Harvard Will Provide Tenured Faculty $2 Million in Low-Interest Loans To Purchase Homes In Cambridge

University faculty who plan on buying homes in Cambridge this year will be eligible for low-interest, long-term loans under a new $2 million mortgage subsidy plan approved by the Harvard Corporation. Thomas O'Brien, financial vice-president, said yesterday.

The new loan plan, labelled the "Cambridge Option" by O'Brien, would allow tenured faculty--whose average income was about $40.000 last year--to purchase homes closer to campus with special mortgages at 6 per cent interest and 40-year terms.

Bank mortgages in the Cambridge area presently carry 11 per cent interest rates with 20-to 30-year terms.

Relations

"We hope to encourage more faculty to live in Cambridge to improve student-faculty relations and make it casier for newer faculty from around the country to find homes in the area," O'Brien added.

The price of one-family homes in the university area currently averages about $100.000, a local real estate agent said yesterday.

The Harvard Real Estate Corporation will administer the new plan, but eligibility will be determined by the dean of each faculty.

Big Money

The $2 million fund, which comes from the general operating account of the Corporation, will be allocated according to the percentage of tenured faculty in each school of the university. A minimum of 20 $100.000 loans will be made this year.

The Faculty of Arts and Sciences (FAS) will receive the largest allotment of $800.000, while the School of Education and the Divinity School will each receive $100.000 loans.

Non-tenured faculty will not benefit from the plan, but O'Brien said attempts will be made to find more housing space. "We can only tackle one problem at a time," he added.

Under the present faculty housing plan, the University rents housing that it already owns to faculty at favorable rates with the option of buying, Robert Silverman, vice-president for property management, said.

This "purchase option" plan has drawbacks, however, since faculty members lose tax deductions that they would receive had they owned the homes, and the University is responsible for all maintenance work, O'Brien said.

The "Cambridge Option" will eliminate these problems, and will help faculty deal with the rising cost of housing, O'Brien added.

None of those professors contacted yesterday had heard of the plan or were willing to comment.