The concept of the Energy Efficient Mortgage (EEM) has yet to catch on, especially in light of the current economic environment. According to the Energy Star Program, EEMs are essentially a financing tool that makes it easier for borrowers to qualify for loans to purchase homes with specific energy-efficiency improvements. Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs.
Although the EEM idea is still in the infancy stage, it's already been responsible for some long-term consequences in the mortgage industry. First, these specialized loans are available for both retrofitting and new development. Secondly, as the real estate industry recovers (which it
always does), those who are already researching the potential of EEMs will certainly be ahead of the curve.
Those now taking advantage of EEMs are a handful of forward thinkers who know where the industry is heading. Unfortunately, only a select few financial institutions currently offer these progressive mortgages. According to an article in the latest issue of New Jersey & Company Magazine, there are no local banks offering them yet. However, the article does state that these programs are sure to make headway as demand for them becomes more apparent. Banks need to find new way to increase the asset side of the ledger, and EEMs are certainly a positive way to do so.
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03/18/08 @ 08:58 Agreed. Hopefully the financial crisis will not impede this aspect of investment.
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03/18/08 @ 09:04 · http://habitatadvisory.com I'm all for incentives to promote sustainable actions but when you really think about the EEM program, what it's doing is allowing borrowers to qualify easier for more debt. Sure they should save energy costs to off set the debt but that's not a given. Maybe the Feds could allow EEM lenders to sell these loans at a greater profit or offer a tax incentive to the lenders to offset the added borrower qualifying risk???
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03/19/08 @ 09:29 