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The AIA Housing and Community Development Knowledge Community (HCD) is a network of architects and allied stakeholders that promotes equity in housing, excellence in residential design, and sustainable, vibrant communities for all, through education, research, awards, and advocacy.

  • 1.  Energy Efficient Mortgages

    Posted 01-25-2016 06:15 PM

    I'm trying to promote Energy Efficient Mortgages (EEM) and Energy Improvement Mortgages(EIM) as a no-extra-cost way to improve energy efficiency, both in terms of bring new construction further than code and in improving existing housing, but haven't been able to find anyone who has actually used them.  Does anyone have a  client who has used one of these mortgage options and would be willing to share that experience? Does anyone understand why these aren't used very often?  Are any non-governmental mortgage companies offering them?

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    Nancy Evenson AIA
    Principal
    Evenson Architecture
    Provo, UT
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  • 2.  RE: Energy Efficient Mortgages

    Posted 01-26-2016 05:35 PM

    As as first-home purchaser and architectural designer, this is the first I have heard of mortgage options such as this.  I am currently in TX and the lending companies I am working with have not mentioned this as an option.  The mortgage and home-buying process is very complicated and people, in general, tend to stick to processes that they know will give them a suitable outcomes.  My wife and I are looking to rejuvenate single-family homes in the area and this is a great option to help promote sustainability within upgraded systems.  My overall question is, how would you get the real estate market to recognize the investment in the individual mortgage when compared to other homes in the neighborhood?  Would the general home buyer recognize this as investment wealth?  These could be questions that the lending companies are asking themselves when it comes to the risk associated with new technologies.    

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    Matthew Spinner Assoc. AIA
    Intern Architect
    ForrestPerkins
    Dallas TX



  • 3.  RE: Energy Efficient Mortgages

    Posted 01-27-2016 05:40 PM

    Sandra Adromatis,  Adomatis Appraisal Service, adomatis@hotmail.com, has done a good bit of research on the issue and just gave a lecture about this subject at the NAHB convention and offered to answer questions about it.  She indicated that an appraiser with the right credentials can raise the price of a green home from 1 to 6% above one just built to code.

     

    Mike

     

    Michael T. Newman

    Partner/President

    Newman Marchive Carlisle Incorporated

    Architects/Building Environmental Consultants

    Celebrating 40 Years of Teamwork

    2800 Youree Drive, Suite 310

    Shreveport, La. 71104

    Off: 318-219-1814

    Cell: 318-458-4877

    http://www.newmaninc.com/

     






  • 4.  RE: Energy Efficient Mortgages

    Posted 01-30-2016 12:39 PM
    Matthew,

    The following reports below should answer most of the questions regarding the value added from green building.






  • 5.  RE: Energy Efficient Mortgages

    Posted 01-30-2016 02:20 PM

    Using an EEM to install energy efficiency up front means that while paying the same or less each month to the mortgage rather than to the utility bill, that money, instead of going “up the chimney” in heating or electricity bills, goes into building value in the home. The advantage to the EEM is that the energy savings is counted as income to determine the loan/income ratio, thus allowing a larger loan. There is no extra cost, but considerable extra benefit to the homeowner, not to mention the benefit to the environment. Essentially, you are buying a more valuable house at no extra cost.

    Part of the benefit, of course, is that it is far less expensive to install upgrades in new construction as the home is built, or, for existing homes, all at once, rather than piecemeal as funds become available.

    The argument becomes more persuasive as buyers become more energy conscious. No one would buy a new car without asking about gas mileage; home values will vary more with energy efficiency as buyers factor in energy costs for existing homes by asking for a year’s worth of utility bills.

    Please note that the government does not necessarily have to be involved in an EEM except to the extent that anyone installing energy upgrades would take advantage of the various tax credits offered by states and the feds which are available to everyone whether working with an EEM or not. Private mortgage brokers can offer the same advantage since the only “extra” concern is validating energy savings through a HERS report. The EEMs offered through VA and FHA have limited amounts but also do not require the down payment or the loan/income ratio to be increased. Private brokers may have different requirements.

    Simply paying cash for upgrades is clearly less expensive in the long run, since the energy cost savings becomes extra income once you exceed the “payback” period. The same is true of the house itself, although there is also an advantage in the mortgage interest tax savings.

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    Nancy Evenson, AIA
    nancy@evensonarchitecture.com



  • 6.  RE: Energy Efficient Mortgages

    Posted 01-26-2016 06:15 PM

    Don't these kinds of mortgages just saddle those who can least afford it with more debt? They borrow against the energy cost savings over the "useful life" of the energy savings measure. This is likely to be longer than most people stay in their houses before moving. Plus they can borrow 97% of the cost. This sounds like a cousin of the sub-prime mortgages that got so many people in trouble in 2008. And our "friendly" government is pushing people into this higher mortgage debt. Maybe these Energy Efficient Mortgages aren't popular because people have wised up and are trying to reduce their debt rather than increase it. That would be nice if it were true.

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    William Hirsch AIA
    ARCHITECT
    William J. Hirsch, Jr, Inc.
    West End NC