Rising utility rates create financial risk for owners and reduce affordability for tenants of multifamily properties. To combat this challenge and multifamily properties’ impact on the natural environment, the Fannie Mae Multifamily Mortgage Business (Fannie Mae) launched the Green Initiative. The mission of the Fannie Mae Multifamily Green Initiative is to enhance the quality, affordability, and environmental sustainability of multifamily housing in the United States. The Green Initiative provides leadership in the multifamily industry by offering Green Financing loans for smart property improvements and delivering innovative tools that measure and capture the value of energy and water efficiency.
As of the first quarter of 2014, Fannie Mae has financed $130 million in Green Preservation Plus loans or in loans that are backed by properties with a Green Building certification. These loans are securitized as Green Mortgage Backed Securities (Green MBS), a securitization standard set by Fannie Mae. Green Preservation Plus provides up to an 85% loan to value (LTV) ratio for owners of Affordable housing to transform their property through energy efficiency, water efficiency, and general property improvements. Fannie Mae’s newest Green Financing product, the Multifamily Property Improvement to Reduce Energy (M-PIRE) loan, underwrites a portion of the property’s projected energy and water cost savings, providing additional loan proceeds for cost-saving upgrades to the common area and to tenant units. To accurately assess a property’s potential for energy and water savings, Fannie Mae developed and published the High Performance Building Module for public use. This module expands a
traditional Property Conditions Assessment report by including an energy and water audit. The audit reveals cost saving opportunities and assists to mitigate property condition risks.
In 2011, Fannie Mae identified that multifamily owners needed a simple way to understand their property’s energy performance but that a single, nationally recognized metric did not exist. Fannie Mae Multifamily Mortgage Business partnered with the U.S. Environmental Protection Agency (EPA) to deliver the 1 – 100 ENERGY STAR® score for multifamily properties. As a result of this partnership, Fannie Mae is proud to announce that the ENERGY STAR score is available for use by the multifamily industry as of September 16, 2014. The 1 – 100 ENERGY STAR score is a product of the Fannie Mae Multifamily Energy and Water Market Research Survey (Survey). In 2012, Fannie Mae surveyed over 1,000 multifamily properties across the U.S. for statistically relevant and comprehensive energy and water information. The EPA used the resulting Survey data to create the ENERGY STAR Score for multifamily. Fannie Mae also invested in the Survey to provide owners with greater understanding of a multifamily property’s energy and water performance, trends and metrics. This paper shares the valuable information and metrics collected through the Survey.