The Impact of Home Energy Retrofit Loan Insurance: A Pilot Program

Alastair McFarlane , U.S. Department of Housing and Urban Development

Impact

A regulatory impact analysis must accompany every economically significant federal rule or regulation. The Office of Policy Development and Research performs this analysis for all U.S. Department of Housing and Urban Development rules. An impact analysis is a forecast of the annual benefits and costs accruing to all parties, including the tax- payers, from a given regulation. Modeling these benefits and costs involves use of past research findings, application of economic principles, empirical investigation, and professional judgment.

This article reflects the views of the authors and does not necessarily reflect the views of the U.S. Department of Housing and Urban Development.

The PowerSaver pilot program will increase the availability of affordable financing for consumers who want to make energy-saving improvements to their homes. The program results from a congressional directive to conduct a pilot of energy-efficient mortgage innovation. The U.S. Department of Housing and Urban Development (HUD) responded to the directive with Power- Saver, a program in which the Federal Housing Administration (FHA) offers insurance for home improvement loans to finance improvements that foster lower energy consumption. The FHA guarantee will motivate both lenders and loan investors to participate in financing energy-efficient improvements and to create a secondary market.