Residential Energy Efficiency Finance and Mortgages
There are more than 100 million homes totaling hundreds of billions of square feet in the United States. This enormous sector accounts for one-fifth of total U.S. energy consumption and nearly a quarter of the nation's greenhouse gas emissions.
IMT works to advance energy efficiency in the residential sector by overcoming financing barriers in mortgage underwriting, appraisal practices and consumer markets. Energy-efficient homes help reduce household utility costs and decrease exposure to energy price volatility. Yet, relatively few homeowners have tapped into these benefits because of persistent financing barriers. IMT is currently working to reform mortgage underwriting and home appraisal practices to fully account for energy; educate appraisers on energy efficiency valuation; and support innovative financing measures like property-assessed clean energy (PACE) financing. 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; 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 law-makers. Find out more about the merits of the bill and its urgent need. Read More>>
IMT REPORTS AND PUBLICATIONS
- The SAVE Act (IMT overview)
- Improve the Accuracy of Mortgage Underwriting by Accounting for Expected Energy Operating Costs
- Legislative Brief: Updating Federal Mortgage Programs to Encourage Energy Efficiency
- Removing Impediments to Energy Efficiency from Mortgage Underwriting and Appraisal Policy (Two-page brief)
- Reducing the Need for U.S. Drilling through Energy Efficiency
LINKS AND RESOURCES
-
Can Creative Financing Programs Close the Energy Efficiency Gap? | RFF Seminar | Oct. 5, 2011 | Cliff Majersik's presentation (PDF) | VIDEO
-
What Have We Learned from Energy Efficiency Financing Programs? | ACEEE | Sept. 20, 2011 | This study from the American Council for an Energy-Efficient Economy (ACEEE) shows that energy efficiency loan financing is proving to be a stable, low risk investment with low default rates and large-scale potential. A review of 24 energy efficiency loan programs finds extremely low default rates ranging from 0-3% throughout the life of the financing program.
PRESS AND NEWS COVERAGE
August 25, 2011 | New York Times | Strange Bedfellows Back Bill Using Mortgages to Spur Energy Retrofits
June 6, 2011 | Colorado Energy News | Senator Bennett Adds His Support to SAVE Act
May 16, 2011 | NAHB Newspaper | Appraisers Making Headway in Recognizing Value of Green Home Features
April 28, 2011 | Builder Magazine | Builders Fight for Value Recognition for Energy-Efficient Homes
April, 2011 | Journal of Light Construction | Big Builders Push for Energy-Efficiency Initiative (html) (pdf)
December 15, 2010: A study published in the Journal of Sustainable Real Estate showed evidence that mortgage default rates are higher, on average, as household car ownership rises. Mortgage default becomes less likely as a home's "walkability" increases. The article controlled for other household characteristics and used data from three geographically and economically disparate areas. Read it here.
November 22, 2010 | The NEWS | Energy Efficiency Could Be Silver Bullet for New Construction
October 31, 2010 | E - The Environmental Magazine | Mortgages and the Energy Factor
August 23, 2010 | Change.org | Should Mortgage Lenders Demand Good Insulation and a Tight Window Seal?
August 18, 2010 | Grist | Senate bill would make energy-efficient mortgages mainstream
July 27, 2010 | The Environmental and Energy Study Institute briefed House legislators on the financial value of energy efficient homes; the presentation included a policy proposal developed in part by IMT that relates mortgage financing to home energy costs. Find out more about the briefing.
