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Smart Mortgages

Posted by Christina B. Farnsworth

Mar 6, 2014 1:35:00 PM

In 1979 Owens Corning advocated for PITI+E, meaning that what a homeowner could qualify for on a mortgage would not only include the costs of principle, interest, taxes and insurance, but also what it cost the homeowner to pay the home’s utility bills.

The theory was that homeowners had to pay those energy bills as part of the cost of home ownership, why not qualify them for a larger mortgage if those bills were lower, and, thus, they had more money available to pay a mortgage?

That was the 20th century. There were various national attempts to get lending institutions to use such energy-considering mortgages, but the documents were complicated and, at that time there were no national rating agencies. But this is the 21st century, and now we have RESNET. We can get verifiable home energy rating indices, and just-introduced legislation has bipartisan support.

New Hampshire Democratic Senator Jeanne Shaheen and Ohio Republican Senator Rob Portman reintroduced (S.1392) that includes the SAVE Act on February 27. Colorado Democratic Senator Michael Bennet  and Georgia Republican Senator Johnny Isakson are co-sponsors of SAVE. The act allows “a Home’s expected energy cost savings to be included when determining the value and affordability of the property. The proposed legislation recognizes the RESNET Home Energy Rating standards for calculating savings.”

Shaheen “told the Senate Energy and Natural Resources Energy Subcommittee’s Energy Subcommittee that the bill had a ‘great chance’ of becoming law due to bipartisan support in both chambers.” Portman expects Senate action within the month.

Bennet’s own press release about the legislation introduced February 27th notes, “On average, homeowners spend about $2,500 a year on home energy costs, and that adds up to more than $70,000 over the life of a 30-year mortgage. But, while mortgage lenders typically take into account the cost of real estate taxes and homeowner’s insurance when determining the cost of a home loan, they do not take into account home energy costs, even though these costs are, in many cases, more than taxes and insurance.”

The SAVE Act addresses “this blind spot, encouraging investments in energy-efficient home building and creating tens of thousands of construction jobs in the process.”

In the House of Representatives, Vermont Democratic Representative Peter Welch and West Virginia Republican Representative David McKinley have sponsored similar bipartisan legislation (H.R.2126). The House bill passed the Energy and Commerce Committee by voice vote January 28.

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