The SAVE Act: Making it a Little Easier to 'Be Green'?

Image Credit: Energy Star 

Despite the recent push for green construction and remodeling, residential energy efficiency remains expensive. The common practice of lenders to ignore the value of green homes when underwriting mortgages keeps eco-friendly living even further out of reach of most moderate-income homebuyers. However, as The New York Times's Lisa Prevost reports, the Senate's bipartisan SAVE Act could make energy-efficient home features more attainable to these moderate-income buyers by incorporating the "green factor" into lender underwriting policies. See S. 1006 (June 6, 2013). The bill, which was introduced last month by Sens. Michael Bennet (D- Colo.) and Johnny Isakson (R-Ga.), seeks to "improve the accuracy of mortgage underwriting used by federal mortgage agencies by including a home's expected energy cost savings when determining the value and affordability of energy efficient homes." Specifically, the bill would require the FHA and lenders under federal conservatorship-namely Fannie Mae and Freddie Mac- to consider energy efficiency and energy savings realized when underwriting loans to buyers who submit a HUD home-energy report. These loans that take into account energy savings would recognize the added value that energy efficient features bring to a property and could result in larger amounts of money available to middle class buyers (the bill's supporters say that the risk of larger borrowing amounts is offset by studies that show that homes meeting federal energy guidelines are 32 percent less likely to go into default than homes that do not meet these standards).

The bill, which has broad support from groups including the U.S. Chamber of Commerce, U.S. Green Building Council, and National Resources Defense Council, is noteworthy not only for its efforts to bring energy conservation into mainstream lending policies but also because it is an uncommon example of politicians reaching across the aisle to collaborate with members of the other party and divergent interest groups. As Senator Bennet stated in his press release regarding the legislation, "it is rare to see such diverse interests come together, and that is because this is a common-sense bill." While the bill seems to hit all the right notes of common sense- including job creation, public-private partnerships, and the expansion of green home affordability- forthcoming debate over the bill may tell us how far common sense can go on Capitol Hill.