Perspectives Blog

A New Milestone in Fannie Mae’s ESG Journey

September 10, 2020
Renee Schultz

Senior Vice President for Capital Markets

We recently completed the issuance of our sixth “green” single-family mortgage-backed security transaction backed by loans financing newly constructed, energy efficient homes. 

Our recent transaction totaled $7.9 million and it is the latest in a series, the first of which was issued on April 22 to commemorate the 50th anniversary of Earth Day. In total, we have issued $50 million in Single-Family Green MBS. Our Single-Family Green MBS deals have ranged in size from $6 million to $11.5 million.

This offering is the latest step in a journey – begun a decade ago when we introduced green financing to the multifamily market – that increasingly ties Fannie Mae’s business activities to measurable Environmental, Social and Governance (ESG) outcomes.

Fannie Mae’s Single-Family Green MBS transactions are the latest innovation that is part of Fannie Mae’s broader Green Bond program. It comes to market just as our Multifamily Green Financing Business turns a decade old. Our Multifamily business has issued $75 billion of green MBS, making us the largest green bond issuer worldwide. Our green bond program, composed of the established multifamily offerings and its newer single-family sibling, is part of our ongoing effort to promote and expand the growth of an active green bond market. As models of positive impact and transparency, these programs are an important part of our corporate ESG framework. 

We expect our Single-Family Green Mortgage-Backed Securities will continue to grow to meet investor demand for securities tied directly to improved energy efficiency in housing and strengthen Fannie Mae’s leadership in green financing globally.

Third-party validation is essential to this growth. In fact, this summer our Single-Family Green Mortgage Backed Security program received a "Light Green" Second Opinion from CICERO Shades of Green, a leading global provider of green ratings for bonds. This Second Opinion is important because it is an independent, research-based evaluation of green bond investment frameworks to determine the environment robustness of green bonds. Also, the opinion offers investors better insight into the environmental quality of green bonds.

The Single-Family Green MBS transactions brought to market since April are backed by newly constructed single-family residential homes with ENERGY STAR® certifications that meet or exceed the national program requirements for ENERGY STAR 3.0 Certified Homes. Future Single-Family Green MBS issuances may include other energy-efficient certifications of newly constructed homes that meet or exceed those of ENERGY STAR 3.0 Certified Homes. ENERGY STAR 3.0 Certified Homes are on average 20% more efficient than single-family homes built to code. 

The mortgage loans in our first six transactions were originated by DHI Mortgage, the mortgage finance arm of home builder D.R. Horton Inc., and Eagle Home Mortgage, the mortgage finance arm of home builder Lennar Corp. We are working to expand our program to bring on additional lenders.

As the world’s largest green bond issuer since 2017, Fannie Mae has shown its dedication to improving environmental sustainability in the homes we finance. Every year since 2015, we have received the EPA’s ENERGY STAR Partner of the Year Award.

We believe that environmentally responsible business practices benefit our company, customers, borrowers, the communities we serve, and our planet. While our Single-Family Green MBS program may be starting small, a decade of successful green financing experience at Fannie Mae shows us that even the most humble saplings, if tended with care and stewardship, can grow into a forest.

Renee Schultz
Senior Vice President for Capital Markets

September 10, 2020