Green Mortgages: A Good Idea That Never Really Got Off the Ground

Energy efficient mortgages (EEMs) have been around since 1980 and can be issued by any FDIC-insured bank, yet they account for fewer than 1 percent of all residential loans. Although tax-deductible mortgage interest should make financing energy-saving improvements easier for homeowners, many borrowers avoid EEMs due to the significant amount of time and paperwork they require. Less paperwork and the absence of a Home Energy Rating System inspection have made the energy-efficiency rebates and tax incentives available through the American Recovery and Reinvestment Act of 2009 more attractive to borrowers instead. Moreover, many lenders, Realtors,and appraisers still place more value on visual components; and home buyers may be more interested in such green products as bamboo flooring and recycled glass countertops than those that boost energy efficiency. However, there are energy-efficiency initiatives sponsored by utilities, state agencies, and local organizations that can reduce project costs by 10 percent to 30 percent. Meanwhile, home buyers may take a closer look at efficiency in the wake of Hurricane Sandy, given that a more energy-efficient home will consume less power from a generator in the event of an outage. | Read More