The initial launch illuminated the challenge of presenting a program whose intricacies can be intimidat- ing and painful, Pagitsas said. “Nobody wants to get a root canal right?” she said. “But energy effi- ciency financing is pretty much akin to getting a root canal. Historically, it has been a separate process. It's standalone and it's different.” Pagitsas said she focused on three “Ps” to simplify the pitch: The product, the people, and the process. She made it a goal for her team and Fannie Mae’s network of 25 multi- family lenders to be able to describe the program in about 30 seconds, which helped simplify its value to borrowers. Pagitsas wanted to cre- ate a straightforward and attractive mortgage product that delivered val- ue to borrowers and to society while benefitting the environment. While the mindset shift was helpful, the program’s adoption by lenders and borrowers initially faced headwinds thanks to eco- nomic uncertainty amid the finan- cial crisis. “New products were not a top priority — it was about steering the ship soundly and safely,” Pagit- sas recalled. “New concepts were questioned.” To further illustrate her point to her team and Fannie Mae’s network of 25 multifamily lenders, Pagit- sas used an example: If a property owner were to install something like a new heating, ventilation, and air conditioning system for an apart- ment building, it can not only in- crease the value of a property, it can also reduce its operating expenses and credit risk. It also can help ten- ants by reducing their energy bills as well as aid the environment by curbing water use and greenhouse gas emissions that contribute to human-caused climate change.
Source: Fannie Mae Green Bond Impact Report: 2012-2018 (year-end)
When Pagitsas used that ap- proach, she said people began to buy into the idea. “When I explained it through that lens, the understanding started to grow,” Pagitsas said. “It’s not green paint. It’s actual capital that’s working to do something of value, which is creating better cash-flow- ing properties that reduce cost burdens on American families. By framing the benefits internally to colleagues through that lens, and then talking about it that way to our lenders, who hadn’t thought of this stuff before, they were able to see the value and sell it to borrowers.” BRANCHING OUT IN IMPACT It took several years for Fannie Mae’s Multifamily Green Financing Business to take root, according to the organization’s data. Between 2012 and 2015, Fannie Mae generat- ed only 4.7 percent — or $245 mil- lion — of its total securities issued
through year-end 2018. But thanks to Pagitsas and her team’s determination, Fannie Mae stayed the course with its two, green mortgage-backed-securities products. Green Rewards — of which Fannie Mae has issued a total of $42.4 billion in financing through 2018 — supports the transition of existing rental housing to a low-carbon economy through investment in energy and water efficiency retrofits and renewable energy generation. The Green Building Certification — of which Fannie Mae has issued a total $9.3 billion in financing through 2018 — may be newly con- structed or retrofitted housing if it meets specific criteria. mortgage backed securities and an additional $6.1 billion in green structured securities. Those whop- ping totals made Fannie Mae the largest green bond issuer in the world in 2017 and 2018, according Combined, Fannie Mae has issued $51.7 billion in green
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