Fannie Mae

The Fannie Mae-RESNET Agreement on the Energy Report for Fannie Mae Energy Mortgage Products requires that rating software programs must use the “assumed note rate” established by Fannie Mae annually in calculating the energy savings value.

The 2004 assumed note rate for purposes of the Energy Efficient Mortgage (EEM) is 5.77%.

1. To prepare the Energy Report necessary for an EEM, the Energy Rater must use the Fannie Mae “assumed note rate” for the particular calendar year (referred to herein as the “Assumed Rate”).

• The Energy Rater calculates the “Energy Savings” under the “Mortgage Industry National Home Energy Rating Systems Accreditation Standards.”
• For a property that is newly constructed or is energy efficient “as is,” the Energy Rater calculates the “Energy Savings Value” as follows:
• The Energy Rater will follow the current guidelines of RESNET’s “Mortgage Industry National Home Energy Rating Systems Accreditation Standards,”
• Using the weighted average physical life of the energy measures (the result is referred to as the “Energy Life”), calculate the present value of the Energy Savings using the Assumed Rate applied to the Energy Life.
• The result is the Energy Savings Value for a property that is newly constructed or is energy efficient “as is.”

2. For an existing property that would benefit from energy improvements, the Energy Rater calculates the “Energy Savings Value” as follows:

• The Energy Rater will follow the current guidelines of RESNET’s “Mortgage Industry National Home Energy Rating Systems Accreditation Standards.,”
• Using the weighted average physical life of the energy measures (the result is referred to as the “Energy Life”), calculate the present value of the Energy Savings using the Assumed Rate applied to the Energy Life—such present value is referred to herein as the “Energy Savings PV.”
• Compare the Energy Savings PV with the installed cost of the energy improvements. The lesser of (i) the Energy Savings PV or (ii) the installed cost is the Energy Savings Value for a property that would benefit from energy improvements.