|Federal||D. James Croft|
|Home Loan||Executive Vice President|
|Mortgage||Risk and Property Management|
Subject: Energy-efficient mortgage program and revised energy addendum
To: All Freddie Mac Sellers and Servicers
Due to the recent renewed interest in energy-efficient housing, we want to direct your attention to our energy-efficient mortgage (EEM) program for home and second mortgages. We believe our program is the model of EEM programs for the secondary market. It has been designed to give credit to your borrowers for the energy conservation improvements made to their properties by allowing them to use the savings in their utility costs to offset higher mortgage payments.
As a part of our recent review of our EEM program, we improved our Form 70A, Energy Addendum, which you may use when underwriting energy-efficient properties. This form was revised with the help of energy industry experts to be more user friendly and to allow greater participation in our EEM program. Fannie Mae has also adopted this revised version (6/89) for use with its EEM program.
Please familiarize yourself with our revised Form 70A by reviewing the highlights below and reacquaint yourself with our entire EEM program by reviewing our policies as summarized in the attached exhibit A.
Revised energy addendum
The instructions throughout Form A have been improved to give helpful examples and to incorporate the following key changes:
Although our EEM program was developed to enable you to assist your borrowers in qualifying for a higher mortgage amount, your underwriters must continue to consider all relevant factors, including a borrower's credit worthiness. If you have any questions about our revised energy addendum or our EEM program, please call you Freddie Mac regional office.
D. James Croft
Executive Vice President
Risk and Property Management