What is an Energy Efficient Mortgage?
“Energy Efficient Mortgages,” also known as EEMs, make it easier for borrowers to qualify for loans to purchase homes with specific energy-efficiency improvements.
EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.
To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.
EEMs are normally used to purchase a new home. EEMs are sometimes confused with Energy Improvement Mortgages (EIMs), which are used for existing homes and allow borrowers to include the cost of energy-efficiency improvements in the mortgage without increasing the down payment.
EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs.
I think that this is something that we should examine for affordable housing in Chapel Hill. What Local Lenders make this type of loan? Can we bring developers and banks together to create oppertunities like this for new town construction so that these loans will have a market?
2 comments:
http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm
This is a link that will giv eyou all added informaiton
For several years we (OCHCLT)ran a program that could include energy retrofits and was funded through HUD "Home" funds (This is a program in which federal funds are channeled through Orange County). The program was discontinued because the administrative costs exceeded the amounts used for construction.
This program targeted people who lived in older homes, had low income and may not have been able to qualify for a new loan or a home equity loan.
It would be interesting to evaluate the program and determine if there are less top-heavy ways of executing.
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