Mortgages Could Go ‘Green’ With Energy-Rewards Lending

Larger mortgages may soon be available for energy-efficient homes. Owners of energy-efficient homes pay lower utility bills, making more money available for the mortgage payment. Proposed federal legislation for green mortgages factors this into the debt-to-income ratios on mortgages for energy-efficient homes and as well as the appraised valuations of these homes. The bipartisan legislation, entitled the Sensible Accounting to Value Energy (SAVE) ACT being considered in the Senate, would require Fannie Mae, Freddie Mac, the Federal Housing Administration, and other federal lenders to revise their rules to reward energy savings. So-called “green-fields” are popping up on more than 125 multiple-listing services, which list properties’ green features. The Appraisal Institute created a comprehensive “green addendum” appraisers can use to evaluate a home’s green features. Genworth Mortgage Insurance plans to offer green mortgages with cost savings for buyers of energy-efficient homes, and will incorporate green valuations in its underwriting. Genworth currently offers incentives to Canadian buyers of homes that are 20 percent more efficient than the national building code or five percent more efficient than provincial standards, whichever is greater. These home buyers receive a 10 percent “energy-efficient refund” on mortgage premiums, a larger debt-to-income ratio, and online access to discounts on household items. Owners of energy-efficient homes also are less likely to default on their mortgages, according to the Institute of Market Transformation. | Read More