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You are here: Home » Resources » Articles » Fannie Mae Updates Make it Easier to Take Advantage of Green Financing

September 14, 2016

Fannie Mae Updates Make it Easier to Take Advantage of Green Financing

By Tony Liou, MBA

FANNIE MAE PUBLISHED NEW CHANGES TO THEIR GREEN FINANCING PROGRAM THAT FURTHER ENTICE BORROWERS TO UTILIZE THEIR GREEN LENDING PRODUCTS

Just last week, Fannie Mae published new changes to their Green Financing program that further entice borrowers to utilize their green lending products. Fannie Mae has committed to paying for the ASHRAE Level II study required as part of the energy and water efficiency analysis for loans made through their green initiative. As mentioned on the Fannie Mae Multifamily Green Financing webpage, Fannie Mae will reimburse borrowers 100% of the cost of the assessment used for the approved loan.

Other Key Revisions

Another significant enhancement made to the Green Rewards product offering now allows for 75% of owner-paid savings and 25% of tenant projected cost savings to be underwritten compared to the formulaic computation that allowed up to 50% for owner- and tenant-paid savings that was available before this latest change.

Prior to the changes, benchmarking for the High Performance Building Module (HPB) required the collection of utility bills from 10% of the tenants if the property wasn’t mastered metered. Now, tenant utility bill collection is only required if the borrower wants to underwrite tenant projected cost savings. This change makes it easier for acquisition deals that are typically under a tight due diligence period to qualify for the Green Rewards. No change has been made to the annual ENERGY STAR® Score reporting requirement using 10% tenant utility data after the energy and water efficiency work has been implemented.

Fannie Mae’s full suite of Green Financing products now includes Green Rewards, Green Building Certification Pricing Break, Green Preservation Plus, and a new offering known as Commercial Property Assessed Clean Energy (C-PACE) consent. By re-evaluating and enhancing their product lines, Fannie Mae is tailoring its programs to meet the needs of, and further attract, owners of multifamily properties to invest in strategic green improvements.

The Rise of Multifamily Green Financing

HUD and Freddie Mac are also offering green lending options making green lending competitive within the multifamily market. As agencies continue to update and enhance their offerings, borrowers now have more options to choose from that best meet their needs. Fannie Mae, HUD, and Freddie Mac provide lending to over 50% of the multifamily market, making green lending a significant game changer.

Continue reading the GlobeSt blog here.

About the Authors

Tony Liou, MBA

Tony Liou, MBA

President, Partner Energy
Tony Liou, MBA is Co-Founder and President of Partner Energy. The company helps clients identify, capitalize and implement energy efficiency and sustainability projects that meet business goals. As an advocate for energy efficiency programs and sustainable building practices that add value for managers and owners of commercial real estate (CRE) assets, he understands the business drivers behind energy efficiency and sustainability in CRE. He worked for 20 years in real estate acquisition and underwriting, engineering design, start-ups, and sales and marketing. When capital and public policy began to incentivize green project investment, Tony built Partner Energy with a team of professional engineers, architects, and sustainability consultants who know how to apply the technologies and programs that can make these investments profitable. He has guided the company to develop a range of service offerings that have helped clients reduce energy usage and energy costs at thousands of properties nationwide. Tony helped to establish one of the agency green loan programs through Fannie Mae and Freddie Mac. Through his efforts, Partner Energy is now a recognized provider of agency green loan services. Tony also shares his insights and discusses best practices at speaking engagements and in online articles. He presents at conferences and events sponsored by universities, industry groups, and non-profit organizations.

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