§1701z–16 — Title 12 Banks and Banking | U.S. Code

Summary

HUD must set up an energy efficient mortgage pilot program in 5 States within 6 months after October 24, 1992. The program must help people buy energy-saving homes and add cost-effective energy improvements to existing homes using HUD-insured loans. Borrowers who meet normal income and credit rules can get the base loan. The cost added for energy improvements cannot be more than the greater of (a) 5 percent of the property value (but not more than 5 percent of the limit in section 203(b)(2)(A)) or (b) 2 percent of the limit in section 203(b)(2)(B). In any year, these mortgages may make up no more than 5 percent of HUD’s 1- to 4-family insured mortgages from the prior fiscal year. Lenders may raise the loan limit by up to 100 percent of the improvement cost if the borrower asks before the base loan is funded. Lenders may hold improvement funds in escrow until work is done and may sell or transfer the mortgage to the secondary market after issuing it but before the improvements are installed. HUD must tell lenders and others about the program, require lenders in the pilot States to give written notice to applicants, and require applicants in those States to sign that they were told about the program. HUD must create a training program with the Energy Department within 9 months after October 24, 1992 and must report to Congress within 18 months after that date on how the pilot worked and whether it can go nationwide. Within 2 years after the pilot starts, HUD must expand the program nationwide and include new homes unless it finds that impractical and reports why. Definitions (one line each): "base loan" — the mortgage without the added energy cost; "cost-effective" — improvements whose present-value energy savings exceed their costs based on an approved home energy rating or other accurate method; "energy efficient mortgage" — a loan that counts home energy savings so a borrower isn’t disqualified for making qualifying energy improvements; "residential building" — a single-family home. The pilot must not end other HUD energy-mortgage programs. HUD must issue needed rules within the 180-day period beginning October 24, 1992. Funding is authorized as needed.

Title 12, §1701z–16

Banks and Banking — Source: USLM XML via OLRC

(a)(1)Not later than 6 months after October 24, 1992, the Secretary of Housing and Urban Development (hereafter referred to as the “Secretary”) shall establish an energy efficient mortgage pilot program in 5 States, to promote the purchase of existing energy efficient residential buildings and the installation of cost-effective improvements in existing residential buildings.

(2)The pilot program established under this subsection shall include the following criteria, where applicable:

(A)The lender shall originate a housing loan that is insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.] in accordance with the applicable requirements.

(B)The mortgagor’s base loan application shall be approved if the mortgagor’s income and credit record is found to be satisfactory.

(C)The cost of cost-effective energy efficiency improvements shall not exceed the greater of—

(i)5 percent of the property value (not to exceed 5 percent of the limit established under section 203(b)(2)(A)) of the National Housing Act (12 U.S.C. 1709(b)(2)(A); 11 So in original. There probably should be an additional closing parenthesis. or

(ii)2 percent of the limit established under section 203(b)(2)(B) of such Act [12 U.S.C. 1709(b)(2)(B)].

(D)In any fiscal year, the aggregate number of mortgages insured pursuant to this section may not exceed 5 percent of the aggregate number of mortgages for 1- to 4-family residences insured by the Secretary of Housing and Urban Development under title II of the National Housing Act (12 U.S.C. 1707 et seq.) during the preceding fiscal year.

(3)In granting mortgages under the pilot program established pursuant to this subsection, the Secretary shall grant mortgagees the authority—

(A)to permit the final loan amount to exceed the loan limits established under title II of the National Housing Act [12 U.S.C. 1707 et seq.] by an amount not to exceed 100 percent of the cost of the cost-effective energy efficiency improvements, if the mortgagor’s request to add the cost of such improvements is received by the mortgagee prior to funding of the base loan;

(B)to hold in escrow all funds provided to the mortgagor to undertake the energy efficiency improvements until the efficiency improvements are actually installed; and

(C)to transfer or sell the energy efficient mortgage to the appropriate secondary market agency, after the mortgage is issued, but before the energy efficiency improvements are actually installed.

