The hottest news in Green these days is the inclusion of Green Financing in the 2022 FHFA Scorecard Appendix A. Green Mortgage Loans will be classified as partially or wholly mission-driven business when there is at least 20% affordability at 60% of area median income (AMI) or below. The 2022 Scorecard indicates that if a Green Property has:
- 20% but less than 50% of units at 60% AMI or lower, 50% of the loan amount will be treated as mission-driven.
- 50% or more of units at 60% AMI or lower 100% of the loan amount will be treated as mission-driven.
Since the 2022 Scorecard overlays Green with the affordability requirement, going Green won’t turn a non-mission deal into a mission deal, but it can increase the mission percentage of a deal. For example: a property with 51% of units unrestricted at 60% AMI is pro rata mission at 51%, going Green makes that deal 100% mission a net add of 49% mission. The additional mission-driven percentage may mean deeper pricing benefits for green deals with affordability, but keep in mind that there is still no affordability requirement for green financing at Fannie Mae.
If the property has:
Impact on mission-driven percentage
Only restricted units at 60% AMI or lower
No change - targeted affordable housing and Green have the same breakpoints of 50% and 100% mission
Only unrestricted units at 60% AMI or lower
Added benefit for difference between pro rata affordability and the Green breakpoints at 50% and 100%
A combination of restricted and unrestricted, or with units at 80-120% AMI
Impact depends on units at 60% AMI or lower
Additional great news is that the 2022 Scorecard applies this benefit to both Green Rewards and Green Building Certification mortgage loans. Both types of Green Financing support Fannie Mae’s charter: green mortgage loans increase affordability by reducing utility bills for tenants, and green bonds support liquidity by expanding our pool of investors. And don’t forget about the environmental benefits!
More than 350 of you attended our recent Deep Dive on Solar training to learn more about delivering a Green Rewards deal with a solar photovoltaic (pv) system as an Efficiency Measure and how Fannie Mae’s Technical Solar Assessment reduces risk for Lenders and Borrowers. Since launching the Technical Solar Assessment in 2020, we’ve seen an increased interest in solar, so we wanted to spotlight two recent Green Rewards borrowers that have chosen to install solar panels.
- A manufactured housing community located in the San Diego, CA metro region, Lamplighter Los Coches, plans to install solar pv arrays on carports and common areas. Once installed, the 350 kW system will offset whole-property energy consumption by more than 40%. The Lender, Capital One, partnered with Shorebreak Energy and Nova Group, GBC on the Technical Solar Assessment and High Performance Building Report.
- Two high-rise properties in West Palm Beach, FL, St. James and St. Andrews Residences, plan to install a rooftop solar pv system totaling over 75kW combined. The properties will also install low flow WaterSense fixtures, ENERGY STAR® appliances, LED lighting, upgraded hot water heating systems and will increase roof insultation as part of a larger rehab. The Lender, Wells Fargo, partnered with Goldin Solar and Partner Energy, Inc. on the Technical Solar Assessment and High Performance Building Report.
These deals are great examples of how solar panels help a property qualify for Green Rewards while deploying onsite renewable energy and helping the transition to a low-carbon economy.
Have questions about Green Rewards with solar pv or other Green Financing questions? Reach out to the Green and Healthy Housing Financing Business at [email protected].