Mortgages and the Energy Factor SAVE Act would mandate federal loan agencies account for expected energy costs

A bill introduced by Senator Michael Bennet (D-CO) would factor energy efficiency into the equation for mortgage applicants. The Sensible Accounting to Value Energy Act (SAVE Act) would mandate federal loan agencies to account for expected energy costs when assessing mortgage applicants.

After the collapse of the housing market, interest groups and individuals started demanding a better way to assess a homeowner’s living costs. Under the current mortgage-lending process, these costs are essentially ignored. In 2007-2008, the average homeowner spent $822 on homeowner’s insurance and $1,897 on property tax, both important variables in determining mortgage lending. But in the same year, the average homeowner spent $2,340 on energy costs, which Bennet and others argue represents a major factor in his or her ability to afford a home.

According to the Environmental and Energy Study Institute, “Utility bills are the second-highest cost for home ownership, after the mortgage, and have a huge impact on the ability of families to afford their homes after purchase, but they are not considered in the mortgage underwriting.”

The SAVE Act, if passed, would require greater accountability in relation to expected home energy use and encourage contractors and builders to include greater energy-efficiency measures in new homes.