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Despite the turmoil that's rattling the world's financial markets, Billings is in a favorable position to develop "work force housing" that would allow moderate-income people to invest in their own homes, according to an official from the Federal National Mortgage Association.

Anne McCulloch, senior vice president and deputy counsel for Fannie Mae, was a keynote speaker at a recent seminar on work force housing. McCulloch said the agency is eager and willing to help Billings develop work force housing, which is designed to serve families whose incomes range between 80 percent and 120 percent of the city's median income, which is $43,377.

Houses falling into that category would be priced in the range of $125,000 to $180,000, said Tom Llewellyn, a Billings real estate agent who chairs the Work Force Housing Task Force, the group that put together a daylong summit.

Llewellyn said the local effort to develop work force housing has nothing to do with "funny money," the subprime mortgage mess that has been a prime factor in the economic crisis.

"We're a funding source first and foremost," McCulloch said in response to a question on how the agency can help. Fannie Mae can help communities acquire land and develop and build work force housing, she said.

"We also help finance local housing authorities and local finance agencies with lines of credit, and we help develop larger multifamily apartment buildings," she said.

Asked to comment on the nation's financial crisis, McCulloch said, "It's been a wild, wild last three months."

"I'm very positive and very optimistic about where we're going," she said. "The reality is, the administration has done a very aggressive job of containing the crisis that's out there."

The federal government forced the takeover of Fannie Mae and a related organization, mortgage finance giant Freddie Mac, in early September. The move means that taxpayers now own a significant stake in the nation's mortgage market.

"Fannie and Freddie now have a full federal backstop," McCulloch said. "We're not capital-constrained anymore. Our purpose is not return to shareholders. Our purpose is what we can do every day to deliver liquidity to communities around the country."

McCulloch told about 100 lenders, real estate agents and other professionals that Montana's relatively strong economy will help it weather the downturn that continues to hammer the nation's financial markets.

"Montana is in a much better position than most states. You have a surplus, and your economy runs countercyclical," she said.

Llewellyn said the issue of work force housing gained traction more than a year ago when officials from General Electric began sizing up Billings for a new operations center that will bring hundreds of jobs to the community. The first question that GE officials asked about Billings, he said, was whether the community has made an investment in work force housing.

One year ago GE Commercial Finance selected Billings as the site of its new operations center. The company has already begun hiring, and a building is under construction in the TransTech Center.

Late last year the City Council formed the Work Force Housing Task Force. Since then, Llewellyn and others have been busy organizing Thursday's summit.

Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, addressed housing affordability by showing that Montana home prices have risen much faster than incomes. In Yellowstone County, housing prices have jumped by 80 percent, while incomes have increased by about 22 percent since 1998.

"Clearly this is a challenge," Barkey said, noting that home prices have risen even faster in Bozeman, Missoula and Kalispell.

On the bright side, Yellowstone County's population continues to grow, and incomes are on the increase. People moving into the community are accounting for most of the population growth. Meanwhile, other factors, such as the birth rate and death rate, haven't had much of an effect, Barkey said.

But the nationwide housing slowdown is starting to show up in Montana's hottest markets, Barkey said. This year prices have fallen in Bozeman, Missoula and Kalispell. In Billings and Great Falls, prices have remained mostly steady, he said.

After Barkey's address, attendees divided into discussion groups and later reported their findings on five topics related to work force housing: financing, design standards and the development process, incentives and regulatory barriers, neighborhood concerns and buy-in and cost components.

A report will be completed later this year.