Built Wise Utah Tools for Builder Partners Fannie Maes: Environmental Initiatives, American Communit

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Built Wise UtahTools for Builder
PartnersFannie MaesEnvironmental
Initiatives,American Communities Fund,and
Employer Assisted Housing

• Southern Utah Homebuilders Association
• March 2004

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Objectives

• Review Fannie Maes Environmental Initiative
  Mortgages which pertain to the Built Wise
  Partnership in Utah
• Review Fannie Maes American Communities Fund
  financial tools which can be utilized by
  developers and home builders
• Offer assistance with your Employer Assisted
  Housing Program

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Environmental Initiatives
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Resource Efficient Mortgages

• Designed to
• recognize lower operating costs of energy
  efficient homes Energy Efficient Mortgages
  (EEMs)
• recognizes lower commuting costs of transit
  Smart Commute Mortgages
• increase affordability for home buyers,
  regardless of income
• promote livable, walkable communities
• encourages resource efficient housing nationwide

The right thing to do! Frank Raines, Chairman
and CEO, Fannie Mae
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Efficiency is NOT Conservation

• Efficiency is NOT turning down thermostat and
  sacrificing comfort
• Get most from energy by using state-of-the-art
  technologies
• Efficiency is most immediate, cost effective way
  to reduce energy use and pollution
• Nationally, average home spends 1,900 each year
  on home energy
• an efficient home can save 50

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Impact of Energy Costs

• New and existing homes benefit from energy
  efficiency improvements
• EEM allow home buyers to finance energy
  improvements
• Lower energy costs increase housing affordability

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Energy Efficient Mortgages

• Energy efficiency provides a cushion for
  households through volatile energy prices
• Retail prices are predicted to remain high for
  several years to date that trend remains true
• SOURCE EIA, AEO, 2001
• Low-income households spend greater percentage of
  income on energy

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Value to Low Income Families

• Rapidly rising energy costs causing true hardship
  for low-income families
• In FY 1999, low-income consumer spent 14 annual
  income for energy bills
• In FY 2000, grew to 19, to date it has dropped
  only slightly
• 2001 additional 1.1 million households applied
  for heating cooling financial assistance
• 2001 4.3 million households in 19 states in
  arrears on their utility bills and faced possible
  shut off.

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Energy Efficient Mortgage

• Energy Savings
• Estimated monthly energy savings added to
  borrowers income for qualification purposes
• Energy Value -- Adjusts LTV
• For new construction Purchase price OR appraised
  value of Property plus present value
• For retrofits As-is value plus cost of
  improvements or as-completed value

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Energy Efficient Mortgages

• Qualify for larger mortgage
• Finance energy retrofits
• Energy improvements to existing homes can be 15
  of homes value
• finance up to 100 of improvements
• improvements paid over life of mortgage

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Home Buyer Demand

• 9 in 10 (91) say energy efficient features are
  extremely or very important
• Willing to pay 2,327 more for these features
• 37 more than that would pay in 2001
• Increasing number of production builders are
  building energy efficient homes
• Growing number are even providing savings
  guarantee
• SOURCE 2000 green building survey
• conducted by Professional Builder,
• Luxury Home Builder,Professional
• Remodeler, and Housingzone.Com

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Whats New in 2003

• Streamlined product line
• DU solution for the products
• MCM EEM low down payment option
• Increased allowable LTV
• Allowances for rebates and tax credits
• Something for all borrowers

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EEM Benefits

• Qualify for larger mortgage
• Energy savings added to income for qualification
  purposes
• Finance energy retrofits
• Energy improvements to existing homes can be 15
  of homes value
• Finance up to 100 of improvements
• Improvements paid over life of mortgage
• Increases Appraised Value of Home
• For new construction appraised value of property
  plus present value of efficiency improvements
• For retrofits installed costs plus sales price
  and appraised value

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How Does a Home Qualify?

• Every home must be rated by a certified energy
  rater
• Home can be energy efficient as-is or need
  efficiency upgrades which can be financed
• Rater will provide report that includes all the
  information the lender needs
• Estimated monthly Energy Savings
• The Energy Value of the energy efficiency
  measures

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HERS Ratings

• Home energy rating is standard measure of home's
  energy efficiency
• Requires on-site inspection by a certified home
  rater
• Home receives a point score between 1 to 100
• 80 is the reference home
• Energy Star homes must achieve an 86
• Home energy raters are trained and certified by
  RESNET
• Rating system provides third party verification

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EEM Product Parameters

• Automated underwriting
• 30-year, fixed rate
• Purchase or limited cash-out refinance
• 97 LTV
• 3 minimum borrower contribution
• No income limit for borrower
• SFC 124

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MyCommunityMortgage EEM

• Even lower down payment
• Lesser of 500 or 1
• Borrowers with income of 100 of area median
  income or less
• Exceptions for Fannie Neighbors? areas
• Higher incomes ok for high cost areas
• Same value from energy efficiency measures
• 100 LTV
• Credit score, if manually underwritten, varies
  with MCM option chosen
• SFC 124 AND MCM SFC

