Bipartisan U.S. bill will help homeowners investing in energy-efficient homes
June 9, 2013 - Some interesting news from the States: senators Michael Bennet and Johnny Isakson introduced the Sensible Accounting to Value Energy (SAVE) Act to establish “more practical mortgage lending processes”, encourage investments in energy-efficient home building and create (they say) an estimated 83,000 construction jobs.
By Anthony Capkun
“Monthly energy bills constitute a major expense for families and the SAVE Act will help them make more informed decisions when purchasing a home and provide them with a better understanding of how much they can save by investing in energy efficiencies for their home,” said Bennet.
The senators plan to file the legislation as an amendment to the Energy Savings and Industrial Competitiveness Act of 2013, introduced by senators Jeanne Shaheen and Rob Portman, should that legislation receive Senate floor consideration in the future.
The SAVE Act allows federal mortgage loan agencies to consider a home’s energy efficiency and expected monthly energy bills when determining the homeowner’s ability to pay monthly mortgage payments.
“As an industry that develops numerous materials and technologies that empower Americans to save energy, we believe energy efficiency is critical to sustainability in homes and buildings,” says the American Chemistry Council.
The average homeowner spends more than $2500 each year on energy costs, say the senators, but energy costs are not taken into account when determining the cost of a home loan. On average, these energy costs amount to more than $70,000 over the life of a 30-year mortgage.
The SAVE Act would address this blind spot, giving a more complete picture of the costs of home ownership, and providing a better understanding of the benefits of energy-efficient investments for the home. The SAVE Act is expected to result in $1.1 billion in energy savings—money that homeowners can put back into the economy. This legislation would let families finance home energy upgrades as a part of their mortgage.
“Energy efficiency truly is a win-win-win. Homebuyers are able to reduce their monthly heating and cooling bills, the economy benefits from job creation, and the country as a whole saves energy,” said Johns Manville CEO Mary Rhinehart.
The SAVE Act works in three ways to promote energy efficiencies and help homeowners pick the home that’s right for them. If a qualified energy report is provided, then lenders will account for expected energy cost savings as an offset for other expenses when determining a borrower’s ability to afford the monthly mortgage. Lenders will also add the present value of energy savings when calculating the loan-to-value ratio, which helps determine the risk of a loan. The bill imposes no requirements on homeowners. Participation by homeowners is completely voluntary; they are not required to submit an energy report.
Lenders will also inform loan applicants of the cost savings and benefits of investing in energy efficiencies and talk to them about resources available to help them improve the energy efficiency of their home.
The bill has support from a broad coalition of real estate, business, building trade and conservation groups, including Alliance to Save Energy, American Council for an Energy-Efficient Economy, ASHRAE, National Association of Manufacturers, National Electrical Manufacturers Association and U.S. Green Building Council.