At the recent Green Real Estate 2008 conference (http://www.ecobroker.com/conference/) for Ecobrokers (www.ecobroker.com/) a number of lenders sat on a panel. The lenders from Country Wide, Wells Fargo, My Energy Loan and others spoke about the current and future trends in lending.
One of the main themes running through out the entire conference as using what is already available and making it better. Ideas like "green-o-vation" were used. "The greenest house available is the one you already own." And words used consistently regardless of the subject of the panel were: conservation, audits, tune up, quality, focus, durable, testing, performance and optimize.
For those who are familiar with PITIE or EEM's (Principle, interest, tax, insurance and energy) this formula has basically disappeared due to lack of use, interest and understanding.
But a new formula may be taking PITIE's place - PITILUM. Lenders: What are your thoughts on this?
- Principle
- Interest
- Tax
- Insurance
- L= location
- U=Utilities
- M=Maintenance
Location being factored in for people who live near public transportation or walking distance to work and school. Take what would be a car payment, car insurance and maintenance as a factor?
Utilities being factored in for houses with passive solar design, 95% efficient furnaces, solar water heaters and other improvements. If the owner has a house that uses much less energy could the difference be factored into a loan?
Maintenance being because the home owner doesn't have to pay to maintain a house with sustainable features such as a 50 year roof, zero scaled yard, and low maintained exterior. Could the lack of maintenance be factored into the payment and insurance costs?
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It all sounds great, but what kind of proof is the mortgage company going to require? I can see this being so easy that anyone can qualify and the numbers won't pan out, so we are right backwhere people are getting into trouble with more payment than they can handle. On the other end of that, the process being so complicated that no one can muddle through it to qualify. I love the fact that this would give incentives for people to build, demand and live in more efficient homes, I think it would be a step in the right direction towards "greening" up the industry, I am just worried that the people in control don't always have the same moral concept as the consumer
Third party verification is key here. The house has to qualify based on 3rd party verification, energy star, LEEDS, home inspections, HERS rating and the like. But it's an interesting idea I think.
Hi Dena -
I think it would be great for lending to move that direction. Including maintenence and utilities might motivate people to hop on the conservation band wagon! Great ideas!
that is indeed an interesting concept - I had never heard of it before -
It's a newer idea that as far as I know hasn't been used yet. I'm going to do a follow up post on this and where the industry maybe going soon.
Hi Dena - it takes the lending industry a while but front cover of my Broker mag today - "Going Green - Brokers make the move." I haven't read it yet, I'll share when I do!