In September, Fannie Mae announced changes to its Multifamily Green Financing program that are aimed at enticing more borrowers to use green lending products. The green lending market is flourishing with options, as Freddie Mac and the U.S. Department of Housing and Urban Development also offer green lending products for multifamily borrowers.
Among the new changes to Fannie Mae’s green financing option: Fannie Mae now will reimburse borrowers 100% of the cost for the ASHRAE Level II study, which is a required water and energy efficiency analysis used for loan approval, according to a Sept. 14, 2016 article by Tony Liou on GlobeSt.com.
Other changes to Fannie Mae’s green financing, which provides mortgage financing to apartment buildings and cooperatives for water and energy efficiency upgrades, include 75% underwriting of owners’ projected cost savings and 25% underwriting of tenants’ projected costs — both of which are available with the Green Rewards product, according to the Fannie Mae website. Prior to this change, Fannie Mae only allowed for up to 50% owner and tenant-paid savings, according to GlobeSt.com.
Liou reported that High Performance Building (HPB) assessment used to require utility bill collection, representing 10% of tenants for properties that weren’t master-metered. But with the changes and to make the process easier, borrowers only need to collect tenant utility bills if they want to underwrite tenant projected cost savings.
This and other green lending programs not only allow multifamily property owners to upgrade their properties with smart energy and water saving improvements, but also to increase property value and environmental sustainability, as well as save on utility costs. The key for borrowers, lenders, tenants and others, according to Liou, is to stay up-to-date on available programs — what they’re offering and how they’re changing – in this dynamic market.
Source: “Fannie Mae Updates Make It Easier To Take Advantage of Green Financing,” GlobeSt.com (Sept. 14, 2016)