Eco-Home Owners Lose Financing for Going Green
To make the home solid, the whole thing is covered a layer of concrete, clay and stucco. "We lovingly call it the trash house," Ms. Hagar said.
The Hagars aren't alone. From straw bale to shipping container houses, radical eco-architects are increasingly exploring new environmentally-friendly materials for home construction. The only problem is that banks have yet to catch up.
"If you wanted to, say, use hay bale as insulation, you can do that without any problems as long as you're meeting building code," explains Jeffrey Fritz, an eco-broker with Green City-Coldwell Banker in Los Angeles. "What becomes challenging is when a home doesn't meet building standards and there's nothing similar close by. That presents big problems for a lender, insurer and an appraiser since there's nothing to price compare it to."
Fritz says that for those seeking to build a home made from alternative materials, the first step is to make sure that the structure is up to code. To do that, homeowners need to work hand-in-hand with their local government, which may present a challenge in and of itself."
Different places vary on how much they'll work with you," Fritz says. "If you want to make a home out of environmentally conscious wood and the rest out of tires or clay, that's going to be a lot easier to get permits for than a house made entirely out of alternative materials."
With permits in place, swaying a lender to back your endeavor will be much easier. Provided that the home is proven to be structurally sound, Fritz says that lenders can't reject clients on the basis of the material they built with alone. They can, however, reject the client if an appraiser can't assess the value of the home.
"That's going to be your other major hurdle," says Fritz. "If there's nothing like the home you're making out there, it's extremely difficult to set a price. It's a lot easier if you have an established home and you're putting on an addition made out of alternative materials."
That hasn't stopped builders in the past. Earthship Biotecture, a green building firm based in Taos, N. M., specializes in creating carbon-neutral structures that require no fossil fuels, use no water and no municipal utilities.Made predominantly from trash-everything from aluminum cans and glass bottles to old electrical appliances-the buildings virtually eliminate utility bills and actively reduce trash that would normally get thrown into landfills.
"It's challenging to get financing because sometimes there aren't enough comparable buildings in the area," says Earthship spokesperson Kirsten Jacobsen. "Thankfully, there are some lenders who are doing green financing."
While several larger lenders including Wells Fargo have green lending departments, most cater to clients with structures made from earth-friendly versions of traditional materials. For everyone else, the choice is to either build in a part of the country like New Mexico that has a significant number of alternative homes or settle for something a little less radical.
"It's something that's growing every day," says Jacobsen, "but for right now, the financing part is a challenge."
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