Energy-Related Mortgage Innovations to Come Within a Year?

New-home mortgages may include funds for energy-efficient improvements in the near future. Three new studies showing the advantages of owning energy-efficient housing are helping to build momentum in the home-building, financial, and energy industries to push for change in mortgage-lending practices. A University of North Carolina Center for Community Capital study showed that the risk of default is 32 percent lower on mortgages of energy-efficient homes. Meanwhile, an American Council for an Energy Efficient Economy study showed that calculating energy savings into mortgage underwriting would result in a 16 percent reduction of energy use and $10 billion in U.S. energy savings from 2014 to 2030. In addition, a National Association of Home Builders Economics and Housing Policy Group survey showed that 90 percent of home buyers would choose an energy-efficient home with permanently lower utility bills over a less-expensive traditional home. On the strength of these studies, Vision 2020 Economics + Financing chair Robert Sahadi expects to see energy-related mortgage innovations within a year, but he also is working with federal regulators to pass the SAVE Act, legislation that would institutionalize energy-efficient mortgages. “We’ve already met with [the Department of Housing and Urban Development] and they were very pleased with the study, it was very helpful to them,” Sahadi says. | Read More