Kenneth Harney
The Nation's Housing

Government Readies Biggest Ever Push for Energy Saving

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By Kenneth R. Harney
Saturday, July 25, 2009

You're probably familiar with some of the federal government's incentives for home energy efficiency -- heftier tax credits for solar panels, solar water heaters, geothermal heat pumps, heavy-duty insulation and windows and electricity-saving air conditioning and the like.

But these come-ons are just the beginning of an unprecedented government-wide push for energy conservation in housing -- and even "locational efficiency" -- benefits.

At the Department of Housing and Urban Development, a new generation of energy-efficiency mortgages is being rolled out, starting with Federal Housing Administration loans that offer 5 percent larger mortgage amounts to people who plan to undertake energy-efficiency improvements.

For example, if you qualify for a $300,000 FHA mortgage to purchase a typical house, under recent guidance to lenders the FHA might now be able to offer you $15,000 more up front -- a $315,000 loan amount -- if the extra money is used to substantially lower the property's annual energy consumption.

HUD Secretary Shaun Donovan wants the FHA to offer additional incentives. One of the possibilities: Give applicants credit on their qualifying incomes in exchange for documentable savings in annual energy expenditures.

Meanwhile, the House of Representatives has passed a massive energy-conservation and emissions-control bill. Although the American Clean Energy and Security Act is better known for its more controversial "cap-and-trade" carbon emissions program, the bill also contains an entire subsection devoted to creating incentives for consumers and federal agencies to build and finance more energy-efficient dwellings.

Among the key housing provisions in the bill:

-- The FHA would be directed to insure a minimum of 50,000 new energy-efficient mortgages during the coming three years. An energy-efficient house is defined as one in which energy consumption is reduced by 20 percent after renovations.

-- Fannie Mae and Freddie Mac would be directed to develop new mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders.


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