The SAVE Act: 5 Things to Know
Did you know that 46% of the average U.S. homeowner's costs go towards utilities? In contrast, homeowner's insurance only accounts for 16% of the average U.S. homeowner's costs, and property taxes 37%. Despite the fact that it is the largest cost to homeowners, energy costs are neglected during the underwriting of single family mortgages. However, the Sensible Accounting to Value Energy (SAVE) Act, introduced in June 2013, could improve mortgage underwriting used by federal mortgage agencies, like Fannie Mae and Freddie Mac, by incorporating a home's expected energy savings into the determination of a home's value.
Here are the 5 things to know about the SAVE Act:
- The bill would improve access to energy efficiency upgrades without increasing the cost of homeownership, while promoting energy conservation and construction jobs, and allowing larger loans for borrowers in new purchases and refinancing.
- The Act, unlike the previous version introduced in 2011, will not penalize older, more inefficient homes or those that do not have a report based on estimated energy consumption.
- There is no cost to taxpayers to implement the SAVE Act! The bill focuses on removing current obstacles preventing homeowners from improving the energy efficiency of their homes rather than relying on taxes or fees.
- The Institute for Market Transformation (IMT), a nonprofit group that promotes energy efficiency in buildings, estimates that the Act will generate 83,000 jobs and $1.1 billion in energy savings by 2020.
- Even smaller investment energy efficiency upgrades can save 30% or more in a home's energy bills, in addition to improving the comfort and value of the home. Talk about a good deal!
Interested in learning more about the SAVE Act? Check out the resources below:
- IMT, who helped draft the legislation, published a fact sheet that explains the background of the bill, as well as the three different components of the bill: the debt-to-income adjustment, loan-to-value adjustment, and consumer information.
- The American Council for an Energy-Efficient Economy (ACEEE), as well as IMT, analyzed the job creation and consumer energy savings of the SAVE Act. You can read about their methodology and results in this two-pager.
- The full text of the bill is also available for your perusal.