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Environment Systems and Decisions

, Volume 35, Issue 1, pp 157–168 | Cite as

Energy-efficient homes and mortgage risk: crossing the chasm at last?

  • Andrew R. Sanderford
  • George A. Overstreet
  • Peter A. Beling
  • Kanshukan Rajaratnam
Article

Abstract

A topic of recent interest is energy-efficient houses. In the last twenty years, the US market has witnessed growth in the adoption of energy efficiency via various building technologies, design schemes, and eco-labels by developers, homebuilders, and homebuyers. Although housing and real estate scholars have begun explorations of the factors associated with the diffusion of energy efficiency, the subject has yet to be explored from the perspective of a critical stakeholder—the mortgage lender. This paper distinguishes itself from the extant literature in several ways. First, using a diffusion of innovation intellectual framework, the authors explore the role of the lender as an innovation gatekeeper. Second, as a review article, the authors summarize several key papers from the underwriting, credit scoring, and finance literature to help frame a number of market frictions that could mute further diffusion of energy efficiency in housing. Finally, the authors analyze these frictions and offer both market and public policy suggestions that may help overcome these frictions and increase opportunities for both private competitive advantage and market transparency.

Keywords

Credit scoring Mortgage loans Risk management  OR in environment and climate change 

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Andrew R. Sanderford
    • 1
  • George A. Overstreet
    • 2
  • Peter A. Beling
    • 3
  • Kanshukan Rajaratnam
    • 4
  1. 1.College of Architecture, Planning, and Landscape ArchitectureUniversity of ArizonaTucsonUSA
  2. 2.McIntire School of CommerceUniversity of VirginiaCharlottesvilleUSA
  3. 3.Department of Systems and Information EngineeringUniversity of VirginiaCharlottesvilleUSA
  4. 4.Department of Finance and Tax and The African Collaboration for Quantitative Finance and Risk ResearchUniversity of Cape TownRondeboschSouth Africa

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