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Institute for Market Transformation

Promoting energy efficiency in buildings
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Single-Family Finance & Mortgages

There are more than 100 million homes in the United States, accounting for one-fifth of total U.S. energy consumption and nearly a quarter of the nation's greenhouse-gas emissions. Energy-efficient homes help reduce household utility costs and protect homeowners against volatile energy prices. Research by IMT and the University of North Carolina shows that owners of energy-efficient homes are 32 percent less likely to default on their mortgages. Yet relatively few Americans enjoy the benefits of an efficient home because of persistent financing barriers.

IMT is working to reform mortgage underwriting and home appraisal practices to fully account for energy. We educate appraisers on energy efficiency valuation and support innovative financing measures. Overcoming financing barriers will result in more energy-efficient homes and less overall energy consumption; lower utility bills for homeowners; mortgage underwriting that is more sound, with reduced risk of defaults; and the creation of green jobs in the real estate, home construction and retrofit markets.

The SAVE Act

The SAVE (Sensible Accounting to Value Energy) Act, a new proposal supported by energy efficiency advocates and leading U.S. homebuilders, seeks to correct mortgage underwriting and home appraisal practices to assess the expected energy costs for mortgage loan applicants. IMT has been a staunch advocate of the legislation and helped draft the bill now before lawmakers. Find out more about the merits of the bill and its urgent need by clicking the link above.

Why include energy costs in mortgage underwriting?

Why include energy costs in mortgage underwriting?



The average homeowner spends over $2,000 each year on energy costs, more than on either property taxes or home insurance. Yet taxes and insurance are regularly accounted for in mortgage underwriting, while energy is ignored. The SAVE Act would remedy this blind spot to improve the quality of lending. Purchasers of more efficient homes could get better terms for a mortgage--in light of the lower utility bills they can expect--and in some cases could finance energy-saving improvements as part of their mortgage.