The Nation's Housing

Government Readies Biggest Ever Push for Energy Saving

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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