The Energia Today - Tomarrow's energy today

An unprecedented push by the U.S. government to widen rewards for energy-conscious homeowners is underway.

An example: FHA loans offering 5% larger mortgages to buyers who plan on making renovations.

By Kenneth R. Harney

Reporting from Washington -- 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, windows, air conditioning and the like.

But these are just the beginning of an unprecedented push by the government that's getting underway for energy conservation in housing.

At the Department of Housing and Urban Development, a new generation of mortgages designed to encourage energy efficiency is being rolled out, starting with Federal Housing Administration loans that offer 5% larger mortgages to people who plan on making energy-efficiency improvements.

For example, if you qualify for a $300,000 FHA mortgage, the FHA might now be able offer you an additional $15,000 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 loan applicants credit on their qualifying incomes for a home loan in exchange for documentable savings in annual energy expenditures.

Meanwhile, the House of Representatives has passed a massive energy conservation and emissions control bill. Though the American Clean Energy and Security Act is better known for its more controversial "cap-and-trade" carbon emissions program, the bill also contains a section devoted to creating incentives for consumers and federal agencies to build and finance energy-efficient dwellings.

Among the key housing-related provisions in the bill:

* The FHA is 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% following renovations.

* Fannie Mae and Freddie Mac are directed to develop mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders.

The two companies also would be required to help establish a secondary market for energy-efficient and location-efficient mortgages for moderate- and lower-income home buyers. The new generation of loans would increase the qualifying incomes of applicants by at least one dollar for every dollar of projected energy savings from renovations, green construction or efficient design.

Similar concessions on loan applicants' incomes would be extended for properties located in areas close to employment centers or mass transit lines. No concessions would be made for homes in far-flung neighborhoods that eat into family incomes because of long commutes, which would add to carbon emissions.

* Real estate appraisers would be required to take energy improvements and the money they save into account as they value houses. For example, if you spent $30,000 on a series of major upgrades, an appraiser would need to consider the annual cost savings in energy produced and the effect, if any, on market value. States would require licensed appraisers to undergo additional professional training to equip them for their new energy-efficiency valuation responsibilities.

* Federal financial regulators would be directed to support the establishment of privately run "green banking centers" inside banks and credit unions. The centers, which presumably could be unmanned kiosks or staffed offices, would help consumers understand how best to obtain financing for energy-conserving home improvements, second and primary mortgages, and energy audits and ratings.

HUD would also be authorized to conduct "renewable energy home product expos" to educate the public about the latest technologies and financing concepts.

* State governments would be required to ensure that homeowners whose energy technologies allowed them to get "off the grid" -- no longer fully dependent on utilities to provide them power -- are not denied property hazard coverage by insurance companies.

With all this emphasis on energy efficiency and reduction of real estate-related emissions, is there any evidence that home buyers will take part? Will they use mortgages that encourage energy efficiency or even pay more for houses that are loaded with the latest energy-saving technologies? The jury is out because much of this is prospective and hasn't yet been signed into law.

But maybe there's going to be some extra green in green.