Sec. 1502. Enhanced energy efficiency underwriting criteria
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Not later than 1 year after the date of enactment of this Act, the Secretary of Housing and Urban Development shall, in consultation with the advisory group established in section 1505(c), develop and issue guidelines for the Federal Housing Administration to implement enhanced loan eligibility requirements, for use when testing the ability of a loan applicant to repay a covered loan, that account for the expected energy cost savings for a loan applicant at a subject property, in the manner set forth in subsections
(b)and (c). The enhanced loan eligibility requirements under subsection
(a)shall require that, for all covered loans for which an energy efficiency report is voluntarily provided to the mortgagee by the homeowner, the Federal Housing Administration and the mortgagee shall take into consideration the estimated energy cost savings expected for the owner of the subject property in determining whether the loan applicant has sufficient income to service the mortgage debt plus other regular expenses. To the extent that the Federal Housing Administration uses a test such as a debt-to-income test that includes certain regular expenses, such as hazard insurance and property taxes— the expected energy cost savings shall be included as an offset to these expenses; and the Federal Housing Administration may not use the offset described in subparagraph
(A)to qualify a loan applicant for insurance under title II of the National Housing Act ( 12 U.S.C. 1707 et seq. ) with respect to a loan that would not otherwise meet the requirements for such insurance. Energy costs to be assessed under this subsection shall include the cost of electricity, natural gas, oil, and any other fuel regularly used to supply energy to the subject property. The guidelines to be issued under subsection
(a)shall include instructions for the Federal Housing Administration to calculate estimated energy cost savings using— the energy efficiency report; an estimate of baseline average energy costs; and additional sources of information as determined by the Secretary of Housing and Urban Development. For the purposes of paragraph (1), an energy efficiency report shall— estimate the expected energy cost savings specific to the subject property, based on specific information about the property; be prepared in accordance with the guidelines to be issued under subsection (a); and be prepared— in accordance with the Residential Energy Service Network’s Home Energy Rating System (commonly known as HERS ) by an individual certified by the Residential Energy Service Network, unless the Secretary of Housing and Urban Development finds that the use of HERS does not further the purposes of this subtitle; in accordance with the Alaska Housing Finance Corporation energy rating system by an individual certified by the Alaska Housing Finance Corporation as an authorized Energy Rater; or by other methods approved by the Secretary of Housing and Urban Development, in consultation with the Secretary and the advisory group established in section 1505(c), for use under this subtitle, which shall include a third-party quality assurance procedure. If an energy efficiency report is used under subsection (b), the energy efficiency report shall be provided to the appraiser to estimate the energy efficiency of the subject property and for potential adjustments for energy efficiency. The Federal Housing Administration may price covered loans originated under the enhanced loan eligibility requirements required under this section in accordance with the estimated risk of the loans. In the absence of a publicly disclosed analysis that demonstrates significant additional default risk or prepayment risk associated with the loans, the Federal Housing Administration shall not impose material costs, impediments, or penalties on covered loans merely because the loan uses an energy efficiency report or the enhanced loan eligibility requirements required under this section. The Federal Housing Administration may price covered loans originated under the enhanced loan eligibility requirements required under this section in accordance with the estimated risk of those loans. The Federal Housing Administration shall not— modify existing underwriting criteria or adopt new underwriting criteria that intentionally negate or reduce the impact of the requirements or resulting benefits that are set forth or otherwise derived from the enhanced loan eligibility requirements required under this section; or impose greater buy back requirements, credit overlays, or insurance requirements, including private mortgage insurance, on covered loans merely because the loan uses an energy efficiency report or the enhanced loan eligibility requirements required under this section. Not later than 3 years after the date of enactment of this Act, and before December 31, 2019, the enhanced loan eligibility requirements required under this section shall be implemented by the Federal Housing Administration to— apply to any covered loan for the sale, or refinancing of any loan for the sale, of any home; be available on any residential real property (including individual units of condominiums and cooperatives) that qualifies for a covered loan; and provide prospective mortgagees with sufficient guidance and applicable tools to implement the required underwriting methods.
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Sec. 1502
Enhanced energy efficiency underwriting criteria
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