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Freddie Mac: Nearly $1.4B of 2022 Single-Family Green Securities Issuance

Jul 21, 2023 AppraisersBuildersGeneralProvidersRaters


In its recently released 2022 Green MBS Impact Report, Freddie Mac reported that the company issued $1.372 billion in Single-Family Green Mortgage-Backed Securities (MBS) for the year.

The 2022 Green MBS Impact Report provides an overview of Freddie Mac’s Sustainability Strategy and Single-Family Green Bond Framework and highlights the estimated impact of the enterprise’s Single-Family Green MBS program.

From its inception in 2021 to year end 2022 Freddie Mac Single-Family Green MBS Issuance totaled nearly $2 billion in Single-Family Green MBS bonds. The bonds were backed by more than 6,400 Freddie Mac mortgages secured by newly constructed homes with a RESNET® HERS® Index Score of 60 or less. The program also covers GreenCHOICE Mortgages® where the loan was used to finance the purchase and installation of solar panels.

“Freddie Mac has joined a growing movement of investors and other capital markets participants who are building a more robust market for environmentally focused investments,” said Freddie Mac’s Mark Hanson, Senior Vice President, Securitization. “The size of our Green MBS issuance doubled from 2021 to 2022, reflecting market demand for this type of product and the expansion of eligible collateral to include loans backed by homes with a qualifying Home Energy Rating System (HERS®) score. By meeting the needs of green investors in this way, we are making home possible for more individuals and families.”

In the Single-Family Green MBS issued in 2022, Freddie Mac included mortgages backed by newly constructed homes with a HERS Index Score of 60 or less, in addition to refinance mortgages that paid off existing debt that was used to finance the purchase and installation of solar panels.

The report notes that the HERS® Index was chosen because of its industry recognition and the foundational basis it serves for other energy certifications. In addition to being recognized by the DOE and EPA, the rating is used as an input for ENERGY STAR certification. RESNET® also maintains a national registry of all HERS® ratings and can connect with entities to share that information, so the standard is scalable. Freddie Mac chose the HERS® Index level of 60 because it is comparable to the efficiency associated with the ENERGY STAR v3.1 certification, which has a target range that generally corresponds to HERS® scores between 55 and 65.

Freddie Mac estimates that the collateral in its 2022 Single-Family Green MBS issuance:

  • Saved enough energy to power more than 2,000 homes for a year,
  • Avoided greenhouse gas emissions the equivalent of taking nearly 3,800 cars off the road for a year, and
  • Saved an estimated average of $722 in annual utility costs for each homeowner with a mortgage included in a 2022 Freddie Mac Single-Family Green MBS.

Read the full 2022 Green MBS Impact Report at https://capitalmarkets.freddiemac.com/mbs/docs/2022_SF_Green_MBS_Impact_Report.pdf