Bill Reintroduces Energy Costs to Underwriting Process

Lawmakers from both sides of the aisle introduced a bill in the Senate Wednesday that would require mortgage lenders to consider energy costs for borrowers when underwriting their federally insured loans.

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""Sen. Michael Bennett"":http://bennet.senate.gov/ (D-Colorado) and ""Sen. Johnny Isakson"":http://isakson.senate.gov/ (R-Georgia) introduced the bill, titled the Sensible Accounting to Value Energy (SAVE) Act, as a way to restore household energy expenses to the underwriting process for government-backed mortgages.

""As someone who has 30 years of experience in the resident real estate industry and who has lived through multiple recessions, I understand that recovery in the housing market and job creation in the construction sector is pivotal to getting our economy back on track,"" Isakson said in a ""statement"":http://isakson.senate.gov/press/2011/101911BennetEnergyCosts.html.

He credited the bill as one with ""the potential to create jobs without any cost to taxpayers... [and]... improve mortgage underwriting"" by including energy cost considerations.

Sources from Capitol Hill tell _MReport_ that the legislation caps a yearlong effort by companies and lobbyists from across the spectrum to introduce the bill.

Robert Sahadi, director of energy efficiency finance policy with the Washington, D.C.-based ""Institute for Market Transformation"":http://www.imt.org/ (IMT), explains that regulators with ""Fannie Mae"":http://www.fanniemae.com/portal/index.html, ""Freddie Mac"":http://www.freddiemac.com/, and the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration (FHA)

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nixed household energy considerations ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô long part of federal underwriting standards ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô during the 1980s, given low energy costs typical of the era.

He cites FHA manuals prominent before the 1960s and says that the ""Department of Veterans Affairs"":http://www.va.gov/ already examines household energy costs in approving the federal loans it backs for veterans.

Cliff Majersik, executive director for the nonprofit, shares with us that a ""broad coalition"" of supporters lined up to back the bill as a way to formally reintroduce energy cost considerations to the underwriting process.

A statement endorsed by several backers supplied names that include the ""U.S. Chamber of Commerce"":http://www.uschamber.com/, ""Appraisal Institute"":http://www.appraisalinstitute.org/, ""American Council for an Energy-Efficient Economy"":http://www.aceee.org/ (ACEEE), ""Natural Resources Defense Council"":http://www.nrdc.org/about/default2.asp, and ""U.S. Green Building Council"":http://www.usgbc.org/, among others.

""The big picture here is that the SAVE Act creates jobs, and that it doesn't cost the taxpayers anything,"" Majersik says. ""The big selling point is that it doesn't create any new regulations for private firms. It just fixes a blind spot for federal authorities.""

He cites ""IMT research"":http://www.imt.org/files/SAVE_Act_Factsheet.pdf jointly conducted with ACEEE that projects the creation of 83,000 new jobs in construction, renovation, and manufacturing over the next decade as a result of the bill, with 16,000 jobs on the way for 2015 as the law ramps up.

The estimate projects that the SAVE Act would help save homeowners more than $1.1 billion in current inflation-adjusted dollars by 2020.

""The SAVE Act creates private sector jobs while making our homes more energy efficient,"" ""Ross Eisenberg"":http://www.chamberpost.com/category/author-ross-eisenberg/, environment and energy counsel at the U.S. Chamber of Commerce, said in the statement. ""And by accomplishing these goals without the need for major federal spending, the SAVE Act will spur job growth in the private sector without adding to the federal deficit.

""That is a ├â┬ó├óÔÇÜ┬¼├ï┼ôwin-win' for the business community, and is the kind of realistic, commonsense policy everyone should want to get behind,"" he added.