Bennet, Isakson Introduce Bipartisan Bill to Account for Energy Costs in Mortgage Underwriting

SAVE Act Would Create New Construction Jobs, Encourage Energy Retrofits, Lower Home Energy Bills - Bill has Support from Broad Coalition of Real Estate, Business, Building Trade, and Conservation Groups

Washington, DC – U.S. Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA) today introduced a bipartisan bill that would enable better mortgage underwriting, encourage investments in energy efficient homebuilding and create more than 80,000 construction jobs.

Under the Sensible Accounting to Value Energy (SAVE) Act, federal mortgage loan agencies would consider a homeowner’s expected energy costs when determining the homeowner’s ability to make monthly mortgage payments.

“It is rare to have such diverse interests come together, and that’s because this is a common-sense bill,” said Bennet. “The Save Act would help provide access to useful information about energy usage that home owners, buyers, appraisers and underwriters want and need. It would lead to more complete and accurate mortgage underwriting, would encourage investments in home energy improvements, create more than 80,000 jobs and lighten the load for Colorado families’ budgets.”

“As someone who has 30 years of experience in the resident real estate industry and who has lived through multiple recessions, I understand that recovery in the housing market and job creation in the construction sector is pivotal to getting our economy back on track,” said Isakson. “I place my support behind this bill because it has the potential to create jobs without any cost to taxpayers, and it will also improve mortgage underwriting in this country by including energy as a factor in the process.”

“The SAVE Act creates private sector jobs while making our homes more energy efficient,” said Ross Eisenberg, Environment and Energy Counsel at the U.S. Chamber of Commerce. “And by accomplishing these goals without the need for major federal spending, the SAVE Act will spur job growth in the private sector without adding to the federal deficit. That is a ‘win-win’ for the business community, and is the kind of realistic, commonsense policy everyone should want to get behind.”

“This bill is a win for homeowners, the economy, and a cleaner environment. The legislation would empower homeowners and lenders with better information about energy bills so they can make more informed decisions. This proposal would enable increased investment in the energy efficiency of homes, leading to lower energy bills. At the same time, it also would help create jobs and reduce toxic pollution from wasted energy,” said Philip Henderson, senior financial policy specialist, Natural Resources Defense Council.

“We strongly support this legislation because it will improve mortgage underwriting performed by federal mortgage agencies by ensuring that energy costs are included in the process,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “It would require use of qualified, competent appraisers and would help ensure that appraisers have access to data needed to analyze the effects of energy-efficient home improvements in the marketplace. Consumers would benefit from the bill’s efforts to help ensure they receive a reliable, credible opinion of value.”

The average homeowner spends more than $2,000 each year on energy costs – more than on either real estate taxes or homeowners insurance, both of which are regularly accounted for in mortgage underwriting. On average, these energy costs amount to more than $60,000 over the life of a 30-year mortgage. The SAVE Act would address this blind spot, giving a more complete picture of the costs of homeownership and borrowers’ capacity to service debt.

Under the SAVE Act, lenders would account for expected energy costs along with other recurring payments in the debt-to-income qualifying ratios, which test the borrower’s ability to afford regular monthly mortgage payments. According to a new study from The American Council for an Energy-Efficient Economy, the SAVE act is predicted to create 83,000 new jobs in construction, renovation and manufacturing by 2020.

The bill has support from a broad coalition of real estate, business, building trade and conservation groups, including Leading Builders of America, Appraisal Institute, U.S. Green Building Council, National Association of Manufacturers, International Code Council, EcoBroker, Green Builder Coalition, U.S. Chamber of Commerce, American Society of Heating, Refrigerating and Air Conditioning, Engineers, Structural Insulated Panel Association, The Residential Energy Services, Network, Inc. (RESNET), Efficiency First, E2 Environment Entrepreneurs, Alliance to Save Energy, American Council for an Energy-Efficient Economy, American Gas Association, American Public Gas Association, Center for American Progress, Natural Resources Defense Council, National Association of State Energy Officials and Institute for Market Transformation. 

“Right now, federal mortgage underwriting rules don’t factor in the second-biggest cost of home ownership: energy bills. That leaves mortgages more vulnerable as energy costs rise,” said Cliff Majersik, executive director of the Institute for Market Transformation (IMT). “The SAVE Act will improve mortgage rules by correcting this blind spot. It will also make energy-efficient homes and home improvements more affordable, at no cost to the taxpayer. Increased demand will drive job growth in the construction and renovation industry." 

“With this act in place, we believe it is possible to substantially increase the energy efficiency of new homes over the next decade while retaining affordability for our customers. This truly is a win-win opportunity for our customers, the economy and our environment,” said Ken Gear, executive director of Leading Builders of America, Inc.