Getting renewable and energy efficient neighborhoods accurate energy appraisals

(a)

Disclosure

The head of each covered agency shall require that any creditor to which an application for a covered loan is made shall provide to the borrower, on the same date that the creditor delivers or places in the mail the disclosures described under section 1026.19(e)(1)(iii)(A) of title 12, Code of Federal Regulations, for such loan, a written disclosure that includes the following:(1)A statement that the prospective borrower or current homeowner may provide an energy report, or any information in such report, regarding the property subject to the covered loan to the creditor or to a qualified appraiser or other interested party for consideration during a home appraisal or application for a covered loan.(2)A statement that the prospective borrower under the covered loan has the right to request an energy report regarding the property subject to the covered loan.(3)A statement that, in developing an appraisal in connection with such covered loan—(A)a qualified appraiser will take the information in the report into consideration; and(B)the appraisers’ final opinion of the value of the property may be higher, lower, or no different than if the energy report had not been available for the appraiser to review.(4)A statement that, as with any other data considered by the appraiser that affects the appraiser’s opinion of the value of a property, consideration of such data may help or hurt the ability of the prospective borrower to obtain a covered loan.(b)

Required analysis

In connection with a covered loan, the creditor under such loan shall, in underwriting the loan, use the appraised value of the subject property value as determined by a qualified appraiser. The consideration of an energy report by the qualified appraiser may not be used as a basis to reject a home appraisal or application for a covered loan.(c)

Consideration of energy characteristics

On and after March 1, 2026, the head of each covered agency shall require, with respect to any covered loan for a property for which an energy report is available, that upon the prospective borrower’s consent the creditor shall provide the appraiser with the energy report when the appraiser receives the assignment, and any underwriting or verification systems used by the creditor shall accommodate any appraisal that takes the energy report into consideration.(d)

Consideration of information

A qualified appraiser to whom an energy report is provided in connection with a covered loan shall take the information in such report into consideration when developing an appraised value of the property. In developing the appraised value of the property, the qualified appraiser shall take into consideration—(1)the energy efficiency characteristics of the property for which the report was prepared, any renewable energy related features of such property, estimated energy savings for such property, the energy consumption for such property relative to comparable homes, or any one or more of such items;(2)whether such characteristics of the property are relevant to the market value of the property; and(3)any additional information, as determined by the relevant head of a covered agency.(e)

Portability

Upon the request of a prospective borrower under a covered loan, the creditor shall provide a copy of an energy report with respect to the property, at no cost, to the prospective borrower.(f)

Guidance

(1)

In general

The heads of the covered agencies, after consultation with the advisory committee established pursuant to paragraph (2), shall jointly prescribe guidance for creditors to implement this section which—(A)shall confirm the acceptance, by each of the covered agencies, of all applicable approaches to value utilized by appraisers to demonstrate market reaction to energy efficiency and renewable energy;(B)shall set forth procedures for consumer disclosures, the preparation and sharing of energy reports, and the provision of the reports to qualified appraisers; and(C)shall not provide for how an appraiser shall consider information in an energy report.(2)

Advisory committee

The heads of the covered agencies shall jointly establish an advisory committee of stakeholders to advise the heads of the covered agencies in carrying out this section, which shall consist of representatives of housing advocates, energy efficiency and renewable energy organizations, energy raters, home builders, architects, single-family mortgage creditors, consumer advocates, appraisers, and other interested groups.(3)

Systems requirements

Not later than the expiration of the 2-year period beginning on the date of the enactment of this Act, the heads of the covered agencies shall jointly require a creditor originating a covered loan for which an energy report is prepared under this section to use origination and underwriting systems that review, score, or rate appraisals in a manner consistent with the creditor guidance issued pursuant to paragraph (1).(g)

Definitions

In this section:(1)

Covered agency

The term covered agency means—(A)the Federal Housing Administration of the Department of Housing and Urban Development;(B)the Federal Housing Finance Agency, to the extent that such Agency oversees and regulates the enterprises, as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502); except that any requirement imposed by this section on such Agency or the Director of such Agency shall be treated as a requirement with respect to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, to be imposed and enforced pursuant to the authority of such Director and Agency to supervise and regulate such enterprises;(C)the Government National Mortgage Association;(D)the Rural Housing Service of the Department of Agriculture; and(E)the Department of Veterans Affairs.(2)

Covered loan

The term covered loan means a residential mortgage loan (as such term is defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602)) that is made, insured, purchased, guaranteed, or securitized by a covered agency or intended to be purchased, guaranteed, or securitized by a covered agency.(3)

Creditor

The term creditor has the meaning given such term in section 103 of the Truth in Lending Act (15 U.S.C. 1602). (4)

Energy report

The term energy report means, with respect to a property, an analysis that—(A)(i)details the energy-related features in the home; (ii)estimates the expected energy costs or energy savings specific to the property, or both, based on specific information about the property; or(iii)complies with both clauses (i) and (ii);(B)estimates the expected energy generated from installed renewable energy features; and(C)is conducted—(i)in accordance with the guidance issued under this section;(ii)in accordance with HERS by an individual certified by the Residential Energy Service Network, unless the Secretary finds that the use of HERS does not further the purposes of this section;(iii)by the Department of Energy’s Home Energy Score; or(iv)by other methods approved by the Secretary, in consultation with the Secretary of Energy and the advisory committee established pursuant to subsection (f)(2), for use under this section, which shall include a quality assurance procedure approved by the Secretary, in consultation with the Secretary of Energy.(5)

HERS

The term HERS means the Home Energy Rating System of the Residential Energy Service Network.(6)

Qualified appraiser

The term qualified appraiser means an appraiser who, with respect to the assignment to conduct an appraisal—(A)is licensed, qualified, or certified to conduct an appraisal in the State in which the property is located;(B)has completed a course of 7 or more hours of continuing education on the consideration of energy reports in the appraisal process that—(i)includes case studies;(ii)includes an examination, which the appraiser has passed; and(iii)was submitted to, and approved by, the Appraiser Qualifications Board of the Appraisal Foundation through its Course Approval Program; and(C)is, at the time of agreeing to perform the assignment, competent to perform the assignment.