Volume 10; No. 1; Winter 1998
Affordable Home Ownership
This article was jointly written by Tom Hamilton, Director of California
Home Energy Efficiency Survey (CHEERS) and by various energy experts at
the Pacific Gas and Electric Company.
Securing the down payment for the house of your dreams can be a daunting,
sometimes discouraging, exercise. Specialized loan products that reduce
the downpayment have helped thousands of Àon the margin" buyers obtain
mortgages. But what happens when the escrow closes, the deed clears and
reality sets in? Too often, the combined expenses of the mortgage payment
and home maintenance costs quickly turn a dream house into a disaster.
Next to the mortgage payment, utility bills may be a home owner³s most
significant monthly household expense, particularly in homes with old
appliances, inefficient heating or poor insulation. Energy-efficiency
loan programs can assist homebuyers in qualifying for home loans while
lowering home operating costs. Consider these reasons why energy efficiency
is a benefit to both lenders and consumers:
- Using less energy reduces utility bills and improves affordability.
By retrofitting an existing home or buying a more efficient new home,
existing or prospective home owners can reduce the amount of gas and
electricity needed to light, heat or cool a home by as much as 50 percent.
These savings can lower projected monthly expenses and can help qualify
low-income borrowers for mortgages.
- Energy efficiency adds value. An increasing number of homebuyers are
seeking homes with dual-pane windows, wall and ceiling insula- tion,
and energy-efficient appliances.
Retrofitted or newly constructed energy-efficient homes qualify for
what is known as an Energy Efficient Mortgage (EEM). Qualification for
an EEM requires that a home have an energy efficiency rating, which in
California is offered through the California Home Energy Efficiency Rating
Survey (CHEERS) program. CHEERS is a non-profit organization that provides
third-party recommendations for how to improve residential energy efficiency.
For example, CHEERS has launched a partnership with the regional HUD/FHA
office in Fresno, California, to perform ratings on all FHA repossessed
homes. This program enables energy efficiency improvements to be made
when upgrading these homes for resale.
In 1994, Pacific Gas and Electric Company (PG&E), which serves a population
of 13 million in Northern California, formed a partnership with Fannie
Mae called the Home Energy Savings Loan Program (soon to be called PG&E
Comfort Link). Under this program, homeowners can borrow a maximum of
$15,000 to install high-efficiency air conditioning, low-emissivity windows
and insulation upgrades. The program features below-market, tiered interest
rates tied to loan amount, with same-day approval and streamlined loan
PG&E would like to work with mortgage lenders interested in considering
second mortgages under this program in an effort to improve efficiency,
reduce monthly expenses and improve affordability. Furthermore, PG&E encourages
lenders to work with Fannie Mae and Freddie Mac to create programs that
include consideration for underwriting residential loans secured by certified
Energy-efficient loans are good for the environment, and they help make
home ownership affordable. Lenders and consumers are encouraged to contact
PG&E for more information about the Comfort Link program and/or its possible
replication in other states.
In addition to its Comfort Link program, PG&E also offers weatherization
services, energy education, and energy-efficient refrigerators to qualified
low-income customers. For questions about PG&E³s residential energy efficiency
programs, call the Smarter Energy Line at 1-800-933-9555. For questions
about business energy efficiency programs, call the Energy Efficiency
Resource Center at 1-800-468-4743. Information on energy efficiency programs
and services is also offered on PG&E³s Web Site: http://www.pge.com. CI
For additional information about CHEERS, contact Tom Hamilton (800)
424-3377, or visit CHEERS on the Internet at www.cheers.org.
Inquiries regarding PG&E alliances should be directed to David Altscher,
Senior Project Manager for PG&E, at (415) 973-6077.