[Congressional Record Volume 162, Number 17 (Thursday, January 28, 2016)]
[Senate]
[Pages S351-S352]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 3042. Mr. ISAKSON (for himself, Mr. Bennet, Mr. Portman, and Mrs.
Shaheen) submitted an amendment intended to be proposed to amendment SA
2953 proposed by Ms. Murkowski to the bill S. 2012, to provide for the
modernization of the energy policy of the United States, and for other
purposes; which was ordered to lie on the table; as follows:
At the end of title I, add the following:
Subtitle F--Housing
SEC. 1501. DEFINITIONS.
In this subtitle, the following definitions shall apply:
(1) Covered loan.--The term ``covered loan'' means a loan
secured by a home that is insured by the Federal Housing
Administration.
(2) Homeowner.--The term ``homeowner'' means the mortgagor
under a covered loan.
(3) Mortgagee.--The term ``mortgagee'' means--
(A) an original lender under a covered loan or the holder
of a covered loan at the time at which that mortgage
transaction is consummated;
(B) any affiliate, agent, subsidiary, successor, or
assignee of an original lender under a covered loan or the
holder of a covered loan at the time at which that mortgage
transaction is consummated;
(C) any servicer of a covered loan; and
(D) any subsequent purchaser, trustee, or transferee of any
covered loan issued by an original lender.
(4) Servicer.--The term ``servicer'' means the person or
entity responsible for the servicing of a covered loan,
including the person or entity who makes or holds a covered
loan if that person or entity also services the covered loan.
(5) Servicing.--The term ``servicing'' has the meaning
given the term in section 6(i) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605(i)).
SEC. 1502. ENHANCED ENERGY EFFICIENCY UNDERWRITING CRITERIA.
(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Housing and Urban
Development shall, in consultation with the advisory group
established in section 1505(b), develop and issue guidelines
for the Federal Housing Administration to implement enhanced
loan eligibility requirements, for use when testing the
ability of a loan applicant to repay a covered loan, that
account for the expected energy cost savings for a loan
applicant at a subject property, in the manner set forth in
subsections (b) and (c).
(b) Requirements to Account for Energy Cost Savings.--The
enhanced loan eligibility requirements under subsection (a)
shall require that, for all covered loans for which an energy
efficiency report is voluntarily provided to the mortgagee by
the mortgagor, the Federal Housing Administration and the
mortgagee shall take into consideration the estimated energy
cost savings expected for the owner of the subject property
in determining whether the loan applicant has sufficient
income to service the mortgage debt plus other regular
expenses. To the extent that the Federal Housing
Administration uses a test such as a debt-to-income test that
includes certain regular expenses, such as hazard insurance
and property taxes, the expected energy cost savings shall be
included as an offset to these expenses. Energy costs to be
assessed include the cost of electricity, natural gas, oil,
and any other fuel regularly used to supply energy to the
subject property.
(c) Determination of Estimated Energy Cost Savings.--
(1) In general.--The guidelines to be issued under
subsection (a) shall include instructions for the Federal
Housing Administration to calculate estimated energy cost
savings using--
(A) the energy efficiency report;
(B) an estimate of baseline average energy costs; and
(C) additional sources of information as determined by the
Secretary of Housing and Urban Development.
(2) Report requirements.--For the purposes of paragraph
(1), an energy efficiency report shall--
(A) estimate the expected energy cost savings specific to
the subject property, based on specific information about the
property;
(B) be prepared in accordance with the guidelines to be
issued under subsection (a); and
(C) be prepared--
(i) in accordance with the Residential Energy Service
Network's Home Energy Rating System (commonly known as
``HERS'') by an individual certified by the Residential
Energy Service Network, unless the Secretary of Housing and
Urban Development finds that the use of HERS does not further
the purposes of this subtitle;
(ii) in accordance with the Alaska Housing Finance
Corporation energy rating system by an individual certified
by the Alaska Housing Finance Corporation as an authorized
Energy Rater; or
(iii) by other methods approved by the Secretary of Housing
and Urban Development, in consultation with the Secretary and
the advisory group established in section 1505(b), for use
under this subtitle, which shall include a third-party
quality assurance procedure.
(3) Use by appraiser.--If an energy efficiency report is
used under subsection (b), the energy efficiency report shall
be provided to the appraiser to estimate the energy
efficiency of the subject property and for potential
adjustments for energy efficiency.
(d) Required Disclosure to Consumer for a Home With an
Energy Efficiency Report.--If an energy efficiency report is
used under subsection (b), the guidelines to be issued under
subsection (a) shall require the mortgagee to--
(1) inform the loan applicant of the expected energy costs
as estimated in the energy efficiency report, in a manner and
at a time as prescribed by the Secretary of Housing and Urban
Development, and if practicable, in the documents delivered
at the time of loan application; and
(2) include the energy efficiency report in the
documentation for the loan provided to the borrower.
