U.S. Senators Johnny Isakson, R-Ga., and Michael Bennet, D-Colo., last week introduced their SAVE Act legislation as an amendment to S.1392, the Energy Savings and Industrial Competitiveness Act of 2013. This amendment is a win-win situation for home buyers and home sellers alike. More sellers will want to make home energy efficiency investments to attract future home buyers looking for homes with reduced energy costs. The home construction industry will benefit knowing their newly constructed, energy efficient homes will be more affordable due to home loan calculations that factor in the potential monthly savings from expected lower energy bills.
This amendment, # 1844, mirrors the SAVE Act, S.1106, introduced by Bennet-Isakson as a stand-alone bill in June. The amendment allows federal mortgage loan agencies to consider a home's energy efficiency and expected monthly energy bills when determining the homebuyer's ability to pay monthly mortgage payments.
"As someone who has more than 30 years of experience in the residential 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'm proud to join Sen. Bennet in offering our legislation as an amendment, which would improve mortgage underwriting in this country by including expected energy costs as a factor in the process. I encourage my Senate colleagues to support our amendment because it is a commonsense way to grow private-sector jobs and increase energy efficiency in our country."
"With an increasing number of ways to save energy in and around our homes, it makes sense that our mortgages account for the savings that these new technologies bring," Bennet said. "The SAVE Act will encourage investments in energy-efficient homebuilding and help create thousands of jobs. I look forward to working with Senator Isakson to pass this amendment and bring this commonsense idea to our home lending practices."
Home mortgage lenders typically take into account the cost of real estate taxes and homeowner's insurance when determining the cost of a home loan. Lenders typically do not take into account home energy costs, which tend to be higher than the cost of real estate taxes or homeowners insurance. On average, homeowners spend about $2,500 a year on home energy costs, and that adds up to more than $70,000 over the life of a 30-year mortgage. The SAVE Act would address this blind spot.
In addition, according to a study from The American Council for an Energy-Efficient Economy and the Institute for Market Transformation, the SAVE Act could create an estimated 83,000 new jobs in home construction, renovation and manufacturing by 2020 as homeowners renovate their homes to be more energy efficient.
The bill has support from a broad coalition of real estate, business, building trade and conservation groups, including: Alliance to Save Energy, American Chemistry Council, American Council for an Energy-Efficient Economy, American Institute of Architects, American Public Gas Association, Appraisal Institute, ASHRAE, Center for American Progress, Center for Neighborhood Technology, Consumer Federation of America, E2 Environment Entrepreneurs, Council of North American Insulation Manufacturers Association, Earth Advantage Institute, EcoBroker, Efficiency First, Energy Program Consortium, Environmental Defense Fund, Green Builder Coalition, Institute for Market Transformation, International Association of Certified Home Inspectors, International Code Council, International Economic Development Council, Johns Manville, Leading Builders of America, National Association of Home Builders, National Association of Manufacturers, National Association of Realtors, National Association of State Energy Officials, National Electrical Manufacturers Association, Natural Resources Defense Council, Network, Inc. (RESNET), Structural Insulated Panel Association, The Real Estate Roundtable, The Residential Energy Services, U.S. Chamber of Commerce and U.S. Green Building Council.