SAVE – Mortgage Loans and Energy Efficiency
In early June, the Sensible Accounting to Value Act (the SAVE Act) was reintroduced in Congress by Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA). While the SAVE Act was originally defeated in the last session of Congress, it is expected to pass this time around, especially given that it now has the support of both the National Association of Realtors and the National Association of Homebuilders.
Considers Energy Savings in Mortgages
The SAVE Act will change federal mortgage underwriting by allowing lenders to include a home’s expected energy cost savings when determining the value and affordability of energy efficient homes. This has been a long time coming, and given that utility bills are usually larger than property taxes and homeowners insurance, it would be a huge benefit to have cost savings included during underwriting.
Once the SAVE Act passes, the Department of Housing and Urban Development (HUD) will issue updated underwriting and appraisal guidelines for borrowers who submit a qualified home energy report. This is not just good for borrowers, but also for lenders, because studies have shown that mortgage default risks are 32 percent lower on Energy Star labeled homes that were rated by a certified RESNET Home Energy Rater. This in turn is good for those who work in all areas of the energy efficiency industry – as more people take advantage of the SAVE Act, it will continue to stimulate job growth in this market.
A few benefits of the SAVE Act are:
No Cost To Taxpayers
There are no additional taxes or fees with this Act. It simply removes obstacles that currently hold back more efficient building or renovating of homes due to financing constraints.
Stimulate Job Growth
With financing more readily available for energy efficiency projects, the construction, remodeling and manufacturing sectors of the economy will see a nice upswing in line with the passing of the Act.
Lower Utility Bills
With a small upfront investment in energy efficiency upgrades, Americans will not just improve the comfort and value of their homes, but they could see a reduction in their utility bills of 30% or more.
Energy Efficiency In More Homes
By making the financing for energy improvements accessible to more people through their traditional mortgage, the SAVE Act will bring energy efficiency to homes that may not have had it otherwise. This means more energy efficient homes, more jobs stimulated as a result of the improvements being made, lower utility bills for more people, and more money back into the economy.
The SAVE Act will save people money, it will save environmental resources, and it will save and stimulate jobs. It’s a great example of what bipartisan leadership can provide.