Selling Part VI Underwriting
2 - Principal Residences/Second Homes
216 - Underwriting Mortgages Secured by Energy Efficient Properties
Lenders should give special underwriting consideration to borrowers who are purchasing properties that are energy efficient or that will be undergoing energy-related improvements. Higher monthly housing expense - and obligations-to-income ratios may be justified because the borrower will realize savings in energy costs.
The lender should consider the energy savings of a property, along with other property and borrower characteristics, when it decides whether increased qualifying ratios are justified. For energy-efficient properties, we allow increases of up to 2% in both the monthly housing expense-to-income ratio and the total obligations-to-income ratio. The energy-efficiency of the property must be rated as "high" to justify the use of these increased ratios.
(also see Part VII, Section 305)
A lender must retain all energy-related documents that it uses to make the underwriting decision. For each mortgage loan, the lender must attach to the Uniform Residential Appraisal Report (Form 1004) either an Energy Addendum (Form 1004A), rating form from Energy Rated Homes of America, evidence that the dwelling was built in accordance with an energy conservation program that meets the National Association of Home Builders' Thermal Performance Guidelines, or the builder's certification that the dwelling was constructed in a manner that meets or exceeds the standards established by the 1989 Council of American Building Officials' Model Energy Code. This documentation must be sent to us if we perform an underwriting performance review of the mortgage.