313: Energy-Efficient Properties

A lender may consider a newly constructed dwelling as energy-efficient if it is built in compliance with qualifying energy conservation programs that the National Association of Home Builders (NAHB) classifies as meeting the NAHB Thermal Performance Guidelines or if it is constructed in a manner that meets or exceeds the standards established by the Council of American Building Officials (CABO) 1992 Model Energy Code.  New construction -- as well as existing homes -- may also be qualified as energy-efficient through an appraiser's or an energy consultant's development of an energy-efficient rating using either a rating form from the Energy Rated Homes of America or Part 1 of our Energy Addendum (Form 1004A).

The appraiser must include an evaluation of the energy-efficient characteristics of the property and an overall rating -- of "high" "adequate," or "low" -- for the energy efficiency of the dwelling in the applicable appraisal report form.  The lender may take the energy savings into consideration when evaluating the borrower's debt-to-income ratio, if the property receives an overall rating of "high" (as discussed in Part X, Section 302.08).  Generally, a dwelling must include features from each of the following three major categories to receive a "high" rating:

A.    Insulation and infiltration.  We require insulation with adequate "R" values and infiltration barriers in the form of the following:

•           Insulation in ceilings, roofs, or attic floors that are over conditioned spaces, in exterior walls, under floors that cover unheated areas, around slabs, around heating or cooling ducts or pipes that run through unconditioned spaces, around the sill area, and around the water heater;

•           Special fireplace devices or features, such as combustion-air and -flue dampers, and a fire door;

•           Sealing of the sole plate and penetrations of the exterior shell; and 

•           Dampers for exhaust fans.       

B.    Windows and doors.  We require either double- or triple-pane windows or storm windows, and either storm doors or insulated doors.  We also require caulking and weatherstripping around windows and door areas and at the sill area.

C.    Heating and cooling systems.  We require the following types of heating and cooling systems:

•           New efficient heating and cooling systems, or appropriate modifications to an existing system; 

•           Zoned heating and/or air conditioning; 

•           Automatic set-back thermostats; or 

•           Solar equipment or design.      

Regardless of the method used for qualifying a dwelling as energy-efficient, the appraiser must consider the reaction of the market to the energy-efficient improvements (or proposed alterations) and reflect their contributory value in the "sales comparison analysis" adjustment grid.  This adjustment must be based on the appraiser's analysis of comparable sales.  When adequate comparable sales are not available, the appraiser may use Part 2 of the Energy Addendum (Form 1004A) to develop an opinion about the value of the energy-efficient items, which should be equal to the lesser of the present worth of the estimated savings in utility costs and the installed cost of the energy-efficient items (as adjusted for physical, functional, or external depreciation).