A Decade of Fannie Mae Green Financing
Thank you for your continued partnership on Green Financing! Did you know that we started our Green Financing program as the Green Initiative back in 2010? Since our first green loan in 2012, we’ve issued $75 billion of Green MBS, reducing the use of limited natural resources across the country, and lowering utility costs for tenants and owners.
Our program saw some big changes in 2019, including the change to Green Rewards eligibility rules at the beginning of last year, and the change to the FHFA Scorecard financing cap exclusion in Q4. Last year we:
- Released our first Green Bond Impact Report, describing the environmental, social, and financial impacts of our Green MBS issued from 2012 through 2018;
- Kicked off our Green Measurement and Verification Service, providing Borrowers with free assistance to comply with their annual reporting requirements; and
- Produced $22.8 billion of Green MBS comprising 32% of all 2019 multifamily loans.
It’s been an amazing decade for Green, and we’re looking forward to the next one. Now let’s get to the good part: what’s new in 2020, and what will Green Loans look like this year?
Raising the Bar on Green Building Certifications
Every year Fannie Mae assesses the multifamily Green Building Certifications in the market, and we update the list and groupings of the Green Building Certifications that we recognize. In 2020, not only have we added new certifications, we’ve also created an entirely new grouping of certifications called Towards Zero.
- Groups are assigned based on the certification’s minimum required level of energy savings; higher groups may get better pricing!
- Towards Zero is a new group designed for Green Building Certifications that are reaching for Net Zero energy standards through a combination of innovative highly efficient construction techniques and renewable energy generation. An increasing number of multifamily pioneers are embracing this challenge and we’re proud to support them.
- Many loans on properties with Green Building Certifications will see the same pricing benefit as Green Rewards loans in 2020 – so remember to ask whether the property has a Green Building Certification.
- Many state affordable housing programs have incorporated Green Building Certification requirements into their Qualified Allocation Plans (QAPs), so check in with your MAH property owners.
Holding Steady on Green Rewards
Q: How are we changing Green Rewards this year?
A: We aren’t!
Our analysis found that the 2019 Green Rewards eligibility requirements led to great projected cost savings for both owners and tenants, reasonable implementation costs, and a selection of sensible property improvements, many of which are viewed by tenants as property amenities. Eligibility in 2020 will be the same as 2019: 30% combined energy and water projected savings, inclusive of a minimum 15% projected energy savings.
What will your Green Rewards deals look like in 2020?
One of my favorite things about the new year is digging into our data to find out what a typical deal will look like this year. Since we haven’t changed eligibility requirements, we expect 2020 deals to look very similar to the 2019 deals. We looked at more than 900 High Performance Building (HPB) Reports from 2019 loans, and here’s what we found:
- Median cost of installation for 2019 deals was $463 per unit.
- Selected improvements are trending towards projected energy and water reductions of approximately 15% each; actual median was 16.7% projected energy savings and 16.7% projected water savings.
- There’s still a 40-year "sweet spot", with median per-unit installation costs of $420-470 at properties built 1970-2010.
Measurement & Verification – Providing Top Notch Service to Your Borrowers
Fannie Mae’s Green Measurement and Verification (M&V) Service streamlines and simplifies the one-time verification and annual reporting processes for Green Mortgage Loans. The Green M&V Service saves Borrowers time, effort, and money! In 2019 this service was an exclusive, no-cost benefit for Fannie Mae Borrowers, and will continue to be a no-cost benefit in 2020.
Healthy Housing for Affordable Properties
Healthy Housing Rewards™ continues to provide a pricing incentive and certification cost reimbursement for Multifamily Affordable Housing (MAH) deals. Last year we saw innovative combinations of Healthy Housing Rewards Healthy Design and Green Rewards in rehab projects, and for Borrowers providing high quality resident services, Healthy Housing Rewards Enhanced Resident Services™ can help offset the cost of the services.
Want more insights? We’re coming to a city near you, or sign up for a virtual training
Do you need a refresher, have new team members, or have a question on a specific deal? The Green and Healthy Housing Financing team will be hitting the road again in 2020 to support you. We’re happy to come to your office or set up a virtual training. We are always available to answer your questions, and you can reach out directly to Molly Simpson for conventional deals and Rachel Cluett for MAH deals. We look forward to another great year of Green partnership with you in 2020!