---
kind: "section"
citation: "12 U.S.C. § 1701z–16"
title: "12"
title_heading: "Banks and Banking"
number: "1701z–16"
heading: "Energy efficient mortgages pilot program"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1701z-16"
units:
  - "Chapter 13 — National Housing"
---

# §1701z–16. Energy efficient mortgages pilot program

- (a) **Establishment of pilot program—**
  - (1) **In general—** Not later than 6 months after October 24, 1992, the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development (hereafter referred to as the “[Secretary](/usc/12/1715z–22a.md?p=4)”) shall establish an energy efficient [mortgage](/usc/12/1707.md?p=a) pilot program in 5 [States](/usc/12/1707.md?p=d), to promote the purchase of existing energy efficient residential buildings and the installation of cost-effective improvements in existing residential buildings.
  - (2) **Pilot program—** The pilot program established under this subsection shall include the following criteria, where applicable:
    - (A) **Origination—** The lender shall originate a housing loan that is insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] in accordance with the applicable requirements.
    - (B) **Approval—** The [mortgagor](/usc/12/1707.md?p=b)’s base loan application shall be approved if the [mortgagor](/usc/12/1707.md?p=b)’s income and [credit](/usc/12/5481.md?p=7) record is found to be satisfactory.
    - (C) **Costs of improvements—** The cost of cost-effective energy efficiency improvements shall not exceed the greater of—
      - (i) 5 percent of the property value (not to exceed 5 percent of the limit established under [section 203(b)(2)(A)](/usc/12/203.md)) of the National Housing Act ([12 U.S.C. 1709(b)(2)(A)](/usc/12/1709.md?p=b-2-A);[^1] or
      - (ii) 2 percent of the limit established under [section 203(b)(2)(B)](/usc/12/203.md) of such Act [[12 U.S.C. 1709(b)(2)(B)](/usc/12/1709.md?p=b-2-B)].
    - (D) **Limitation—** In any fiscal year, the aggregate number of [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section may not exceed 5 percent of the aggregate number of [mortgages](/usc/12/1707.md?p=a) for 1- to 4-family residences insured by the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development under title II of the National Housing Act ([12 U.S.C. 1707](/usc/12/1707.md) et seq.) during the preceding fiscal year.
  - (3) **Authority for mortgagees—** In granting [mortgages](/usc/12/1707.md?p=a) under the pilot program established pursuant to this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) shall grant [mortgagees](/usc/12/1707.md?p=b) the authority—
    - (A) to permit the final loan amount to exceed the loan limits established under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] by an amount not to exceed 100 percent of the cost of the cost-effective energy efficiency improvements, if the [mortgagor](/usc/12/1707.md?p=b)’s request to add the cost of such improvements is received by the [mortgagee](/usc/12/1707.md?p=b) prior to funding of the base loan;
    - (B) to hold in escrow all funds provided to the [mortgagor](/usc/12/1707.md?p=b) to undertake the energy efficiency improvements until the efficiency improvements are actually installed; and
    - (C) to transfer or sell the energy efficient [mortgage](/usc/12/1707.md?p=a) to the appropriate secondary market agency, after the [mortgage](/usc/12/1707.md?p=a) is issued, but before the energy efficiency improvements are actually installed.
  - (4) **Promotion of pilot program—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall encourage participation in the energy efficient [mortgage](/usc/12/1707.md?p=a) pilot program by—
    - (A) making available information to lending agencies and other appropriate authorities regarding the availability and benefits of energy efficient [mortgages](/usc/12/1707.md?p=a);
    - (B) requiring [mortgagees](/usc/12/1707.md?p=b) and designated lending authorities to provide written notice of the availability and benefits of the pilot program to [mortgagors](/usc/12/1707.md?p=b) applying for financing in those [States](/usc/12/1707.md?p=d) designated by the [Secretary](/usc/12/1715z–22a.md?p=4) as participating under the pilot program; and
    - (C) requiring each applicant for a [mortgage](/usc/12/1707.md?p=a) insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] in those [States](/usc/12/1707.md?p=d) participating under the pilot program to sign a statement that such applicant has been informed of the program requirements and understands the benefits of energy efficient [mortgages](/usc/12/1707.md?p=a).
  - (5) **Training program—** Not later than 9 months after October 24, 1992, the [Secretary](/usc/12/1715z–22a.md?p=4), in consultation with the [Secretary](/usc/12/1715z–22a.md?p=4) of Energy, shall establish and implement a program for training personnel at relevant lending agencies, [real estate](/usc/12/1707.md?p=g) companies, and other appropriate organizations regarding the benefits of energy efficient [mortgages](/usc/12/1707.md?p=a) and the operation of the pilot program under this subsection.
  - (6) **Report—** Not later than 18 months after October 24, 1992, the [Secretary](/usc/12/1715z–22a.md?p=4) shall prepare and submit a report to the Congress describing the effectiveness and implementation of the energy efficient [mortgage](/usc/12/1707.md?p=a) pilot program as described under this subsection, and assessing the potential for expanding the pilot program nationwide.
- (b) **Expansion of program—** Not later than the expiration of the 2-year period beginning on the date of the implementation of the energy efficient [mortgage](/usc/12/1707.md?p=a) pilot program under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall expand the pilot program on a nationwide basis and shall expand the program to include new residential housing, unless the [Secretary](/usc/12/1715z–22a.md?p=4) determines that either such expansion would not be practicable in which case the [Secretary](/usc/12/1715z–22a.md?p=4) shall submit to the Congress, before the expiration of such period, a report explaining why either expansion would not be practicable.
- (c) **Definitions—** For purposes of this section:
  - (1) The term “base loan” means any [mortgage](/usc/12/1707.md?p=a) loan for a residential building eligible for insurance under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] or [title 38](/usc/38.md) that does not include the cost of cost-effective energy improvements.
  - (2) The term “cost-effective” means, with respect to energy efficiency improvements to a residential building, improvements that result in the total present value cost of the improvements (including any maintenance and repair expenses) being less than the total present value of the energy saved over the useful life of the improvement, when 100 percent of the cost of improvements is added to the base loan. For purposes of this paragraph, savings and cost-effectiveness shall be determined pursuant to a home energy rating report sufficient for purposes of the Federal National [Mortgage](/usc/12/1707.md?p=a) Association and the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation, or by other technically accurate methods.
  - (3) The term “energy efficient [mortgage](/usc/12/1707.md?p=a)” means a [mortgage](/usc/12/1707.md?p=a) on a residential building that recognizes the energy savings of a home that has cost-effective energy saving construction or improvements (including solar water heaters, solar-assisted air conditioners and ventilators, super-insulation, and insulating glass and film) and that has the effect of not disqualifying a borrower who, but for the expenditures on energy saving construction or improvements, would otherwise have qualified for a base loan.
  - (4) The term “residential building” means any attached or unattached single family residence.
- (d) **Rule of construction—** This section may not be construed to affect any other programs of the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development for energy-efficient [mortgages](/usc/12/1707.md?p=a). The pilot program carried out under this section shall not replace or result in the termination of such other programs.
- (e) **Regulations—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall issue any regulations necessary to carry out this section not later than the expiration of the 180-day period beginning on October 24, 1992. The regulations shall be issued after notice and opportunity for public comment pursuant to the provisions of [section 553 of title 5](/usc/5/553.md) (notwithstanding subsections [(a)(2)](/usc/5/553.md?p=a-2), [(b)(B)](/usc/5/553.md?p=b-B), and [(d)(3)](/usc/5/553.md?p=d-3) of such section).
- (f) **Authorization of appropriations—** There are authorized to be appropriated such sums as may be necessary to carry out this section.

