Green lending is back thanks to record low interest rates and other factors that enable borrowers to keep more loan proceeds and receive lower payments. In addition, the early response to COVID-19 disrupted the flow of commercial credit and left the company Fannie Mae and Freddie Mac The combination of abundant funds at low interest rates made a hot impression Apartment building Market, especially for affordable housing projects that often have a green component. Together, these factors create the perfect environment for borrowers to take advantage of environmentally friendly loan programs.
As a leader in multi-family and green finance, Fannie Mae has taken great strides to motivate borrowers and owners to invest in strategic, environmentally friendly and sustainable property improvements through the Green Rewards program. While the Green Rewards program is not new, the focus in the past has mainly been on improving energy and water efficiency. One of the most effective ways to achieve full energy efficiency when needed is to install a solar panel on the property. While these systems can be expensive, they can convert great rewards into savings for owners and potential tenants – and the low interest rates along with the green lending programs help make solar power a reality. As an added bonus, Fannie Mae recently added a new incentive to her program to help with her push to invest in solar, which is starting to generate interest.
What is Fannie Mae Multifamily Green Rewards?
Fannie Maes Multifamily Green Rewards is a mortgage loan financing program available to borrowers who have decided to reduce their property's energy and water usage by 30% overall in order to improve both cash flow and property quality. Of the required minimum reduction of 30%, at least 15% of the savings must be attributed to energy savings.
The Green Rewards program already offers the borrower several advantages, such as lower interest rates, up to 5% more loan income and free energy and water audit reports. Now, Fannie Mae has added a free solar technical property appraisal to the program for those interested and solar approved.
While multi-family home finance can seem daunting due to the program requirements, this shouldn't deter borrowers or lenders from taking advantage of the many benefits they offer. Working with consultants who are familiar with managing all of Fannie Mae's due diligence is key to an efficient and smooth approval process.
What is the purpose of a technical solar rating?
A Technical Solar Assessment (TSA) is carried out to determine the potential of a property for renewable energies and is documented in a Technical Solar Report. The report is a new form of due diligence required by Fannie Mae that uses calculations and models that adequately project consumption and cost reduction to determine a practical and achievable solar system design and specifications for a building.
In addition to the detailed description of the solar potential, the TSA also confirms to the parties involved that the recommended system can be built. By thoroughly analyzing the local approval process and communicating with the local utility company, the TSA reduces the potential for roadblocks during the development phase of the installation. Since the TSA is the final form of due diligence carried out before the loan is closed, an analysis of the feasibility of the system is a critical part of the project.
When would a technical solar assessment be carried out?
As a rule, the TSA is triggered and carried out after a pre-qualified HPB consultant has created an HPB (High-Performance Building) report and determined that the property is suitable as an efficiency measure for a solar system. The HPB report makes this determination based on an analysis of the supply data and the potential system size. In certain circumstances, however, the TSA and HPB reports may need to be generated at the same time due to time constraints (usually for acquisition projects). In this case, the parties completing the reports will ensure that the recommendations are consistent before filing.
Both the TSA and HPB reports are 100% refundable by Fannie Mae and are required to qualify for the Green Rewards program. The TSA cost will be reimbursed by Fannie Mae as long as (1) the proposed solar system is selected and implemented, and (2) the loan ends up as a Fannie Mae Green Rewards Mortgage Loan. The cost of the HPB report (also known as the Energy and Water Audit Report) is also reimbursed if the loan is closed as Green Rewards and meets the eligibility requirements and filing deadlines for the reimbursement.
What does a technical solar rating consist of?
Once the HPB report is completed that the property can meet the required energy savings target and has determined the appropriate size of the solar system needed, a TSA can be performed.
The TSA is divided into three phases. Phase 1 consists of a review of the utility accounts and counters of the property; kWh consumption and total kW capacity; and the associated rates for generation, transmission and distribution. While Phase 2The technical solar consultant will visit the site to assess the potential of the solar system. Phase 3 Includes all information gathered in earlier phases with structural and electrotechnical calculations, site-specific historical weather data, specific selection of components of the solar system, feasibility of interconnection and permissible considerations that together enable a comprehensive analysis of renewable energies. The final analysis will be submitted in the form of a solar technical report which will include a financial analysis of the proposed project, technical specifications and configurations for the solar field, and a power generation simulation for the proposed design.
The Technical Solar Report and associated Form 4099.I, which documents the recommended renewable energy measures for the property, are then presented to the lender and Fannie Mae as part of the Green Rewards mortgage loan. If the borrower chooses to install the system, 75% of the savings paid by the owner and 25% of the cost savings projected by the tenant can be included in the net insured cash flow. At the end of the analysis, the TSA must clearly demonstrate with great certainty that the system can be built, connected and designed at an accurate cost, and the report must be completed within 10 days of the loan closing.
Who can carry out a technical solar assessment?
Only solar technical consultants who have one of the following three professional titles are allowed to conduct the TSA:
- PVIP certification (PV Installation Professional) certified by the North American Board of Certified Energy Practitioners® (NABCEP®);
- PVDS Specialist (PVDS) certification, certified by NABCEP®; or
- PVIS certification (PV Installer Specialist) certified by NABCEP®.
In addition, the Technical Solar Consultant must have carried out at least 5 multi-family solar assessments for PV systems with more than 20 kW in the last 2 years.
Fannie Mae, as well as Freddie Mac and HUD, are increasingly providing competitive eco-friendly loan products to borrowers, lenders, and anyone involved in the purchase or refinancing of apartment buildings. The green credit market will only grow. The spread of solar energy and the shift to more sustainable and renewable energy systems are not far behind. Qualified solar consultants can help you learn more about the solar potential in your property.