Game Changing Green Energy Mortgages Come to Washington

Research has shown that home buyers prefer environmentally friendly houses, but prefer to finance the features that convert the typical house into an efficient one. The first generation of energy efficient mortgages failed at allowing buyers to finance the cost of energy-related improvements. Because of the lack of financing options, buyers of today’s high-performance houses have had to pony up thousands of dollars in cash to pay for the energy extras they crave--geothermal heat pumps, or triple low-emissive windows--or pass on them. Home builders have been reticent to offer high performance energy efficient homes because of valuation problems.

SecurityNational Mortgage, which has over 80 offices across the US, has created the solution for recognizing the value of energy improvements such as solar panels and rainwater runoff collection systems. We are positioning ourselves as the nation’s premiere green lender. In 2013, in partnership with Green Energy Money of Austin, Texas, SecurityNational launched a massive high-performance pilot program with a goal of funding 10,000 energy-efficient homes by the end of 2015. We are working with builder, real estate, and utility partners in California, Illinois, Arizona, Colorado, Maryland and Washington State to achieve this goal.

We have funded some $20 million in sustainable construction since the last part of 2013, and we have $200 million more in the pipeline, according to Teresa Lopez, who spearheads SecurityNational’s green lending program.

“We’re not interested in doing one deal here and there,” says Lopez. “We want to prove the marketability of our process and get all the systems and standards in place so we can go national. Our belief is that there is a lot of pent-up demand.”

The “key to the kingdom,” as Lopez calls it, is in the appraised value of the home. Even today, when more and more builders are able to produce houses that cost little or nothing to operate - and sometimes generate excess energy that can be sold back to the utility - appraisers have been slow to identify the value that energy improvements add to a property’s overall worth, now and in the future.

Appraisals have always been the biggest roadblock, according to those in the green building movement. But SNMC’s GEM Group facilitates the process with an appraisal that recognizes and quantifies the value of features such as solar heating and water, geothermal heat, rainwater harvesting, energy-efficient building materials and electric vehicle stations.

According to Lopez, GEM’s proprietary green appraisal rating system standardizes the connection between the popular Home Energy Rating System (known as the HERS index) and 18 energy-rating systems and building codes. The result captures the monetized value that lenders require to back high-performance construction - or even remodels.

In layman’s terms, GEM has developed a method for green appraisals that support the valuation process. Our process facilitates a green appraisal that maximizes the value of your investment. It makes it possible for appraisers to fully recognize the lower maintenance costs and reduced operating expenses of an energy-efficient home.

Under the GEM system, builders will be able to submit measures and costs for green upgrades, absorb the capital outlays necessary to purchase and install the upgrades and then get their money back in higher prices that can be justified by a green appraisal.

The game has changed.

If you would like to learn more, or your organization would like to participate in the program, you can email me at brad.toft@snmc.com.