Introducing Rationality into the Home Financing Process

RESNET releases a new climate proposal to help the incoming Biden-Harris Administration craft a strong national climate policy.

It’s an understatement to say the incoming Biden Administration has a lot on its plate come January 21. To help, RESNET has distilled the best avenues to reduce carbon emissions into a guidance document called White Paper on Introducing Rationality in the Home Financing Process.

The organization makes the argument that no national climate policy can be effective unless it addresses reducing energy consumption and carbon production in homes. It lays out a plan in which the U.S. Department of Housing and Urban Development (HUD) should direct mortgage underwriters to consider energy-efficiency measures that lower operating expenses when calculating mortgage qualification, home value, and qualifying interest rate. 

The benefits of adopting this plan are: 

• Making energy-efficient homes more affordable to American families. 
• Boosting the construction and purchase of energy-efficient homes.
• Creating a more evolved mortgage market where energy costs are consistently considered as a cost of housing. 

“It’s high time that we update the valuation metrics for our homes and buildings,” says Sara Gutterman, CEO Green Builder Media. “Lowest upfront cost and price per square foot are antiquated metrics that don’t incorporate sustainability, performance, resiliency, quality, or health considerations. Similarly, we need to update our mortgage underwriting standards to include energy efficiency and the long-term cost of homeownership. Otherwise, we’re not accurately calculating the full costs.”

Currently, home energy performance is not considered in the mortgage underwriting process. Because of this, home builders don’t have an incentive to spec energy-efficient features because they could price out home buyers who can’t qualify for higher mortgages, even though those buyers would actually be spending less when the lowered utilities are factored. 

This policy paper will be the foundation of RESNET’s advocacy to the incoming Administration, and it urges you to review the paper and forward it to your congressional representatives. 

Download the White Paper on Introducing Rationality in the Home Financing Process here. 

Learn more about RESNET’s initiatives at its upcoming virtual conference, February 22-24. 

Cati O’Keefe is the editorial director of Green Builder Media. She has 25 years of experience reporting and writing on all aspects of residential housing, building and energy codes, green building, and sustainability.