GreenCHOICE Mortgages^® FAQ

GreenCHOICE Mortgages:

GreenCHOICE Mortgages offer several important flexibilities, including the following:

• Finances eligible improvements with an aggregate cost up to 15% of the as-completed property value.
• Requires an energy report only if aggregate costs of basic eligible improvements exceed $6,500. (Note: For certain eligible improvements, alternative documentation may be obtained in lieu of an energy report.)
• Allows a single closing on improvements and home purchase or refinance.
• Lets the borrower pay off (or pay down) existing debt that financed the purchase/installation/repair/upgrade of eligible improvements as part of a refinance.
• Provides the lender with a $500 credit on delivery to Freddie Mac.

All Freddie Mac-approved lenders may deliver GreenCHOICE Mortgages. lt may be delivered to Freddie Mac without recourse before the eligible improvements are completed.

For complete information on GreenCHOICE Mortgages, please review Guide Chapter 4606.

Yes, these flexibilities apply to both purchase and “no cash-out” refinance transactions. GreenCHOICE Mortgages can be used in conjunction with most Freddie Mac mortgage offerings* and any property type eligible under the Freddie Mac Single-Family Seller/Servicer Guide.
*Seller-owned converted mortgages, Construction Conversion and Renovation mortgages are not eligible.

Yes, provided the improvements do not impact the structural integrity of the property.

GreenCHOICE, CHOICEHome, and CHOICERenovation are separate offerings that are part of our CHOICE family of mortgage offerings designed to provide solutions for making homeownership achievable and sustainable, whether it’s to finance renovations and repairs, energy-efficient improvements for example, or next-generation factory-built homes.

Yes, CHOICERenovation^® mortgages and GreenCHOICE Mortgages can be originated in conjunction with each other under Guide Section 4607.16(b). In such cases, Sellers will be eligible for the $500 credit for credit fees as outlined in Guide Exhibit 19 Credit Fees.

These are among the opportunities that GreenCHOICE provides Sellers:

• Increase loan originations.
• Expand or enhance their product offerings.
• Offer greater housing affordability for low and middle-income families:
  • Combine these flexibilities with our affordable products, such as Home Possible® mortgages.
  • Provide financing solutions to help pay for improvements that can significantly lower the borrower’s utility bills.
• Save time with streamlined documentation.
   

If applicable, Servicers must have processes in place to meet the special servicing requirements related to mortgages secured by properties with incomplete improvements.

Yes, borrowers may still pay off a PACE obligation with the proceeds from a “no cash-out” refinance and cash-out refinance, provided certain requirements are met, including that the PACE loan is paid in full. See Guide Sections 4301.4 and 4301.8.

Most energy-efficient improvements are financed with unsecured or secondary debt with higher interest rates and shorter terms than mortgage financing, resulting in higher monthly payments. To help homeowners take advantage of low mortgage interest rates and consolidate debt, Freddie Mac added the flexibility to GreenCHOICE to allow homeowners to pay off (or pay down) existing debt that financed the eligible improvements as part of a “no cash-out” refinance transaction.

It is anticipated that borrowers will spend less on their utility bills and, therefore, have more money available to pay for other monthly housing expenses.

Freddie Mac purchases mortgages secured by properties with solar panels. To learn more, start with our requirements for properties with solar panels in Guide Section 5601.4 . Solar panels are an eligible improvement for GreenCHOICE Mortgages.

There is not an occupancy restriction; however, the transaction must be a “no cash-out” refinance or purchase transaction per Guide Section 4606.3.