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Commercial Mortgages: Energy Factors and Default Risk

The commercial mortgage loan process involves high stakes and energy efficiency is generally not a motivating factor for lenders, with current mortgage practices not fully accounting for the risks and opportunities associated with energy use of buildings. After a scoping study and stakeholder engagements with lenders and building owners, Lawrence Berkeley National Lab and Haas School of Business identified several potential inventions to properly account for energy factors in the lending process. Here, they demonstrated how and where energy factors can "move the needle" on key underwriting metrics such as default risk, NOI, and economic or functional obsolescence. 

Presenters: Paul Matthew, Lawrence Berkeley National Laboratory; Nancy Wallace, Haas School of Business UC Berkeley