Three years after the University stopped subsidizing mortgages for senior faculty members, the shadows still remain.

Harvard Real Estate (HRE) developed the Purchase Option Plan and the Cambridge Option Plan in the mid-1970's to help Harvard lure newly tenured professors to Cambridge. The programs aimed to provide young scholars with prime Cambridge housing at discount rates.

But Harvard and real estate are always a volatile combination in Cambridge, and these plans raised even more furor than usual. In addition to the University's tax-free status. local politicians and activists constantly condemn the University's large share of the rental market, and its efforts to influence city government. The twin mortgage plans, City Councilors say, represent both.

"If there's one item that would draw unanimous [City] Council hostility, it's the mortgage program," says veteran tenant activist Michael Turk.

The mortgage programs subsidize all or part of Harvard professors' 40-year mortages either on houses bought from the University or on homes faculty members have purchased within Cambridge. In exchange, Harvard has the right of first refusal should the owners choose to sell.

Many of the 103 people who received mortages under these two plans are still paying them off and the subsidies still figure heavily in town-versus-gown rhetoric.

Although University officials stopped grantingnew mortages three years ago, they have neverannounced this fact and many local activistsappear to believe that faculty members are stillreceiving new subsidies. The cancellation of theprograms is documented in a letter from Harvardlawyer Daniel M. Polvere, submitted to the RentControl Board in May of 1984.

According to University officials--some of whomare also uncertain about the current status of theprogram--Harvard cancelled the programs becausethey became too costly. The program "didn'tanticipate the market values going completely outof sight," said HRE Controller Sheldon G. Tandler.

But a decade ago when the University wasconsolidating its real estate holdings, theCambridge real estate scene was vastly differentand the University could afford such mortgageplans.

When HRE was created in 1978, it assumed themanagement of the University's taxable propertiesand the mortgage programs.

Under the Purchase Option Plan, tenured Harvardfaculty members could buy Harvard-owned housesnear the University, receiving mortgages wellbelow the market rate on all or part of theircost, said Tandler.

He said the mortgage plans included a specialmeasure "to prevent speculation" that requiredbuyers who left Harvard or moved within five yearsto sell their houses back to the University forthe same price they had paid. If the owners soldtheir houses at any time, Harvard had the firstoption to buy them back.

A few years later, Tandler said, Harvard beganto run out of buildings to sell to faculty, andcreated the Cambridge Option Plan. Under thisprogram, Harvard gave below-rate loans to facultymembers who wanted to buy homes in Cambridge.Again, if these professors chose to sell theirhomes, Harvard would have the first chance to buythem.

Liberal City Councilors criticized the planvolubly at the time and still do. At a recent CityCouncil meeting Councilor Saundra M. Grahaminveighed against the program, which she saiddrove up property values and gave Harvardprofessors an unfair advantage in this area'sfierce battle for housing.

Councilor Francis H. Duehay '55 said, "Wecertainly asked [Harvard] in several forms to stopthat program. It pushed up the price of housingfor everybody." He added that at least one Harvardprofessor, whom he would not identify, had boughta house under the program "for investmentpurposes."