Residential Energy Services Network (RESNET)

Residential Energy Services Network (RESNET)

January 07, 2014 11:00 ET

RESNET Leading the Charge for Housing Market and Financing Reforms

OCEANSIDE, CALIFORNIA--(Marketwired - Jan. 7, 2014) - A new policy proposal put forward by the Residential Energy Services Network (RESNET) calls for greater transparency in the housing market through the labeling of a home's energy performance. RESNET also proposes a re-evaluation of the way that housing affordability is calculated, and suggests that a new formula is needed that would account for energy savings. The adoption of a new formula would introduce greater rationality into the mortgage industry than is now present.

The issue of home energy efficiency has been steadily gaining momentum throughout the nation, with homeowners increasingly looking for ways to reduce their energy bills. This has revealed the need for reform in both the housing market and mortgage industry, based on savings achieved by energy efficient homes. And while information about the energy efficiency of home appliances and cars is readily available to consumers through Energy Guide labels and MPG (miles-per-gallon) stickers, the same cannot be said for houses. As a result, homebuyers have little idea about the potential energy costs of homes they are viewing. In order to address this problem, RESNET advocates a HERS® (Home Energy Rating System) Index Score for all homes financed through federal mortgage programs such as Fannie Mae, Freddie Mac, FHA and the VA. The HERS Index is the industry standard for measuring a home's energy performance, and a HERS Index Score informs consumers as to how energy efficient the home is. Annually, over 200,000 homes in the U.S. are being rated and issued a HERS Index Score. To date over 1.5 million homes have been energy rated and issued a HERS score.

RESNET also found that current federal mortgage underwriting practices are out of step with today's marketplace, as they fail to consider energy savings when determining the value and affordability of energy efficient homes. According to a recent study conducted by the University of North Carolina's Center for Community Capital and the Institute for Market Transformation (IMT):

  • Borrowers financing energy efficient homes were one-quarter less likely to prepay their mortgages.

The findings clearly demonstrated that energy efficient homes cost less to run, and saved their owners money. Therefore, RESNET recommends a new formula to determine housing affordability, which takes energy savings into account:

Principal + Interest + Taxes + Insurance - Monthly Energy Savings (PITI-ES) = TOTAL COST

Advantages of the new formula include:

  1. Greater accuracy in calculating housing affordability
  2. Making energy efficient homes more accessible to consumers

Requiring HERS Index scores for homes financed by federal mortgage programs, and a new housing affordability calculation that includes energy savings, will bring transparency and rationality to the housing market and mortgage industry respectively.

To download the new policy initiative, click on RESNET Call for Reform


The Residential Energy Services Network (RESNET) is the independent, national nonprofit organization that homeowners trust to improve home energy efficiency and realize substantial savings on their utility bills. RESNET's industry-leading standards are recognized by the U.S. Department of Energy and the U.S. Environmental Protection Agency, among others.

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