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Green is a niche mortgage loan again?

The hot topic in real estate is green homes. People are building, buying and remodeling existing homes to make them more energy efficient, healthy and have less impact on the environment. While it is a relatively recent trend housing, which started in commercial construction for over two decades as owners sought ways to reduce the increase in utility bills. The field quickly became more than a concern with the power to include materials, techniques and products that conserve scarce resources, recycling the materials used, and avoid using toxic ingredients and processes. Since the cheaper and better products and materials were available, green or ecological spread of construction for housing.

Green building is becoming the standard for new commercial projects but it is unclear how many homes are actually being built with energy saving and environmentally friendly due to the nature of statistics still confuse commercial and residential markets. In 2006, McGraw Hill Construction estimates that green building this year, representing 10 percent of all construction and U.S. President Green Building Council (USGBC), said in April that green building has contributed $ 178,000,000,000 domestic product Gross for the last eight years. But under no circumstances will we know if residential construction accounts for 20 percent or 90 percent of these figures. There is anecdotal evidence however, that the building is a factor of growth in new housing construction and remodeling. For example, the state of California recently enacted the first statewide green building code and 6,500 developers have signed on the construction of Energy Star approved homes. USGBC LEED program monitoring originally green commercial construction now offers five levels of certification for housing. We can also assume that green building home is larger today, get bigger, to what extent remains unknown.

So far there has been a lot of news about sustainable housing finance, in part by a special mortgage would be overkill for many purchases. Much of green building merely reflect new technologies applied to old products and low-e (low carbon) coating on the glass of the window or kitchen cabinets free of formaldehyde. When a green house is just a regular house with environmentally friendly, a plain vanilla mortgage work well.

However, some homes environmentally sensitive have funding problems. A subset of households very green, like the domes, yurts, and brokerage of land are growing in popularity, but many projects are not off the ground because the chosen construction methods, while valid, appraisers confuse or frighten the lenders. Even houses that have normal one unique feature, such as a geothermal heating system solar roof tiles can be built against underwriting guidelines. loans construction are also a problem. Think of all the usual problems inherent in the placement of financing for the construction of a house and quadruple that if the house is really green. Building codes have not yet reached the green technology – which is a year until new regulations including California force – not have a lot of loan officers must sign on the progress of construction.

Green mortgages are available, but so far not widely known. The FHA offers a wrinkle in their 203 (b) and 203 loan guidelines (k), which allows the recognition of the cost savings of green improvements. Energy consumption efficient mortgage (EEM) allows the borrower to bring the cost of some green improvements on top of the approved mortgage without qualifying for the loan amount plus high or if payment is based on the same. Freddie Mac, Fannie Mae and VA mortgages offer similar concessions and has Energy Star, a joint effort of the EPA and the Department of Energy, launched a pilot program, in addition to the characteristics of the FHA program encourages lenders to offer preferential rates, reduced fees, or lower costs end borrowers. There are caps in most of these MA programs, but are still useful, especially when customers are pushing the boundaries of their relationships.

It seems that in its current home, green financing has the following characteristics:
• The potential market size is unknown.
• There is an unmet demand for creative products in some sectors.
• Programs are available are not being properly marketed and promoted.
• No one really understands what is happening.
• Not many people are doing anything about it.

Sounds like the very definition of a opportunity. There seems to be a need for entrepreneurs who understand what is happening out there and some excellent reasons to be positioned as an expert on green financing.

It is a rather empty niche. If there are lenders who specialize in green loans are doing a good job of marketing. Google green mortgages, the Green lenders, mortgage brokers green and get millions of hits, but the best links lead to regret the lack of funding or green ratings to sites of brokers called green mortgage. National USGBC green guide lists six sources of funding. The National Association of Realtors offers its members a name green, the Mortgage Bankers Association did not.
Becoming a green mortgage expert in your area code or even a national stake no claim to the title would be difficult. First, learn the basics of green building and green home ownership. Most of the methods and terminology are quite simple and there are dozens of books and web sites for starters. It is important that you are familiar with the basics of green building, such as sustainability and at the same time be aware of materials and products, technical knowledge not required, it is good to know what a geothermal heat pump, but it is not necessary to know how it works.

Know who the players are. LEED USGBC Leadership in Environmental Education and Design program mentioned above, is one of the porters, which sets standards for green building and for professionals in the field. Energy Star has long rated appliances and other products Energy Efficiency and now is doing the same for new homes. The National Association of Home Builders is active in the development of construction green residential standards and the Forest Stewardship Council certifies the sustainability of building materials made of wood. You will learn quickly about a dozen other organizations and agencies that are active in the field.

Qualify for existing programs, such as those offered by the FHA or the Energy Star pilot program if you are able to do so, developing their own programs. Talk to your investors about this potentially explosive market and how it can benefit from it. If you can develop a conduit for the financing of some of the most extreme construction techniques which will be a market maker. Construction techniques such as straw bale has a long history, are structurally valid, and are growing in popularity, but may be orphaned mortgage.

Be prepared to educate appraisers and insurance agents. The lack of compositions or the capacity to ensure risk insurance kills a lot of green financing. There is no reason home with a gas oven can not be a draft of a geothermal system with as an insurance agent refuses to secure a house of straw bales need to know the houses have four times the rated burn wooden construction. Sometimes you have to force these people to lift her head off the books of his government.

Marketing a green business approach is easy and relatively cheap. Contact your local green builders and realtors roots, especially any exploitation of the NAR designation green. Qualify as an Energy Star partner in http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.pt_lender_benefits. If you can provide funding for any of the extravagant construction techniques of contact, and include dozens of blogs that support their use, funding is a big topic of discussion. Advertising on the USGBC and NAHB directories, and depending on your approach, community directories in cities such as green conscious Austin, Texas, Portland, Oregon, and Cambridge, Massachusetts.

The trend toward green construction could become a mega-trend, become the standard sector, or simply being a small market sector and healthy. Mortgage lenders starting to focus on this market in early we could find a constant flow new business or a potential bonanza. In any case, be ahead of the curve when the competition finally discovers the market.

About the Author

David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems’ (NMLS) required pre-licensing education and continuing education.

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