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RESNET Releases Study on Impact of Energy Efficiency on VA Home Loans

Jul 20, 2020

As a benefit to our nation’s veterans, the U.S. Veterans Administration (VA) administers the Veterans Home Loan program to assist those who have served our country with the ability to purchase and finance a home.

Who better to be able to afford an energy-efficient home that has lower utility bills and is more comfortable than our veterans who have served us so well?

RESNET is advocating that the VA Home Loan program be modified to account for the energy savings of an energy-efficient home in the mortgage loan qualification process.

To determine the impact that such a policy would have on the ability for veterans to buy a high energy performance home, RESNET has published the report, “Impact of Energy Efficiency on VA Home Loans”.

The report is based upon the analysis conducted by the Florida Solar Energy Center (FSEC) and mortgage finance industry veteran and expert Robert Sahadi of GreenSpace Investment.

RESNET commissioned FSEC and Robert Sahadi to determine the potential impact of energy efficiency on Veterans Administration (VA) mortgages.

FSEC analyzed the energy savings homes in five diverse metro areas in the U.S. The analysis looked at the following cities:

• Dallas, Texas

• Denver, Colorado

• Detroit, Michigan

• Miami, Florida

• San Diego, California

The study looked at the calculated savings of taking a home that was built in the 1970’s (HERS® Index Score of 130), a home built to the 2009 International Energy Conservation Code (the standard which more than 30 state energy codes are based on) and compared them to a home that achieves a HERS Index Score of 61 (the average HERS Index Score of the over 240,000 homes that were HERS rated in 2019).

Mr. Sahadi took the results of the FSEC analysis and looked at the potential mortgage impact implications of a new HERS rated, energy-efficient home versus an older nonenergy efficient home. The results of this analysis found that a home with a HERS Index Score of 61 generated significant “additional buying power” from $13,000 to over $24,000 with the same income and downpayment. This additional buying power would allow a VA borrower to gain the energy savings and health benefits of a high energy performance new home with lower housing costs than an older, less efficient home.

Robert Sahadi has held senior positions at Fannie Mae, where he was vice president of product development and vice president of mortgage-backed securities. While at Fannie Mae, he oversaw the development of the corporation’s energy-efficient mortgages and green innovations. He has held multiple positions in the federal government, at the U.S. Department of Housing and Urban Development, in the Executive Office of the President, and at the Federal Home Loan Bank Board, where he was chief economist. He has an MBA in finance and an M.A. in economics from the University of Cincinnati.

To download the report click on Impact of Energy Efficiency on VA Home Loans