(4)The Secretary shall encourage participation in the energy efficient mortgage pilot program by—

(A)making available information to lending agencies and other appropriate authorities regarding the availability and benefits of energy efficient mortgages;

(B)requiring mortgagees and designated lending authorities to provide written notice of the availability and benefits of the pilot program to mortgagors applying for financing in those States designated by the Secretary as participating under the pilot program; and

(C)requiring each applicant for a mortgage insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.] in those States participating under the pilot program to sign a statement that such applicant has been informed of the program requirements and understands the benefits of energy efficient mortgages.

(5)Not later than 9 months after October 24, 1992, the Secretary, in consultation with the Secretary of Energy, shall establish and implement a program for training personnel at relevant lending agencies, real estate companies, and other appropriate organizations regarding the benefits of energy efficient mortgages and the operation of the pilot program under this subsection.

(6)Not later than 18 months after October 24, 1992, the Secretary shall prepare and submit a report to the Congress describing the effectiveness and implementation of the energy efficient mortgage pilot program as described under this subsection, and assessing the potential for expanding the pilot program nationwide.

(b)Not later than the expiration of the 2-year period beginning on the date of the implementation of the energy efficient mortgage pilot program under this section, the Secretary of Housing and Urban Development shall expand the pilot program on a nationwide basis and shall expand the program to include new residential housing, unless the Secretary determines that either such expansion would not be practicable in which case the Secretary shall submit to the Congress, before the expiration of such period, a report explaining why either expansion would not be practicable.

(c)For purposes of this section:

(1)The term “base loan” means any mortgage loan for a residential building eligible for insurance under title II of the National Housing Act [12 U.S.C. 1707 et seq.] or title 38 that does not include the cost of cost-effective energy improvements.

(2)The term “cost-effective” means, with respect to energy efficiency improvements to a residential building, improvements that result in the total present value cost of the improvements (including any maintenance and repair expenses) being less than the total present value of the energy saved over the useful life of the improvement, when 100 percent of the cost of improvements is added to the base loan. For purposes of this paragraph, savings and cost-effectiveness shall be determined pursuant to a home energy rating report sufficient for purposes of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, or by other technically accurate methods.

(3)The term “energy efficient mortgage” means a mortgage on a residential building that recognizes the energy savings of a home that has cost-effective energy saving construction or improvements (including solar water heaters, solar-assisted air conditioners and ventilators, super-insulation, and insulating glass and film) and that has the effect of not disqualifying a borrower who, but for the expenditures on energy saving construction or improvements, would otherwise have qualified for a base loan.

(4)The term “residential building” means any attached or unattached single family residence.

(d)This section may not be construed to affect any other programs of the Secretary of Housing and Urban Development for energy-efficient mortgages. The pilot program carried out under this section shall not replace or result in the termination of such other programs.

(e)The Secretary shall issue any regulations necessary to carry out this section not later than the expiration of the 180-day period beginning on October 24, 1992. The regulations shall be issued after notice and opportunity for public comment pursuant to the provisions of section 553 of title 5 (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such section).

(f)There are authorized to be appropriated such sums as may be necessary to carry out this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The National Housing Act, referred to in subsecs. (a)(2)(A), (D), (3)(A), (4)(C), and (c)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the Act is classified generally to subchapter II (§ 1707 et seq.) of this chapter. For complete classification of this Act to the Code, see section 1701 of this title and Tables. Codification Section was enacted as part of the Energy Policy Act of 1992, and not as part of the National Housing Act which comprises this chapter. Section was formerly classified as a note under section 12712 of Title 42, The Public Health and Welfare.

Amendments

2008—Subsec. (a)(2)(C). Pub. L. 110–289, § 2123(1), amended subpar. (C) generally. Prior to amendment, text read as follows: “The cost of cost-effective energy efficiency improvements shall not exceed the greater of— “(i) 5 percent of the property value (not to exceed $8,000); or “(ii) $4,000.” Subsec. (a)(2)(D). Pub. L. 110–289, § 2123(2), added subpar. (D).

Statutory Notes and Related Subsidiaries

Similar ProvisionsSimilar provisions were contained in Pub. L. 102–550, title V, § 513, Oct. 28, 1992, 106 Stat. 3786.

§1701z–16 Energy efficient mortgages pilot program