SEC. 2. DEFINITIONS. 
In this Act, the following definitions shall apply: 
(1) COVERED
AGENCY.—The term ‘‘covered 
agency’’— 
(A) means— 
(i) an executive agency, as that term 
is defined in section 102 of title 31, United 
States Code; and 
(ii) any other agency of the Federal 
Government; and 
(B) includes any enterprise, as that term is 
defined under section 1303 of the Federal 
Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4502). 
(2) COVERED LOAN.—The term ‘‘covered loan’’ 
means a loan secured by a home that is issued, in-
sured, purchased, or securitized by a covered agency. 
(3) HOMEOWNER.—The term ‘‘homeowner’’ 
means the mortgagor under a covered loan. 
(4) 
MORTGAGEE.—The 
term 
‘‘mortgagee’’ 
means— 
(A) an original lender under a covered loan 
or the holder of a covered loan at the time at 
which that mortgage transaction is con-
summated; 
VerDate Mar 15 2010 
20:17 May 16, 2014
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H4615.IH
H4615
TKELLEY on DSK3SPTVN1PROD with BILLS
(B) any affiliate, agent, subsidiary, suc-
cessor, or assignee of an original lender under 
a covered loan or the holder of a covered loan 
at the time at which that mortgage transaction 
is consummated; 
(C) any servicer of a covered loan; and 
(D) any subsequent purchaser, trustee, or 
transferee of any covered loan issued by an 
original lender. 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(6) SERVICER.—The term ‘‘servicer’’ means the 
person or entity responsible for the servicing of a 
covered loan, including the person or entity who 
makes or holds a covered loan if that person or enti-
ty also services the covered loan. 
(7) SERVICING.—The term ‘‘servicing’’ has the 
meaning given the term in section 6(i) of the Real 
Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(i)). 
SEC. 3. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress finds that— 
(1) energy costs for homeowners are a signifi-
cant and increasing portion of their household budg-
ets; 
VerDate Mar 15 2010 
20:17 May 16, 2014
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H4615.IH
H4615
TKELLEY on DSK3SPTVN1PROD with BILLS
(2) household energy use can vary substantially 
depending on the efficiency and characteristics of 
the house; 
(3) expected energy cost savings are important 
to the value of the house; 
(4) the current test for loan affordability used 
by most covered agencies, commonly known as the 
‘‘debt-to-income’’ test, is inadequate because it does 
not take into account the expected energy cost sav-
ings for the homeowner of an energy efficient home; 
and 
(5) another loan limitation, commonly known as 
the ‘‘loan-to-value’’ test, is tied to the appraisal, 
which often does not adjust for efficiency features of 
houses. 
(b) PURPOSES.—The purposes of this Act are to— 
(1) improve the accuracy of mortgage under-
writing by Federal mortgage agencies by ensuring 
that energy cost savings are included in the under-
writing process as described below, and thus to re-
duce the amount of energy consumed by homes and 
to facilitate the creation of energy efficiency retrofit 
and construction jobs; 
(2) require a covered agency to include the ex-
pected energy cost savings of a homeowner as a reg-
VerDate Mar 15 2010 
20:17 May 16, 2014
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H4615.IH
H4615
TKELLEY on DSK3SPTVN1PROD with BILLS
ular expense in the tests, such as the debt-to-income 
test, used to determine the ability of the loan appli-
cant to afford the cost of homeownership for all loan 
programs; and 
(3) require a covered agency to include the 
value home buyers place on the energy efficiency of 
a house in tests used to compare the mortgage 
amount to home value, taking precautions to avoid 
double-counting and to support safe and sound lend-
ing. 
SEC. 4. ENHANCED ENERGY EFFICIENCY UNDERWRITING 
CRITERIA. 
(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this Act, the Secretary shall, in con-
sultation with the advisory group established in section 
7(b), develop and issue guidelines for a covered agency to 
implement enhanced loan eligibility requirements, for use 
when testing the ability of a loan applicant to repay a cov-
ered loan, that account for the expected energy cost sav-
ings for a loan applicant at a subject property, in the man-
ner set forth in subsections (b) and (c). 
(b) REQUIREMENTS TO ACCOUNT FOR ENERGY COST 
SAVINGS.—The enhanced loan eligibility requirements 
under subsection (a) shall require that, for all covered 
loans for which an energy efficiency report is voluntarily 
VerDate Mar 15 2010 
20:17 May 16, 2014
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H4615.IH
H4615
TKELLEY on DSK3SPTVN1PROD with BILLS
provided to the mortgagee by the mortgagor, the covered 
agency and the mortgagee shall take into consideration the 
estimated energy cost savings expected for the owner of 
the subject property in determining whether the loan ap-
plicant has sufficient income to service the mortgage debt 
plus other regular expenses. To the extent that a covered 
agency uses a test such as a debt-to-income test that in-
cludes certain regular expenses, such as hazard insurance 
and property taxes, the expected energy cost savings shall 
be included as an offset to these expenses. Energy costs 
to be assessed include the cost of electricity, natural gas, 
oil, and any other fuel regularly used to supply energy to 
the subject property. 
(c) DETERMINATION OF ESTIMATED ENERGY COST 
SAVINGS.— 
(1) IN GENERAL.—The guidelines to be issued 
under subsection (a) shall include instructions for 
the covered agency to calculate estimated energy 
cost savings using— 
(A) the energy efficiency report; 
(B) an estimate of baseline average energy 
costs; and 
(C) additional sources of information as 
determined by the Secretary. 
VerDate Mar 15 2010 
20:17 May 16, 2014
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H4615.IH
H4615
TKELLEY on DSK3SPTVN1PROD with BILLS