Fannie Mae’s Green Financing Loans offer attractive financial incentives to encourage property owners to invest in green and sustainable practices. Fannie Mae’s Green Financing Loans include three types of financing options: Green Rewards, Green Building Certifications, and Healthy Housing Rewards. These financing options are designed to help property owners reduce their properties’ environmental impact, improve the quality of life for residents, and ultimately save money on operational costs. At AEI, we are proud to be an approved third-party consultant that can assist property owners with the assessments and reports required to take advantage of these financing options. Let’s explore each financing option and how they can benefit property owners.
Fannie Mae’s Green Rewards:
Fannie Mae’s Green Rewards program offers several benefits to property owners who commit to reducing their property’s annual energy and water usage by at least 30% combined, with a minimum of 15% projected energy savings.
Eligibility and Terms:
To be eligible for the Green Rewards program, properties must belong to all asset classes with at least 12 months of stabilized residential occupancy. Manufactured housing communities are eligible only if a solar PV system is selected as a required efficiency measure. Property owners must commit to improvements that are projected to reduce the whole property’s annual energy and/or water usage by at least 30% combined, of which a minimum of 15% must be projected energy savings. The improvements must be installed within 12 months of loan origination. Participants in the program are eligible for a lower interest rate, free High Performance Building Report (HPB Report) and Technical Solar Assessment, and up to 5% more loan proceeds.
- HBP Report: Fannie Mae provides a High Performance Building Report (HPB Report) that covers the scope of an ASHRAE Level 2 Energy Audit when the loan is delivered as a Green Rewards Mortgage Loan that AEI can help prepare.
- Technical Solar Assessment: Fannie Mae also offers a paid for Technical Solar Assessment for properties that are suitable for a Solar PV system through the Green Rewards Mortgage Loans if the borrower chooses to install a Solar PV system as a required efficiency measure.
Fannie Mae’s Green Building Certificates:
Fannie Mae recognizes more than 35 Green Building Certifications from 12 certifying organizations. These include: Construction Green Certifications, which are designed for properties at various points during development and construction, and Renovation Green Certifications, which are for properties making significant property improvements. Existing Building Green Certifications, on the other hand, are for properties with at least 12 months of operating history that have not undergone substantial or major renovations recently.
Eligibility and Terms:
Green Building Certifications provide a range of benefits for property owners, including a lower interest rate, access to 40+ eligible certifications for new construction, major renovations, and existing properties, and the ability to attract more investors with a Green Mortgage-Backed Security (MBS). To be eligible for these benefits, a property must have a Green Building Certification recognized and approved by Fannie Mae per Form 4250. Standard third-party reports, including Appraisal, Phase I Environmental Assessment, and a Property Condition Assessment, are required. AEI can help with the assessment and reporting necessary for certification.
In Depth Review of Fannie Mae’s Green Financing Loans Assessment:
One of the key components of Fannie Mae’s Green Financing Loans are the assessments, which provide lenders and property owners with a comprehensive analysis of their property’s environmental issues, as well as its physical condition. Our team of experts will come out and assess the property you want to finance and make sure it’s up to snuff with Fannie Mae’s requirements. Potential assessments include:
- Appraisal: This assessment will determine the value of the property. This includes a review of comparable sales and income data, as well as a physical inspection.
- Phase I Environmental Assessment: This assessment helps determine whether there are any environmental issues with the property that could affect the value or financing of your property. A Phase I Environmental Assessment can help you avoid costly surprises later on down the line
- Property Condition Assessment: In this assessment, we’ll look at all aspects of the house: roofing materials, electrical system, etc. We’ll give you an idea of what repairs might need to be done to increase its value and make it more marketable.
Fannie Mae’s Healthy Housing Rewards:
Under the Healthy Housing Rewards initiative, Fannie Mae offers financial incentives for borrowers who incorporate health-promoting design features and practices or resident services in their newly constructed or rehabilitated multifamily affordable rental properties. Property owners can follow one of two pathways to qualify for discounted financing. AEI can assist property owners by providing guidance on the requirements for each program and helping them to navigate the application process.
Eligibility and Terms:
The Healthy Housing Rewards benefits include a lower interest rate, reimbursement for Healthy Design Certification fees of up to $6,500, flexible underwriting for Multifamily Affordable Housing properties, flexible loan terms, and fixed- or variable-rate financing options. To be eligible, the property must have a Healthy Design Certification that is recognized and approved by Fannie Mae, and the multifamily property must have rent or income restrictions where at least 50% of the units are affordable to households earning no more than 80% of Area Median Income. AEI is an approved Fannie Mae provider that can help borrowers obtain the Healthy Design certification and other required third-party reports, including Appraisal, Phase I Environmental Assessment, and Property Condition Assessment.
Fannie Mae’s Green Financing Loans Recognition and Awards:
Fannie Mae’s Green Financing Loans have been recognized by the Climate Bond Initiative 2020 Green Bond Pioneer Award, which is given out to the largest global green bond issuer over the last 10 years. They’ve also received awards from GlobalCapital and the U.S. EPA ENERGY STAR program for their work in green financing. In addition to that, they were awarded CMBS Deal of the Year by GlobalCapital in 2018 and Most Impressive Green/SRI ABS Issuer by GlobalCapital in 2019. The company was also awarded the U.S. EPA ENERGY STAR Partner of the Year award for 2015, 2016 and Sustained Excellence Awards for 2017, 2018, 2019 and 2020.
This recognition reflects Fannie Mae’s commitment to creating innovative solutions that drive economic growth while reducing our impact on climate change.
Final Thoughts on Fannie Mae’s Green Financing Loans:
Fannie Mae’s Green Financing Loans offer an attractive opportunity for property owners to invest in sustainable practices while receiving financial incentives. Through the Green Rewards, Green Building Certifications, and Healthy Housing Rewards programs, property owners can reduce their environmental impact, enhance the quality of life for residents, and decrease operational costs. As an approved third-party consultant, AEI can provide property owners with the necessary assessments and reports to access these financing options. With Fannie Mae’s dedication to sustainability, property owners have the chance to make a positive impact on both the environment and their finances.
With AEI’s help, lenders and buyers can make informed decisions and ensure compliance with Fannie Mae’s Green Financing Assessments. Remember, if you have any questions or concerns, don’t hesitate to reach out to one of our experts at AEI. We are here to help you navigate the process and make sure you have the best chance of success when applying for Fannie Mae’s Green Financing Loans. Reach out to speak with one of our consultants today.
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