Fannie Mae hit a major milestone in 2021 as it has now issued $100 billion in green, multifamily mortgage-backed securities (MBS).
The GSE began issuing the MBS 10 years ago to support sustainable and affordable housing for residents in properties financed through its Green Building Certification program and Green Rewards, the company’s green property improvement program. The securities support the housing market by financing homes and communities that meet energy-efficiency and water-saving benchmarks.
"More than a decade ago, we pioneered green housing mortgage finance to make multifamily housing more energy efficient, resulting in tangible and meaningful benefits for building owners and residents," said Michele Evans, Executive VP, Multifamily, Fannie Mae. "Fannie Mae's Multifamily green financing has helped preserve and improve existing housing stock, supporting our efforts to bolster the nation's supply of housing affordable to low- and moderate-income households. As one of the largest issuers of green bonds worldwide, we have fostered a liquid market to support additional green financing and have developed a template for the multifamily marketplace that has attracted investors with its rigor and transparency. We want to thank and acknowledge the support of our DUS lender partners who worked closely with us to introduce our innovative green financing to the marketplace and helped us attain this notable milestone."
Beginning in 2020, Fannie Mae created a new line of green financing that not only backed multifamily units, but also newly constructed single-family residential homes with a green building certification or that exceed the Energy Star 3.0 certification requirements.
Fannie Mae estimates that their bonds have contributed to saving 9.5 billion BTUs of energy, 8.5 billion gallons of water, and 634,000 tons of carbon dioxide emissions through the construction and renovation of 872,000 properties. Further estimates indicate that these measures save the average borrower $843 per year in utility costs resulting in a economic return of $2.83 for every dollar spent.
"This $100 billion milestone reflects Fannie Mae's commitment to creating positive impact and aligning our business activities with measurable environmental, social, and governance (ESG) outcomes," said Laurel Davis, Senior VP and Head of Environment, Social, and Governance, Fannie Mae. "During the last 10 years, we have leveraged our position in the marketplace to power substantial growth of an active, global green bond market that supports more affordable and sustainable communities and reduces the environmental impact of the housing sector. We have built on our experience in the multifamily market by recently introducing green finance to the single-family market to help reduce housing's overall carbon footprint and meet new market demand."
“Given the company's position at the crossroads of capital markets and the housing market, Fannie Mae is working to accelerate the greening of U.S. housing supply and help reduce the carbon footprint of housing. Fannie Mae provides an opportunity for investors to support green housing finance by enabling them to invest in MBS backed by properties that meet energy- and/or water-efficiency standards. The company's rigorous criteria for energy and water efficiency have set industry standards to transparently project environmental, social, and economic impact and support investor decision-making.”
For more on Fannie Mae’s green bonds, including program terms and how to apply, click here.