GreenCHOICE Mortgage a Game Changer For Energy Efficiency

The new mortgage vehicle gives credit for energy-efficient homes.

In mid-November, Freddie Mac announced a new mortgage vehicle called GreenCHOICE. It will help finance home improvements that boost energy efficiency, by including broader financing options to help low-income families reduce their utility costs through energy saving home repairs and improvements.

According to the Department of Energy, energy efficiency can cost an estimated $2,200 per year. Freddie Mac (rightly) states that this is not typically factored into traditional mortgage underwriting methods.

The new GreenCHOICE mortgage will allow Freddie Mac to compare mortgage loan performance between homes with and without energy efficient improvements, and the research will help it design valuation guidance and uniform data collection tools, and develop underwriting guidelines to account for energy efficient features.

One of the organizations partnering with Freddie Mac is the Rocky Mountain Institute (RMI). Longtime SAVE Act advocate Bob Sahadi is leading RMI’s efforts on this. He recently told HousingWire that “with a deeper understanding of the value of energy efficiency, as well as an increased awareness of Freddie Mac’s solutions and underwriting requirements, lenders will have more opportunities to expand their green product offerings in the marketplace.”

It’s good that there is finally traction behind this common-sense financing vehicle. For years, the SAVE Act ran into one political hurdle after another, making Congressional passage frustratingly elusive. Kudos to Sahadi on his persistent efforts to find a path forward.

Photo by Jeremy Levine Design