FHA, Fannie Mae Launch Energy Efficiency Retrofit Program
June 8, 2011
The U.S. Housing and Urban Development Department (HUD) announced on May 31 its Green Refinance Plus, a program between HUD's Federal Housing Administration (FHA) and Fannie Mae to boost energy efficiency in older affordable housing. The program will allow owners of existing affordable rental housing properties to refinance into new mortgages that include funding for energy- and water-saving upgrades, along with other needed property renovations.
Under the program, FHA and Fannie Mae will share the risk on loans to refinance existing rent-restricted projects while permitting owners to borrow additional funds to make energy-saving improvements to their properties. Owners of existing multifamily affordable properties typically refinance their mortgages every 10 to 15 years. In older apartment buildings, however, owners are often hard-pressed to find additional financing to maintain or improve the physical condition of their properties, including making energy-efficient upgrades. Soon, Fannie Mae and its participating lenders will begin accepting applications to refinance owners' debt and improve the energy efficiency of their properties.
The initiative is intended to refinance the expiring mortgages of Low Income Housing Tax Credit properties, and other affordable projects, and to lower annual operating costs by reducing energy consumption. Fannie Mae and HUD anticipate approximately $100 million in initial refinance volume with an average loan amount of $3.5 to $5 million. See the HUD press release and a fact sheet about the Green Refinance program.