The GREEN Appraisals Act of 2025 requires lenders and appraisers to consider energy efficiency and renewable energy features when evaluating properties for covered mortgage loans, aiming to provide borrowers with more accurate property valuations.
Sean Casten
Representative
IL-6
The GREEN Appraisals Act of 2025 requires lenders to inform borrowers of their right to submit an energy report for consideration during home appraisals, and it mandates that qualified appraisers consider these reports when assessing property value for covered loans. Lenders must provide appraisers with the energy report (with borrower consent) and ensure their systems can handle appraisals that consider it. The Act also directs covered agencies to issue guidance for lenders on implementing these changes and to establish an advisory committee of stakeholders.
New Bill Requires Home Appraisals to Factor In Energy Efficiency Reports for Federal Loans
The GREEN Appraisals Act of 2025 aims to weave energy efficiency and renewable energy features into the standard home appraisal process for federally-backed mortgages. Essentially, it sets up a system where things like solar panels or high-efficiency HVAC systems, detailed in an 'energy report,' must be considered by appraisers when determining a property's value for loans involving agencies like the FHA, VA, or Fannie Mae and Freddie Mac.
Your Home's Energy Scorecard
So, what's changing for homebuyers and owners? Lenders will have to give borrowers a heads-up, a written disclosure stating they can submit an 'energy report' – think of it like a detailed analysis of a home's energy features (like a HERS rating) and potential savings – for the appraiser to review. Borrowers can also request such a report. The bill requires appraisers handling these loans to be 'qualified,' meaning they've taken specific training (at least 7 hours plus an exam) on how to evaluate these energy reports. The disclosure also clarifies that considering this report could swing the final appraised value up, down, or keep it the same, potentially impacting loan approval.
How Appraisals Might Change
Under this act, if a borrower consents, the lender must provide the energy report to the qualified appraiser. The appraiser is then required to consider it, looking at energy efficiency features, estimated savings, consumption compared to similar homes, and whether these factors affect market value (Sec. 2). Lenders can't reject an appraisal just because it factored in an energy report. They also need to have systems ready to handle these updated appraisals by March 1, 2026, and must give borrowers a free copy of the energy report if requested.
Real-World Ripples: Costs and Benefits
This could be good news if you've invested in making your home energy-efficient – the appraisal might finally reflect those upgrades, potentially boosting your home's value. However, it cuts both ways. Homes without significant energy upgrades might not see a benefit, or could even compare less favorably. There are also practical hurdles. Lenders face costs to update their underwriting systems within two years of enactment to align with new federal guidance. Appraisers need extra training. While the goal is consistency, how effectively appraisers translate an energy report into dollar value remains to be seen, and there's a chance borrowers could see slightly higher appraisal fees to cover the extra analysis. Federal agencies like FHA and VA get the task of writing the rulebook and setting up an advisory committee, but ensuring everyone interprets the guidance the same way across the board will be key.