Designing A Mortgage Process for Energy Efficiency

As the U.S. housing stock ages and energy prices climb, more robust strategies and financing mechanisms are needed to drive energy efficiency renovations in existing homes, particularly among low- and middle-income households. To date, residential retrofit strategies have broadly targeted homeowners, with less emphasis placed on leveraging the home purchase process to trigger renovations early in a homeowner’s tenure.

In theory, the Energy Efficient Mortgage (EEM) program offered by the Federal Housing Administration (FHA) represents a promising model for catalyzing energy-saving upgrades with home purchase transactions. However, the program has struggled to gain traction. Through interviews with housing counselors, real estate agents, and mortgage lenders, this study sought to understand why this tool is not used to its full potential.

 

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