EEM (Energy Efficient Mortgage): Specifically, a home mortgage for which the borrower's qualifying debt-to-income and housing expense-to-income ratios have been increased ("stretched") by 2% because the home meets or exceeds the minimum standards of the Council of American Building Officials (CABO) 1992 version of the Model Energy Code (MEC). This so-called "stretch" mortgage results from provisions of the Cranston-Gonzalez National Affordable Housing Act, and is refined by the U.S. Energy Policy Act of 1992 (EPAct). The EEM is nationally underwritten by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).
term is often used generically to refer to any home mortgage for
which the underwriting guidelines have been
relaxed specifically for energy efficiency features, or for which any form of financing incentive is given for energy efficiency.
Modified for the National Residential Energy Services Network
from the publication "Financing Energy Efficiency, A Handbook for Iowa Lenders"
Originally Produced by Randy L. Martin, R. L. Martin & Associates for the
Iowa Association of Municipal Utilities with a grant from the Iowa Energy Center.
Special Thanks For Supplying the Individual Guidelines:
Bob Groberg, U.S. Department of Housing and Urban Development
Chip Coffay, Federal National Mortgage Association (Fannie Mae)
Joe Ohern, Iowa Project Office, Fannie Mae
John Hemschoot, Federal Home Loan Mortgage Corporation (Freddie Mac)
"Energy Efficiency Financing, A Lender's Guide for Taking Advantage of This Emerging Market,"
Malcolm Verdict and Jay Wattenberg, 1996, Alliance to Save Energy, Washington, DC.