Green mortgages, in which lenders presumably offer better mortgage loan rates or terms for homes that reduce resource use and related operating costs, are still on the drawing board as a way to attract and qualify potential buyers. But a few carrots are being sprinkled around to indicate that, as green building becomes more defined and commonplace, such programs may follow green building practices into the mainstream.
This summer, Wells Fargo Home Mortgage offered a new-construction solar home program that allows builders in California to transfer a rebate offered by the California Energy Commission’s New Solar Home Partnership directly to buyers at closing, which they can use for the down payment or as a permanent interest-rate buy-down to lower their monthly mortgage payments. The offer applies to conforming and non-conforming loans for new single-family homes, including condominiums, that will be used as the buyer’s primary residence. The rebate amount depends on the size of the solar system installed.
Meanwhile, Mortgagegreen, a green real estate finance company in Larkspur, Calif., is now offering what CEO Tomek Rondio calls the “first national green residential mortgage underwriting standard” for rating and funding sustainable construction. Available nationwide, the new standard includes a green building value rating system that Rondio envisions being adopted by the mortgage lending industry.
Mortgage loan experts are cautious, however. “Without the support or input of national underwriters or a consensus on how to put a value on green building, it’s going to be difficult for other lenders and banks to support this program,” says Bill Renner, the NAHB’s director of single-family finance, who has been tracking both green mortgages and their precursor, energy-efficient mortgages, which have been around since the late 1970s without much fanfare to date. “At least they’re thinking about green.”