12 U.S.C. § 1701z–16: Energy efficient…

Summary

Creates an energy-efficient mortgage pilot program in 5 States. HUD must set it up within 6 months after October 24, 1992. The program helps people buy existing energy-efficient homes and add cost-effective energy improvements. Lenders must insure loans under title II rules and approve the base loan if the borrower’s income and credit are OK. The cost for energy improvements may not be more than the greater of (A) 5% of the property value (but not more than 5% of the limit in section 203(b)(2)(A)) or (B) 2% of the limit in section 203(b)(2)(B). Each year, loans made under the pilot cannot exceed 5% of HUD’s 1- to 4-family insured mortgages from the prior fiscal year. Lenders may add up to 100% of the improvement cost above loan limits if requested before the base loan funds, hold improvement funds in escrow until work is done, and sell the mortgage to the secondary market before improvements are finished. HUD must give information about the program, require lenders to notify applicants in participating States, and get applicants to sign that they were told about the program. HUD must create training with the Energy Department within 9 months and report to Congress on results within 18 months. Within 2 years after the pilot starts, HUD must expand it nationwide and include new homes unless it finds expansion not practical and reports to Congress explaining why. Definitions: base loan (mortgage without improvement costs), cost-effective (savings over life exceed costs), energy efficient mortgage (recognizes energy savings so a borrower isn’t denied), residential building (single-family home). The pilot cannot replace other HUD energy-mortgage programs. HUD must issue needed rules within 180 days after October 24, 1992. Money as needed is authorized.

Title 12, §1701z–16

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(a)Establishment of pilot program

(1)In general

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)Pilot program

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

(A)Origination

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)Approval

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

(C)Costs of improvements

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

(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)Limitation

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)Authority for mortgagees

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)Promotion of pilot program

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)Training program

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)Report

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)Expansion of program

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)Definitions

For purposes of this section: (1)

(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)Rule of construction

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)Regulations

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)Authorization of appropriations

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