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Financing Energy Efficiency: An EEM Handbook


Residential Energy Efficiency Improvement Loans


Fannie Mae is partnering with utility companies to make low interest rate, unsecured consumer loans available to utility customers for the purpose of installing residential energy efficiency improvements. This residential loan product was developed by Fannie Mae link the housing finance industry with efforts to improve residential energy efficiency.

Fannie Mae is a congressionally charted, shareholder-owned company, and is the nation's largest source of home mortgage funds. In March 1994, Fannie Mae launched our Trillion Dollar Commitment by pledging to provide !1 trillion in targeted housing finance by the end of the decade. As part of this initiative, Fannie Mae is working with utility companies to assist their customers by providing a low-cost source of funds that allows homeowners to finance energy-efficiency improvements.

Benefits to utility customers

  • Provides an unsecured financing option
  • Allows a quick approval process
  • Provides a below-market rate compared to other unsecured consumer loans
  • Allows for home improvements while reducing energy-related costs
  • Increases the value of the home.

Benefits to utility companies

  • Provides a product for a competitive retail environment
  • Lowers the cost of demand-side management by replacing rebates with loans
  • Provides significant customer service
  • Shifts customer focus from equipment cost to monthly payments for higher efficiency heating and cooling equipment
  • Promotes a "whole house" or bundled approach to efficiency upgrades
  • Builds a stronger trade ally and dealer network
  • Allows flexibility and control in providing financial services

Loan details

Term: Up to ten years
Amount: Up to $15,000
Rate: Set periodically based upon market conditions (but fixed for the term of the loan)
Security: Unsecured (unless the utility company prefers a secured loan)

Eligible Customers

One- to four-family homeowners in the utility company's service territory are eligible.

Processing loans

Loans may be originated and serviced by the participating utility company, or by a Fannie Mae-approved third party on behalf of the utility company.

Underwriting guidelines

Loans are underwritten according to acceptable credit scoring criteria. Loan approval consists of approving the customer's loan application, reviewing the utility company's payment history, and determining an appropriate credit score.

Risk sharing

Fannie Mae will accept the first 1.5 percent of the loan losses for an additional fee, or the utility company can assume all the risk of loan losses.

Examples of energy saving upgrades

Upgrades include the replacement of central heating and cooling systems, water heating systems, replacement windows and doors, insulation, ductwork upgrades, lighting and other energy efficiency improvements approved by the utility company and Fannie Mae.

Loan delivery

Utility companies will enter into specifically negotiated, annual renewable contracts with Fannie Mae.

Further Information

For further information or current rate quote call:
David Carey at (202) 752-3821
Ian Clark at (202) 752-2832

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