In 2010, Fannie Mae pioneered the concept of Green Financing for Multifamily properties. Like all pioneers, we encountered a lot of challenges and obstacles in our path. But, with a lot of hard work and a little bit of luck, we persevered and developed a suite of innovative multifamily loan products that set the standard for Green Financing across the industry. We did this because we believed that saving energy and water can reduce operating expenses, benefit the environment and extend the useful life of the properties we all finance. That’s one heck of a value proposition and it rings just as true now as it did nine years ago.
Today, I would like to share with you a couple of exciting updates that we are making to our Green Building Certification (GBC) program as part of that ongoing commitment to making the properties we finance more energy and water efficient.
- Towards Zero
Since 2018, our recognized Green Building Certifications have been divided into three groups – 1, 2, and 3 – based on how well the minimum certification requirements align with the social and environment benefits our programs are designed to encourage.
Today, we are excited to introduce a new group called Towards Zero . It’s a new level above Group 1, designed for Green Building Certifications that are reaching for Net Zero energy standards. “Net Zero” means that the property produces as much energy as it consumes through a combination of innovative design, cutting edge technology, and renewable energy generation. While multifamily properties with these certifications are currently rare, an increasing number of multifamily pioneers are embracing this challenge and we are excited to stand with them.
- Eight New Green Building Certifications
We have also expanded our list of Green Building Certifications that are eligible for pricing benefits. Fannie Mae now recognizes 35 different certifications from 12 different organizations, including certifications for new construction, existing buildings, and of course our new Towards Zero certifications. The full list can be found in Form 4250.
- Green Loan Pricing & Pricing Parity
For more than two years we’ve given a significantly smaller pricing benefit to Green Building Certification deals than to Green Rewards deals. Going forward, we will be pricing loans on properties with Group 1 Green Building Certifications the same as Green Rewards loans. Loans on properties with Towards Zero certifications may see even greater pricing benefits.
Remember to ask your borrowers if their building has a Green Building Certification – they may not realize that there’s a pricing benefit! It’s also important to note that many state affordable housing programs have incorporated Green Building Certification requirements into their Qualified Allocation Plans (QAP), so check in with your affordable borrowers as well.
We are thrilled to be leaning back in to Green Building Certification deals. In the coming weeks we’ll be hosting two webinars to talk about the certifications we recognize, our pricing approach, and provide guidance to help you better understand which certifications are the best fit for your customers.
Keep an eye out for emails from Fannie Mae Multifamily with the webinar details, and you can always reach out to your deal team or the Green Financing Team for more information.
Our Continued Commitment to Green
Over the past nine years, we have seen a lot of changes in the Green Financing business from new rules and guidelines to new competitors in the market. While those things may come and go, our commitment to improving the energy and water efficiency of the properties we finance will not waver. No matter the challenge, we remain just as committed to this work as we were on the day our journey began. Because that is what being a pioneer is all about.
If you have any questions about how we are thinking about the future of Green Financing, please don’t hesitate to contact me or our Director of Green Financing, Karyn Sper, directly.
We would love to hear from you.