Freddie Mac announced Friday that it is now offering what it calls GreenCHOICE mortgages.
These mortgages will help finance home improvements for greater energy efficiency, the company explained. The mortgage will include broader financing options to help families with lower incomes reduce home utility costs through energy saving home repairs and improvements.
“Older homes tend to be more energy inefficient, which may raise the cost of homeownership and may make them more difficult to maintain,” said Mike Dawson, Freddie Mac vice president of single-family affordable lending strategy and policy. “GreenCHOICE Mortgages is part of a multiyear initiative to facilitate energy-saving improvements that could help families better sustain homeownership.”
“Freddie Mac is committed to making mortgage lenders and real estate agents aware of these products and the value they bring to the housing market,” Dawson said.
Freddie Mac explained that while energy efficiency can make homeownership more affordable, this cost, an estimated $2,200 per year according to the U.S. Department of Energy, is not typically factored into traditional mortgage underwriting methods.
The new GreenCHOICE Mortgage will allow Freddie Mac to assess mortgage loan performance between homes with and without energy efficient enhancements. The research will help the GSE design valuation guidance and uniform data collection tools and develop underwriting guidelines to account for energy efficient features.
To further this initiative, Freddie Mac is partnering with organizations such as the Rocky Mountain Institute, RESNET, the Institute for Market Transformation and the Department of Energy.
“With a deeper understanding of the value of energy efficiency, as well as an increased awareness of Freddie Mac’s solutions and underwriting requirements, lenders will have more opportunities to expand their green product offerings in the marketplace,” said Robert Sahadi, Rocky Mountain Institute senior advisor.
The initiative is part of Freddie Mac’s Duty to Serve plan, which focuses on supporting underserved markets by financing more rural and manufactured housing and preserving more affordable housing for homebuyers and renters nationwide.