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Energy Efficient Mortgage

• Eligible properties
• One unit, Owner-occupied
• No manufactured homes (w/HUD data plate), unless
  built to state or local code
• No cooperatives
• Property must have energy rating
• Can be energy efficient as-is, new construction,
  or existing needing retrofits
• Appliance manufacturer rebates and tax credits
  are allowable
• Special thanks locally to Whole Siding Windows
  and Superior Insulation

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Desktop? Underwriter

• Available Now!
• Loan decision almost immediate
• quickly demonstrates greater affordability of
  energy efficient homes
• Energy rating included in borrowers loan
  file as verification
• Energy savings are added to Other income
  category of 1003
• Value of energy efficiency added to value of home

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Section V - Add Energy Savings to Other Income
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Section VII - For retrofit homes add the
installed cost of the energy measures to Line B
Alterations, improvements, or repairs For
appliance manufacturer rebates, the rebate amount
is added to Line L Total Other Credits
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Additional Data Section - For new homes add
Energy Savings Value to appraised value For
existing homes add installed cost of energy
efficiency measures to appraised value
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There are no EEM DU messages. Retrofits get a
HomeStyle message. Ignore and code with SFC
124. MCM loans also need SFC 460 for Community 97
and SFC 480 for Community 100
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Additional Information

• FannieMae.com
• utahenergy.org
• RESNET for certified raters
• www.natresnet.org
• Builders
• Energy Efficient Builders Association
• www.eeba.org
• www.energystar.gov/homes
• Alliance to Save Energy
• www.ase.org

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American Communities Fund (ACF)
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What is the ACF?

• Fannie Maes nation wide private-capital
  investment fund that
• offers front-end debt and equity financing for
  single-family and multi-family housing, and
  mixed-use developments
• seeks to produce tangible impact in neighborhoods
• wisely leverages other resources

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Who are our customers?

• Lenders
• Bank partnerships
• For-profit developers
• Homebuilders
• Non-profit developers
• Local, state, and federal agencies
• City and state governments

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Fannie Mae, ACFFinancing Structures?

• Construction Closing
• thru Construction

• Concept to Site Control to
• Initial Pro Forma to
• Subsidy Identification

• Refining Pro Forma to
• Project Design to Closing

Perm Closing to Occupancy

• Fannie Mae Tools
• ACF Direct Equity
• ACF Historic Tax
• Credit equity
• investment
• ACF Inv. Grade
• Bonds
• LIHTC (cont)
• MF DUS Perm Loan
• Targeted MRB
• SF Mortgage

• Fannie Mae Tools
• ACF Community Express

• Fannie Mae Tools
• ACF Community
• Express
• ACF Debt-ADC Const Part
• ACF Equity
• ACF Historic Tax Credit Commitment
• ACF Inv. Grade Bonds
• LIHTC Investment
• MF Const Forward
• Public Finance Project Bond

• Fannie Mae Tools
• ACF Community Express

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Union SquareOgdens Historic 25th Street

• Purpose revitalization project first new
  housing
• downtown in 30 plus years
• Project 60 total units 46 condominiums and 14
  
• live/work units with 25th Street store fronts
• Financing
• Construction Participation with First National
  Bank
• of Layton
• Live/Work Mortgage Experiment with Ogden Citys
• BIC My Community Mortgage 500 down feature
• for all income brackets
• Home prices
• 139,500 and up for off street condominiums
• 242,500 for live/work units 33 square
• footage retail

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Woods CrossTown Center

• Purpose new affordable housing for first time
  homebuyers near the city offices
• Project
• Woods Cross 18 Cottage Homes existing 24 new
  townhomes under construction with another 12 in
  2004
• Financing
• Equity Investments with ACF 820,000 for
  construction
• Energy Efficient and Smart Commute Mortgages
• Home Prices Starting at 129,900, average
  135,900

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Dearbourne HeightsDraper

• Purpose new affordable housing for first time
  homebuyers
• Project
• Draper 91 total units energy efficient designs
  located near public transit stop open spaces
  provided
• Financing
• Equity Investments with ACF 900,000 for
  construction
• Energy Efficient and Smart Commute Mortgages
• Home Prices
• Starting at 155,000 - 165,000

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Albion VillageSandy CitysNew Downtown

• Purpose new affordable housing for first time
  homebuyers just north of the central city
  district
• Project 234 total units energy efficient
  designs located near public transit stop (retail
  units sold separately)
• Financing
• Equity Investment with ACF of 2.8 MM for
  construction
• Energy Efficient and Smart Commute Mortgages
• Home Prices
• Between 115,000 and 170,000

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Employer Assisted Housing (EAH)
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What is EAH?

• An employer-provided benefit that helps employees
  become homeowners and provides value to the
  employer

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Benefits of EAH

• Five Rs
• Recruiting
• Retention
• Return
• Recognition
• Revitalization

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Types of EAH Programs

• Employers can choose from a range of EAH
  options
• Discounts
• Loans
• Grants
• Shared Appreciation
• Matched Savings
• Homebuyer education
• Sample EAH Builder Program
• Software Analysis

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Question Answer Session

• Special thanks again to the following
• Built Wise Initiative Sponsors

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For More Information on Built Wise UtahContact

• Jeff Bennion, DirectorMarci Milligan Sr. Deputy
  Director
• Rob Bennett, Deputy DirectorAlexis Winward,
  Administrative Assistant801.715.6860