February 2008

I frequenty get asked why Energy Efficient Mortgages are so difficult to do. Here`s the long and short of it… Energy Efficient Mortgages are not commonly used because banks don`t believe they can sell enough of them to bundle and sell on the secondary market as mortgage backed securites. If we had a sustainable mortgage backed security (SMBS) then we would be able to bundle green mortgages to sell on the secondary market – many thought leaders understand that sustainable mortgage backed securites would carry a lower risk because eco property buyers are typically better qualified and their homes are more valuable. Banks are VERY lethargic and RISK AVERSE…which is expected, considering it takes so much time to figure out how to separate your money from your wallet.


Just when you thought they were dead…perhaps…and that`s a BIG perhaps, the EEM might be making a comeback….we certainly hope so! Here`s why: The EEM, or Energy Efficient Mortgage, is a specific loan product that provides two core benefits: 1. higher qualifying income since the borrower is projected to spend less money on operating expenses and 2. higher loan amounts – up to 115% of the appraised value with the additional 15% above appraised value being held in escrow to pay for energy efficiency improvements. As you see, the EEM can make a big difference for the right borrower – the borrower who might now be entering the market at a breakneck pace, since in the US we have experienced a near 25% increase in the cost of oil in the last 5 months – staggering…mind-blowing…brain numbing, indeed. For those of us who like numbers – you won`t like these! Check this out: 5 months ago oil was trading at $80 per barrel. Today oil is trading at $102. This is unsustainable. I like simple definitions since I am not too terribly bright…Sustainability means we can keep doing what we are doing…so to speak. Well…we can`t keep absorbing 20 plus percent increases in the cost of oil – our collective cancer, our collective crack and our collective downfall if we don`t change. Help us “crack” the capital markets as we seek to develop, along with Evolution Partners and The Institute for Market Transformation to Sustainability, a Sustainable Mortgage Backed Security (SMBS). Until then, though, help us by allowing us to serve you with an Energy Efficient Mortgage or the hybrid EEM we created called myEnergyLoan, where we arrange financing for you and then give you a credit at closing to either reduce your closing costs or apply as a rate buydown. You won`t find many, if any, loan folk doing what we are doing because it doesn`t pay well…but it pays huge dividends for you and for future generations if you make the decision to go green with your home. We`ll even pay you to do so. Call me with questions: 404/771-2106.