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Making ‘Green’ More Affordable
Lisa Prevost / June 27, 2013
Consumer demand for high-efficiency homes is rising. But the value of “green” isn’t always factored in by appraisers, and is typically ignored by mortgage lenders.
A bipartisan Senate bill supported by a broad coalition of business, real estate, energy and environmental groups seeks to put energy cost savings into the underwriting equation. Called the SAVE Act (for Sensible Accounting to Value Energy), the legislation could make energy-efficient features more affordable to average-income home buyers by allowing them to qualify for a larger loan amount.
The legislation would require Fannie Mae, Freddie Mac and the Federal Housing Administration to incorporate energy efficiency into their underwriting policies. The energy savings would be considered only when a buyer or homeowner chose to submit a qualified home-energy report, the guidelines for which would come from the Department of Housing and Urban Development.
“Right now appraisers really don’t have an effective way of considering energy-efficient features,” said Robert Sahadi, the director of energy efficiency finance policy for the Institute for Market Transformation, a major supporter of the legislation. “The ruling methodology is the sales comparison approach, and to the extent that there aren’t enough comparables in the marketplace, they’re sort of hamstrung. What is being advocated is having a third-party energy report on the house.”