NAMP Views FHA's Energy Efficient Mortgage (EEM) Program as Providing Energy Savings and Relief for Homebuyers

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As utility rates rise, homebuyers can improve their mortgage options by incorporating energy-efficiency features into their FHA-insured home purchase or refinancing. FHA seeks to make EEMs more widely used to aid homeowners and homebuyers. Mortgage professionals can learn more through NAMP and FHA Online University's offered courses.

As of late, many homeowners are being hit hard by an increase in utility rates, especially on the East Coast. A new initiative, the Energy Efficient Mortgages Program (EEM) may help counteract these rising utility costs, thus helping homebuyers or homeowners save money on utility bills by allowing them to finance the cost of adding energy-efficiency features to new or existing housing as a component of their FHA-insured home purchase or refinancing mortgage. The partnership between NAMP and FHA Online University provides the opportunity for mortgage professionals to gain the necessary skills in handling such mortgage market changes, specifically through FHA Online University's class: FHA Processing - "For Processors".

The focus of EEM is to reduce pollution and achieve national energy-efficiency goals, and the initiative also aims to provide improved quality housing for those in lower economic brackets. By incorporating energy-efficiency into a mortgage, the ensuing savings can be considerable enough to affect the proportion of the mortgage that a new homebuyer can afford. The previous problem with EEM lay in that the initiative has been ineffectively marketed, yet as many as 250,000 new homebuyers could qualify per year if they utilized this available option for savings on monthly utility bills. Thus, although EEMs have been available in some states since 1980, new homebuyers and homeowners have infrequently capitalized on the benefits to EEMs. The impact could be significant once borrowers take advantage of the fact that when buying a home they can actually avoid a separate, expensive loan for energy improvements.

EEM is a program that encourages mortgage professionals to make mortgage credit a possibility for undeserved borrowers who may not otherwise qualify for conventional loans on affordable terms (ie: first-time homebuyers or low-income buyers), and to residents of disadvantaged neighborhoods where mortgages may prove difficult to obtain. The EEM initiative is an example of part of the wider usage capabilities provided to mortgage professionals by the FHA. Eligibility extends to borrowers who obtain FHA's popular Mortgage Insurance program for one- to four- family homes. These borrowers are eligible for approximately 97% financing, are able to incorporate closing costs and the up-front mortgage insurance premium into the mortgage, while also paying an annual premium.

Further highlights of EEM is that it can be used along with the FHA rehabilitation program, as well as enabling borrowers of energy-efficient housing rehabilitation activities that do not also require buying or refinancing the property to consider HUD's Title 1 Home Improvement Loan program. "Hud's EEM is a great way for homebuyers to buy a older, less energy efficient home and improve it to make it more cost efficient. In addition, it will increase the value of the home," says Bonnie Wilt-Hild, lead instructor for FHA Online University.     

An EEM can be obtained through FHA-approved lending institutions. These include many banks, savings and loans associations, and mortgage companies that can make loans covered by EEM insurance. Borrowers who are invited to apply include all those who meet income requirements for FHA's standard Section 203(b) insurance, and who can meet the monthly mortgage payments. In addition, up to $200 of the cost of an energy inspection report may be included in the mortgage, as it is required that the cost of the energy improvements and an estimate of the energy savings be determined by a home energy rating system (HERS) or an energy consultant.

EEM can be used to make energy-efficient improvements in existing and new homes, and the improvements can be included in a borrower's mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. EEM is just part of what you can do with FHA. NAMP and FHA Online University is excited to enable mortgage professionals to further their education and gain proficiency within their field, as well as learn more about FHA initiatives such as EEM.

About NAMP.
Based in the heart of Washington D.C., the National Association of Mortgage Processors (NAMP) is known throughout the mortgage processing industry as the voice of today's mortgage processor. NAMP is dedicated to assisting contract loan processors as well as in-house mortgage loan processors, in all aspects of their business. For more information, visit NAMP online at: http://www.MortgageProcessor.org .

About FHA Online University.
FHA Online University offers live, instructor-led online FHA training classes to students nationwide. For more information, visit http://www.FHAtraining.org .

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