## Footnotes

[^1]: So in original. There probably should be an additional closing parenthesis.

## Source credit

(Pub. L. 102–486, title I, § 106, Oct. 24, 1992, 106 Stat. 2792; Pub. L. 110–289, div. B, title I, § 2123, July 30, 2008, 122 Stat. 2839.)

## Notes

### Editorial Notes

### References in Text

The National Housing Act, referred to in subsecs. (a)(2)(A), (D), (3)(A), (4)(C), and (c)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the Act is classified generally to subchapter II (§ 1707 et seq.) of this chapter. For complete classification of this Act to the Code, see section 1701 of this title and Tables.

### Codification

Section was enacted as part of the Energy Policy Act of 1992, and not as part of the National Housing Act which comprises this chapter.

Section was formerly classified as a note under section 12712 of Title 42, The Public Health and Welfare.

### Amendments

2008—Subsec. (a)(2)(C). Pub. L. 110–289, § 2123(1), amended subpar. (C) generally. Prior to amendment, text read as follows: “The cost of cost-effective energy efficiency improvements shall not exceed the greater of—

“(i) 5 percent of the property value (not to exceed $8,000); or

“(ii) $4,000.”

Subsec. (a)(2)(D). Pub. L. 110–289, § 2123(2), added subpar. (D).

### Statutory Notes and Related Subsidiaries

### Similar Provisions

Similar provisions were contained in Pub. L. 102–550, title V, § 513, Oct. 28, 1992, 106 Stat. 3786.