The Energy Efficient Mortgage (EEM) is one of the best kept secrets in our business.  Why? Because most people have no idea what it is and don’t want to invest the time to learn about its’ cost saving powers. In a world of sound-bites, tweets, and bumper-sticker one-liners, who has time to learn about energy-efficient mortgages? Boooring…

Why should you care about an EEM? Congress mandated a pilot program in 1992 (that went national in 1995) to help homebuyers or homeowners borrow more money to help pay for energy-efficient improvements or upgrades. The result is an energy-efficient home with lower monthly utility bills and a decreased footprint on the environment.   And it’s all done without tapping into your savings. 

You can finance these energy-saving features to new or existing homes as part of a FHA or VA insured loan. The goal here, is that the money you save on your energy bill from these improvements (i.e. duct sealing, new windows, energy-efficient water heaters, new heating and air-conditioning systems, etc.), will exceed the slightly higher monthly mortgage payment.

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If you have a mortgage and you let your homeowner’s insurance lapse, or the bank servicing your loan (“the servicer”) lets it lapse, that very same bank can legally order new insurance called “force-placed insurance” for you. And surprise. It’s not cheap. Just ask Hilda Sultan, of Florida, who was billed $33,000. (see video below)

As a mortgage loan originator for almost a decade, I have never dealt with this in my practice until it happened to one of my past clients. I tried to research the subject objectively, but the further I got, the more examples I found of this inherently abhorrent scam.

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Housing Bubble

Are you getting that itch to buy a home? Or maybe you are in the other camp, and can’t even think of buying until the market truly changes course, and homes start to appreciate. Maybe you are one of many Californians who don’t have a job and buying a home is not an option for you. Thankfully, the long-standing myth that it is better to own than rent has been finally silenced.  Just like the horror stories of the great depression told by our grandparents, we too need to share our experience of the current great recession to future homebuyers.  We need to remind them that buying a home is based on careful research, hard numbers, and not the buying frenzy mind-set that blinded so many leading up to the crash.

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