companies that lend money like that to employees often have a short shelf life of prosperity.

It was common practice for the company to offer second mortgages to help new employees relocate, Amgen spokesman David Polk told the Health Blog. The standard term of the loans was five years, but employees who left before that time was up were supposed to pay back the loans within 30 days.

As the cutbacks came down last year, the company said employees who took voluntary buyouts or were laid off could have until October of this year to repay the loans. Now, with the real estate market in a tailspin, the company is giving former employees an extension until next February to repay the loan.

Polk said that employees who left as part of the cutbacks got a severance of at least 24 weeks pay, as well as company health insurance through the end of this year. But even a decent benefit package plus an extension on the loan may not keep everybody afloat. via WSJ Health Blog

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