(e) Required Disclosure to Consumer for a Home Without an
Energy Efficiency Report.--If an energy efficiency report is
not used under subsection (b), the guidelines to be issued
under subsection (a) shall require the mortgagee to inform
the loan applicant in a manner and at a time as prescribed by
the Secretary of Housing and Urban Development, and if
practicable, in the documents delivered at the time of loan
application of--
(1) typical energy cost savings that would be possible from
a cost-effective energy upgrade of a home of the size and in
the region of the subject property;
(2) the impact the typical energy cost savings would have
on monthly ownership costs of a typical home;
(3) the impact on the size of a mortgage that could be
obtained if the typical energy cost savings were reflected in
an energy efficiency report; and
(4) resources for improving the energy efficiency of a
home.
(f) Pricing of Loans.--
(1) In general.--The Federal Housing Administration may
price covered loans originated under the enhanced loan
eligibility requirements required under this section in
accordance with the estimated risk of the loans.
(2) Imposition of certain material costs, impediments, or
penalties.--In the absence of a publicly disclosed analysis
that demonstrates significant additional default risk or
prepayment risk associated with the loans, the Federal
Housing Administration shall not impose material costs,
impediments, or penalties on covered loans merely because the
loan uses an energy efficiency report or the enhanced loan
eligibility requirements required under this section.
(g) Limitations.--
(1) In general.--The Federal Housing Administration may
price covered loans originated under the enhanced loan
eligibility requirements required under this section in
accordance with the estimated risk of those loans.
(2) Prohibited actions.--The Federal Housing Administration
shall not--
(A) modify existing underwriting criteria or adopt new
underwriting criteria that intentionally negate or reduce the
impact of the requirements or resulting benefits that are set
forth or otherwise derived from the enhanced loan eligibility
requirements required under this section; or
(B) impose greater buy back requirements, credit overlays,
or insurance requirements, including private mortgage
insurance, on covered loans merely because the loan uses an
energy efficiency report or the enhanced loan eligibility
requirements required under this section.
(h) Applicability and Implementation Date.--Not later than
3 years after the date of enactment of this Act, and before
December 31, 2019, the enhanced loan eligibility requirements
required under this section shall
[[Page S352]]
be implemented by the Federal Housing Administration to--
(1) apply to any covered loan for the sale, or refinancing
of any loan for the sale, of any home;
(2) be available on any residential real property
(including individual units of condominiums and cooperatives)
that qualifies for a covered loan; and
(3) provide prospective mortgagees with sufficient guidance
and applicable tools to implement the required underwriting
methods.
SEC. 1503. ENHANCED ENERGY EFFICIENCY UNDERWRITING VALUATION
GUIDELINES.
(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Housing and Urban
Development shall--
(1) in consultation with the Federal Financial Institutions
Examination Council and the advisory group established in
section 1505(b), develop and issue guidelines for the Federal
Housing Administration to determine the maximum permitted
loan amount based on the value of the property for all
covered loans made on properties with an energy efficiency
report that meets the requirements of section 1502(c)(2); and
(2) in consultation with the Secretary, issue guidelines
for the Federal Housing Administration to determine the
estimated energy savings under subsection (c) for properties
with an energy efficiency report.
(b) Requirements.--The enhanced energy efficiency
underwriting valuation guidelines required under subsection
(a) shall include--
(1) a requirement that if an energy efficiency report that
meets the requirements of section 1502(c)(2) is voluntarily
provided to the mortgagee, such report shall be used by the
mortgagee or the Federal Housing Administration to determine
the estimated energy savings of the subject property; and
(2) a requirement that the estimated energy savings of the
subject property be added to the appraised value of the
subject property by a mortgagee or the Federal Housing
Administration for the purpose of determining the loan-to-
value ratio of the subject property, unless the appraisal
includes the value of the overall energy efficiency of the
subject property, using methods to be established under the
guidelines issued under subsection (a).
(c) Determination of Estimated Energy Savings.--
(1) Amount of energy savings.--The amount of estimated
energy savings shall be determined by calculating the
difference between the estimated energy costs for the average
comparable houses, as determined in guidelines to be issued
under subsection (a), and the estimated energy costs for the
subject property based upon the energy efficiency report.
(2) Duration of energy savings.--The duration of the
estimated energy savings shall be based upon the estimated
life of the applicable equipment, consistent with the rating
system used to produce the energy efficiency report.
(3) Present value of energy savings.--The present value of
the future savings shall be discounted using the average
interest rate on conventional 30-year mortgages, in the
manner directed by guidelines issued under subsection (a).
