Amid the subprime mortgage mess and housing’s continuing correction from the heyday of ’05, and considering the groundswell for green building, one might conclude that the demand and availability of energy-efficient mortgages (EEMs) to help qualify home buyers and give credit for high-performance homes might actually get the surge of interest anticipated since the Carter administration.
Not likely. Tighter lending practices have all but shut down anything out of the ordinary, and buyers are finding better rates, terms, and fee structures more from improving their credit scores and making bigger down payments than finding a home with upgraded insulation. “There’s been no real financial incentives to seek them out,” says Bill Renner, the NAHB’s director of single-family finance. “[A home’s] energy savings isn’t usually calculated by the lender if the buyer isn’t borrowing up to their loan limit.”
Even when banks were falling over themselves to qualify iffy buyers, EEMs (and their evolved sibling, green mortgages that factor in environmental benefits) were not top-of-mind, barely registering a blip on the $10 trillion domestic mortgage radar. Despite programs offered by Freddie Mac and Fannie Mae, and some from a few other big-name private lenders, the concept can’t find its footing.
Green mortgage programs, in their infancy and so far limited primarily to non-residential buildings that have achieved a LEED rating as a measure of environmental benefit, lack the track record of actual savings and lower risk to attract many lenders—especially in the current market. “Under ideal circumstances, a home buyer or a lender might anticipate some financial benefits from a [high-performance] home,” says Renner. “But it doesn’t take much to trip up that ideal once the owner takes occupancy.”