Democrat Senators Push FHFA to Implement Higher New-Home Energy Standards
Written By: Joel Palmer, Op-Ed Writer
A group of Democrat U.S. senators expressed a lack of patience with the Federal Housing Finance Agency (FHFA) in implementing updated energy standards for new homes backed by the government sponsored enterprises (GSEs).
The seven senators sent a letter to FHFA Director Sandra Thompson last week urging the agency to set minimum standards, a move that has been debated for much of the past year.
“When asked at a hearing of the U.S. Senate Committee on Banking, Housing, and Urban Affairs last April, you indicated an intention to make a decision about this potential action on or about the end of the second quarter,” stated the letter. “As we are now rapidly approaching the end of the third quarter, we respectfully request an update on your intended timeline for a decision and for the Enterprises to begin implementation.”
The letter was signed by Senators Chris Van Hollen (D-Md.), Jeanne Shaheen (D-N.H.), Cory Booker (D-N.J.), Ed Markey (D-Mass.), Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), and Peter Welch (D-Vt.).
The senators noted that the Infrastructure Law and Inflation Reduction Act, signed in 2022, “provided over $1.2 billion of federal funding to help states and localities update their building codes. Already, multiple state and local governments, as well as HUD and USDA have adopted the updated building codes.”
The letter also stated that the agency has the authority to install new mandates, which is granted by the Housing and Economic Recovery Act of 2008, “as well as from other actions FHFA and the government-sponsored enterprises have undertaken in alignment with their missions and obligations.”
The letter stated that FHFA should adopt energy standards that meet or exceed those recently adopted by the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA).
The letter cited claims that HUD and USDA found that the increased costs of building more energy efficient homes were offset by energy cost savings. Furthermore, the senators cited Freddie Mac research that showed energy efficiency improvements reduce risks associated with mortgage-back securities, in part due to better resale values.
“Beyond these financial benefits, updated codes help save lives by protecting families from the impacts of extreme weather events, particularly utility outages during heat waves and cold snaps. Updated energy codes can also yield better indoor air quality and reduce exposure to pollutants that can have negative health impacts including asthma, heart disease and lung cancer,” the letter stated.
Not surprisingly, Republican senators have fought the inclusion of energy mandates for GSE-backed mortgages. Indiana’s two senators, Todd Young and Mike Braun recently introduced the HOUSE Act, legislation that would repeal the mandate related to energy standards.
“Buying a home is more expensive than ever for Americans. We shouldn’t be making them even more expensive with government mandates that could add as much as $31,000 to the price of a new home. My bill will repeal this new Biden administration mandate so we can lower the cost of housing for American families,” said Senator Braun.
The senators said their legislation would repeal the standards implemented by HUD and USDA, which are based on 2021 International Energy Conservation Code standards, and return to 2009 standards in effect. The bill would prevent the Department of Veterans Affairs from implementing the same rule while clarifying “that the Federal Housing Finance Agency has no statutory authority to impose similar mandates.”
In other legislative news related to housing and mortgages, lawmakers included the Homebuyers Privacy Protection Act (HPPA) of 2024 into the latest fiscal National Defense Authorization Act (NDAA).
The HPPA was originally introduced in February by Senator Bill Hagerty (R-TN) and Senator Jack Reed (D-RI) to prevent consumer reporting agencies from furnishing consumer reports derived from mortgage applications unless the recipient of that report has an existing relationship with the borrower. The practice is known as trigger leads.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
