The year 2016 saw an unprecedented boom in multifamily green financing programs. While the GSEs have been committed to sustainability initiatives for many years, this year was different. HUD, Fannie Mae, and Freddie Mac all updated existing programs and/or introduced new programs that were significantly more attractive for everyone than previous iterations. The result? From 0 to 60 in a matter of months. As of late 2016, over $3.2 billion in green loans were funded by Freddie and Fannie—an unprecedented amount.
What exactly made these green finance programs so attractive?
For one, flexibility. There are a lot of ways to get to the pot of gold. (And yes there is a pot of gold; I’ll get to that next.) Both Freddie’s and Fannie’s programs allow borrowers to take credit for already being green (projects that possess a green certification), or for committing to be green (pursue a green certification, or reduce energy and/or water consumption). Those reduction measures are identified through an energy audit, which provides a roadmap to achieve goals that are most cost-effective.
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