Thought you could get away with leaving all the lights on or running appliances when you don’t need to? Think again. A recent study by the University of North Carolina at Chapel Hill’s Center for Community Capital and the Institute for Market Transformation (IMT), a nonprofit organization dedicated to promoting energy efficiency, has determined that homeowners who are not conscious of energy saving practices are one-third more likely to default on their mortgages. The study included 71,000 homes from 38 states and the District of Columbia. The sample was restricted to single-family, owner-occupied houses whose loans originated during 2002-2012 and were used for purchase only. About 35 percent of the houses in the sample were ENERGY STAR-rated for efficiency, with the rest forming a control group. The study determined that the odds of a mortgage default on an ENERGY STAR residence were one-third lower than those of a home in the control group.

According to Cliff Majersik, executive director of IMT, “It stands to reason that energy-efficient homes should have a lower default rate, because the owners of these homes save money on their utility bills, and they can put that money toward their mortgage payments.”

The authors believe that lenders should require an energy audit as part of the mortgage underwriting process, and that federal housing agencies could promote underwriting flexibility for mortgages on energy-efficient homes. They will recommend that Congress consider their findings as they create legislation to improve the accuracy of mortgage underwriting.

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