New FHA/Fannie Mae green refinancing program

14 Jun 2011

HUD announced at the beginning of this month a new program called Green Refinance Plus where FHA and Fannie Mae will assist owners of existing affordable rental housing to refinance in to new mortgages, provided that they include funding for energy or water saving upgrades.  This is aimed at Low Income Housing Tax Credit and other affordable residential projects to  lower operating costs by improving efficiency.  FHA will insure up to an additional 4 to 5% of the loan (up to about $250,000 per loan) to pay for water/energy efficiency improvements and other needed property renovations.

To qualify:

  • the property must be at least 10 years old with a recorded use agreement that extends for the new loan’s term to help preserve affordable housing;
  • at least 5% of the refi proceeds must go to property renovation or energy retrofit;
  • all improvements and retrofits must enhance value and improve property operations;
  • a Green Property Needs Assessment to identify deferred capital needs and cost effective opportunities for energy and water saving improvements will also need to be conducted. 

Clearly, the administration is trying to jump start something in the energy efficiency field and as most experts say, the cheapest electricity is the electricity you save through efficiency.

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