From the New York Times, By Bob Tedeschi, February 3, 2010
BORROWERS looking to make energy upgrades in their homes that will lower utility bills, along with their environmental impact, may soon find additional options available to them.
Fannie Mae, the government-backed company that sets lending standards for mortgages, said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements. And EnergyStar, a joint effort of the Department of Energy and the Environmental Protection Agency, is expected to introduce borrower incentives in New York, after running pilot programs in Colorado, Maine and Pennsylvania.
At the same time, the Appraisal Institute, an industry trade group, said it was training members to better quantify the value of energy-efficient homes. It also said that it was developing a certification program for appraisers who want to specialize in energy-efficient homes.
For years, the only option for borrowers was a so-called energy-efficient mortgage from the Federal Housing Administration. Under that program, borrowers who obtained F.H.A.-insured mortgages could qualify for larger loans if they earmarked additional funds for energy-related improvements, and if those upgrades yielded long-term savings. The F.H.A. has varying formulas for determining the maximum amount for energy improvements, but for many homeowners, the limit is 5 percent above what they could have qualified for in a conventional loan.
As with all F.H.A. loans, energy-efficient mortgages are marginally more expensive, because borrowers must pay the F.H.A. insurance premium. Borrowers have flocked to F.H.A. loans in the past two years, because the qualifications are less stringent than for non-F.H.A. loans. But just 3,088 borrowers chose energy-efficient mortgages last year, according to the agency.
Some mortgage executives have complained that these loans are more complicated than others, because borrowers have to complete an energy audit of their homes and use an appraiser with expertise in evaluating energy-efficient properties, among other things. But Susan Barber, the senior vice president for Wells Fargo's new construction and renovation programs, said the approval process was on par with those for other loans.
Either way, borrowers will have more options in the coming months. Amy Bonitanibus, a spokeswoman for Fannie Mae, said the company would introduce a program before the summer offering incentives to borrowers who take out conventional loans, and devote some of the funds to energy improvements. Ms. Bonitanibus declined to disclose details about the program. Fannie Mae loans require no mortgage insurance if the borrower makes a down payment of at least 20 percent, so its energy-efficient mortgage program will very likely save borrowers more money.
EnergyStar borrowers must submit to an energy audit, and demonstrate that the upgrades will cut energy consumption in the home by at least 20 percent.
Homeowners could still face logistical hurdles in obtaining "green" mortgages from lenders, said Curt Jones, the president of Civil1, a civil engineering company in Woodbury, Conn. He said that appraisers sometimes failed to recognize the increased market value of energy-efficient homes.
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