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Throughout 2019 and into the new decade we have had a lot of customers asking us questions about the Fannie Mae Green Financing and Freddie Mac Multifamily Green Advantage Programs. We wanted to simplify the process (just like with your water bills!) outlining the programs, resources, and steps to savings.
Here’s what we’ll cover:
- What the programs are
- Who they apply to
- Value they provide for the borrowers
- What steps are necessary to qualify
- Additional resources available to those interested
What are the Fannie/ Freddie Green Programs?
Both Fannie Mae and Freddie Mac have recently introduced programs to benefit multifamily owners who have properties with existing green building certifications, or those looking to make efficiency improvements to the energy and water demand of their assets. In addition to reducing utility costs of these buildings, property owners can receive preferred interest rates on their multifamily loans. Over the course of a property’s ownership period these savings can add up to tens of thousands of dollars!
Fannie Mae offers two individual programs under their Green Financing Loans; Green Rewards (GR) and Green Building Certifications (GBC). Green Rewards offers benefits to those willing to perform retrofits on properties, while Green Building Certifications applies to those buildings with existing Green Building Certification.
Freddie Mac’s Green Advantage ProgramⓇ allows building owners who specialize in workforce housing to provide lower utility costs to their tenants and paint a clear picture of sustainability prioritization for their investors, staff, and clients.
Who do these programs apply to?
Fannie Mae’s Green Rewards program applies to multifamily properties located anywhere in the US. Properties with Green Building Certifications from approved certification bodies are eligible to apply for Fannie Mae’s GBC Financing Loan. Loan types eligible for Fannie’s Green Financing program include refinance, acquisition, and supplemental, as well as 2nd supplemental for the Green Rewards program.
Freddie Mac’s Green Advantage ProgramⓇ focuses solely on workforce housing, applying to properties where at least 50% of units must be affordable at incomes from 80% to 150% of market AMI.
What value do these programs provide the Borrowers?
For multifamily property owners, enrolling in Fannie Mae and Freddie Mac’s Green programs provides several valuable benefits.
First and foremost, those enrolled will get reduced interest rates, which over the course of a loan term can save thousands, or more, in interest owned.
Additionally, Fannie Mae will pay for 100% of a property’s energy and water audit, allowing you to focus on maximize efficiencies without spending a dime in the planning phase.
Freddie Mac offers its borrowers even more benefit: the organization will underwrite up to 50% of the projected energy savings under their Green Up® program, and up to 75% or projected energy savings in their Green Up plus® program!
Finally, enrollment in the programs demonstrates a commitment by the borrower to invest in sustainable practices. By committing to reducing the energy and water demand of their property, they are providing benefit to their tenants, their investors, and the planet equally.
What Steps are necessary to qualify?
In order to qualify for these Green Loans Fannie Mae and Freddie Mac customers must both commit to reducing their energy and water consumption by 30% or more, with at least 15% of these savings coming from energy reductions.
In Fannie’s Green Rewards program, customers can pick the tools utilized in order to achieve their necessary savings. Tools like Banyan’s Irrigation Insight, which typically reduce client water consumption by 50-70% can easily achieve the water component of these savings for multifamily customers. Because outdoor water is often paid for directly by ownership, this also has a significant impact on your property’s NOI.
Fannie Mae customers can easily follow the outlined steps in their Go Green Flowchart to qualify for their Green Financing programs.
Freddie Mac borrowers start by completing a Green Assessment report, for which Freddie will reimburse up to $4,000 for the cost of the report. Once the loan terms are finalized borrowers have two years to implement the steps outlined to achieve the energy and water savings.
What additional resources are available to me to learn more?
We recommend reaching out to a qualified consultant who can help you navigate the process from start to finish.
Here at Banyan Water we’d be happy to answer any additional questions you have, particularly in regards to ways to achieve multifamily water savings to help your Green Loan goals become reality. Speak with one of our water conservation representatives today!