(d) Ensuring Consideration of Energy Efficient Features.--
Section 1110 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3339) is amended--
(1) in paragraph (2), by striking ``; and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragraph (3) the following:
``(4) that State certified and licensed appraisers have
timely access, whenever practicable, to information from the
property owner and the lender that may be relevant in
developing an opinion of value regarding the energy- and
water-saving improvements or features of a property, such
as--
``(A) labels or ratings of buildings;
``(B) installed appliances, measures, systems or
technologies;
``(C) blueprints;
``(D) construction costs;
``(E) financial or other incentives regarding energy- and
water-efficient components and systems installed in a
property;
``(F) utility bills;
``(G) energy consumption and benchmarking data; and
``(H) third-party verifications or representations of
energy and water efficiency performance of a property,
observing all financial privacy requirements adhered to by
certified and licensed appraisers, including section 501 of
the Gramm-Leach-Bliley Act (15 U.S.C. 6801).
Unless a property owner consents to a lender, an appraiser,
in carrying out the requirements of paragraph (4), shall not
have access to the commercial or financial information of the
owner that is privileged or confidential.''.
(e) Transactions Requiring State Certified Appraisers.--
Section 1113 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3342) is amended--
(1) in paragraph (1), by inserting before the semicolon the
following: ``, or any real property on which the appraiser
makes adjustments using an energy efficiency report''; and
(2) in paragraph (2), by inserting after before the period
at the end the following: ``, or an appraisal on which the
appraiser makes adjustments using an energy efficiency
report''.
(f) Protections.--
(1) Authority to impose limitations.--The guidelines to be
issued under subsection (a) shall include such limitations
and conditions as determined by the Secretary of Housing and
Urban Development to be necessary to protect against
meaningful under or over valuation of energy cost savings or
duplicative counting of energy efficiency features or energy
cost savings in the valuation of any subject property that is
used to determine a loan amount.
(2) Additional authority.--At the end of the 7-year period
following the implementation of enhanced eligibility and
underwriting valuation requirements under this subtitle, the
Secretary of Housing and Urban Development may modify or
apply additional exceptions to the approach described in
subsection (b), where the Secretary of Housing and Urban
Development finds that the unadjusted appraisal will reflect
an accurate market value of the efficiency of the subject
property or that a modified approach will better reflect an
accurate market value.
(g) Applicability and Implementation Date.--Not later than
3 years after the date of enactment of this Act, and before
December 31, 2019, the Federal Housing Administration shall
implement the guidelines required under this section, which
shall--
(1) apply to any covered loan for the sale, or refinancing
of any loan for the sale, of any home; and
(2) be available on any residential real property,
including individual units of condominiums and cooperatives,
that qualifies for a covered loan.
SEC. 1504. MONITORING.
Not later than 1 year after the date on which the enhanced
eligibility and underwriting valuation requirements are
implemented under this subtitle, and every year thereafter,
the Federal Housing Administration shall issue and make
available to the public a report that--
(1) enumerates the number of covered loans of the Federal
Housing Administration for which there was an energy
efficiency report, and that used energy efficiency appraisal
guidelines and enhanced loan eligibility requirements;
(2) includes the default rates and rates of foreclosures
for each category of loans; and
(3) describes the risk premium, if any, that the Federal
Housing Administration has priced into covered loans for
which there was an energy efficiency report.
SEC. 1505. RULEMAKING.
(a) In General.--The Secretary of Housing and Urban
Development shall prescribe regulations to carry out this
subtitle, in consultation with the Secretary and the advisory
group established in subsection (b), which may contain such
classifications, differentiations, or other provisions, and
may provide for such proper implementation and appropriate
treatment of different types of transactions, as the
Secretary of Housing and Urban Development determines are
necessary or proper to effectuate the purposes of this
subtitle, to prevent circumvention or evasion thereof, or to
facilitate compliance therewith.
(b) Advisory Group.--To assist in carrying out this
subtitle, the Secretary of Housing and Urban Development
shall establish an advisory group, consisting of individuals
representing the interests of--
(1) mortgage lenders;
(2) appraisers;
(3) energy raters and residential energy consumption
experts;
(4) energy efficiency organizations;
(5) real estate agents;
(6) home builders and remodelers;
(7) State energy officials; and
(8) others as determined by the Secretary of Housing and
Urban Development.
SEC. 1506. ADDITIONAL STUDY.
(a) In General.--Not later than 18 months after the date of
enactment of this Act, the Secretary of Housing and Urban
Development shall reconvene the advisory group established in
section 1505(b), in addition to water and locational
efficiency experts, to advise the Secretary of Housing and
Urban Development on the implementation of the enhanced
energy efficiency underwriting criteria established in
sections 1502 and 1503.
(b) Recommendations.--The advisory group established in
section 1505(b) shall provide recommendations to the
Secretary of Housing and Urban Development on any revisions
or additions to the enhanced energy efficiency underwriting
criteria deemed necessary by the group, which may include
alternate methods to better account for home energy costs and
additional factors to account for substantial and regular
costs of homeownership such as location-based transportation
costs and water costs. The Secretary of Housing and Urban
Development shall forward any legislative recommendations
from the advisory group to Congress for its consideration.
______