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Congressional Legislation: Energy Efficiency in Veteran Mortgage Loans

Aug 3, 2021



In December 2020, RESNET published a Policy White Paper on Introducing Rationality into the Home Financing Process advocating adding monthly energy savings into the loan qualification process. To download the white paper click on White Paper on Introducing Rationality into the Home Financing Process

This effort is being boosted through the leadership of Congressman Mike Levin (D-CA) who introduced legislation, the “Veteran Home Energy Savings Act” that would amend the VA home loan program to factor energy efficiency into loan qualification.

If enacted this act will make energy-efficient homes affordable for more veterans. The legislation creates a process for veterans and active service members who are purchasing energy-efficient homes to factor their lower cost energy bills into their residual income requirement, allowing them to qualify for higher VA home loans and incentivizing home upgrades that reduce greenhouse gas emissions.

The key item in the proposed legislation states:

“in cases where a veteran provides to the lender an energy efficiency report the evaluation by the lender of the sufficiency of the residual income of the veteran may include a consideration of the estimate of the expected energy cost savings contained in the report.”

The legislation further specifies that the energy report shall be “prepared in accordance with the “Residential Energy Service Network’s Home Energy Rating System (commonly known as ‘‘HERS’’) by an individual certified by such Network”.

RESNET assisted in the drafting of the legislation.

On July 28, 2021, the House Committee on Veterans Affairs passed by unanimous vote the Veteran Home Energy Savings Act. The next step is to be passed by the full House and the Senate and signed into law by President Biden. The chances of this happening are boosted by the fact that the bill was passed out of committee unanimously, this bipartisanship is rare these days in Washington.

With the passage of the legislation unanimously out of committee, Congressman Levin commented, “Veterans deserve every opportunity to achieve the American dream of homeownership and we can make that easier for them by factoring energy savings into the VA’s lending process. This bill is a win‐win, saving veterans money and benefitting the environment by conserving energy. I hope we can pass this bill with bipartisan support and allow veterans to capitalize on all of the benefits of energy-efficient homes.” Congressman Levin’s release on the act is posted at Levin Release on Veterans Home Energy Savings Act.

To view the legislation, go to Veterans Home Energy Savings Act.

Congressman Levin serves as the Chairman of the House Committee on Veterans Affairs’ Subcommittee on Economic Opportunity, the House Committee on Veterans Affairs and the House Select Committee on the Climate Crisis.  RESNET is headquartered in the Congressman’s district and the Congressman gave a keynote address at the Virtual RESNET 2021 Conference.

The foundation for the legislation was a study commissioned by RESNET that was conducted by the Florida Solar Energy Center and Robert Sahadi.  Mr. Sahadi has held senior positions at Fannie Mae, where he was vice president of product development and vice president of mortgage-backed securities.  The study found that such legislation could generated significant “additional buying power” from $13,000 to over $24,000 with the same income and down payment. To download the report go to Impact of Energy Efficiency on VA Loans

At the first hearing on the proposed legislation took place in the House Committee on Veterans Affairs Matthew Doyle, Deputy Director, National Legislative Service of the Veterans of Foreign Wars (VFW) endorsed the proposed legislation stating, “The VFW supports this legislation, which would permit veterans who are purchasing a home with a Department of Veterans Affairs (VA) loan to submit an energy efficiency report to offset regular expenses for the home calculated in the debt-to-income ratio. This commonsense bill would improve the accuracy of energy supply cost estimates for VA home loans. It would also permit veterans to obtain a home loan using a better analysis of an individual’s financial circumstances.”

RESNET will track this legislation and keep its community informed of its progress.