Energy efficiency improvements could be factored into mortgage underwriting

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Western Montana Grean Real Estate For SaleInman News Staff Writer Jun 12, 2013

Law that would establish guidelines for lenders previously died in committee

A bill aimed at encouraging home energy efficiency improvements by establishing underwriting guidelines for mortgage lenders that factor in cost savings for homeowners has been introduced — again — in the Senate.

S. 1106, the Sensible Accounting to Value Energy Act of 2013, is sponsored by Sens. Michael Bennet, D-Colo., and Johnny Isakson, R-Ga. The bill — which has the support of many real estate industry groups — has been referred to the Senate Banking Committee, where a previous version of the bill introduced in 2011 died.

According to the Appraisal Institute, the bill “would instruct federal loan agencies to assess a borrower’s expected energy costs when financing a house. The U.S. Department of Housing and Urban Development would issue updated underwriting and appraisal guidelines for any loan issued, insured, purchased or securitized by the Federal Housing Administration or any other federal mortgage loan insurance agency.”

The bill’s primary features — an affordability test and a loan-to-value adjustment — would both be optional.