WASHINGTON -- Picture this: You're shopping for a larger home, dropping by open houses on a weekend. Each house you visit has an easy-to-understand disclosure about something that's typically unknown today -- its energy-guzzling costs per year.
The Obama administration's top housing official, Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), thinks consumers deserve more information on the energy efficiency of the houses they buy -- resale and newly built. And he thinks mortgages should come with lower rates or better terms to encourage purchases and retrofits that save energy.
"When you buy a car," he said in an interview, "you know very clearly what the energy efficiency of that (vehicle) is because there's a number on the window. It says: Here's the gas mileage. We don't know that for housing."
A Harvard-trained architect who ran New York City's Department of Housing Preservation and Development for four years before coming to HUD, Donovan said his agency is in the early stages of discussions with federal energy officials to develop "a relatively simple scoring system for housing that would allow you to understand what you're buying and at the same time allow lenders to underwrite that into their mortgage. Ultimately, if your energy bills are going to be lower, there ought to be some (mortgage) benefits to that."
The system might also factor in transportation costs to employment centers in some way, he said, because "most people don't realize that the average American family spends over 50 percent of their income on a combination of housing and transportation." Even with far-flung suburbs' lower prices for houses, "their transportation costs are huge" -- and metropolitan sprawl itself represents a massive energy-consumption inefficiency.
Mortgage terms -- higher loan amounts for buyers to make energy-conserving improvements, lower mortgage rates for energy-efficient homes -- "can be a very powerful tool" in residential energy conservation, he said, and the booming Federal Housing Administration (FHA) insurance program would be a good place to start.
"If in the long run there's a cost of $5,000 to upgrade a house that will produce $10,000 in savings over time for utilities, the perfect tool to realize those savings is a mortgage," said Donovan. Though Fannie Mae, Freddie Mac and FHA all have had versions of "energy-efficient mortgages" on the books for years, their programs have been poorly marketed and little used. Donovan wants to revive and improve the whole concept.
In a wide-ranging discussion, Donovan also touched on a variety of other issues.
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