Should Mortgage Lenders Demand Good Insulation and a Tight Window Seal?

by Chris Santiago · 2010-08-23 09:05:00 UTC
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Mortgages. They're not exactly the sexiest topic in the world. In fact, before the Great Recession slapped us all in the face with the ugly truth about our crooked financial system, I pretty much tuned out when an acquaintance started going on about their fixed rate, this or that.

But the SAVE Act—a bill that would require mortgage lenders to consider energy costs before granting a borrower a federally-insured mortgage—has gotten my attention. Backed by Colorado Senator Michael Bennet, the SAVE Act would apply to all government-sponsored mortgage enterprises. That includes our pals Fannie and Freddie, as well as the Federal Housing Administration. According to The Economist, those three amigos currently guarantee more than 90 percent of all new loans.

Why should lenders care about energy efficiency? Because borrowers who spend less on utility bills have more cash to drop on their mortgage payments. Jonathan Hiskes at Grist breaks it down: the average energy costs over a 30-year loan amount to $70,000. Lay that on the table next to $170,000, the median home price in the U.S., and you start to see how significant a consideration energy costs should be.

So who, besides me, is with Sen. Bennet? The Leading Builders of America, for one—or 16, I should say, since that's the number of the country's largest construction companies that the LBA represents. Not surprisingly, though, the National Association of Homebuilders isn't on the bandwagon: Real estate groups are breathing down their neck to protect the energy-sucking homes they're trying to shill.

Bennet is considering introducing the bill after the August recess. But everyone who at least occasionally dips their toes in the news cycle knows that it would take a miracle to pass anything in the Senate these days. But, to quote a favorite movie: This is chess, not checkers. With the climate bill six-feet under, it's important to attack the energy problem from every angle possible with long-term goals in mind. And with the rug being pulled out from under other mortgage-related efficiency programs like PACE, Bennet's bill couldn't hit the floor any sooner.

Photo Credit: Bryn Pinzgauer

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Chris Santiago is a freelance writer and editor. He most recently worked at McGraw-Hill and "got green" at Oberlin College.
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