WASHINGTON, DC—For years, the financial case for sustainability has been strictly one of common sense -- but backed up by plenty of rigorous financial studies: by building and maintaining sustainable buildings, the owners and tenants save energy and maintenance costs. Lately, though, the financial incentives have become more direct, thanks to Fannie Mae.

The GSE began offering favorable financing terms for sustainable projects last month and recently closed the first Fannie Mae M-PIRE (Multifamily Property improvements to Reduce Energy) loan for a Bronx rental building

Not surprisingly, the offer of better financing has been of great interest to the community, Chrissa Pagitsas, the director of Fannie Mae's Multifamily Green Initiative, tells GlobeSt.com. "We have seen an immediate market response to it," she says.

The program, announced last month, recognizes eight certifications including the USGBC's LEED program. For qualifying properties, Fannie Mae is offering a 10 basis point interest rate reduction, to 3.9% from 4% on loans for multifamily refinance, acquisition or supplemental mortgage loan. So, on a $10 million dollar loan amortizing over 30 years, the owner would save $95,000 in interest payments over a 10-year term.

Last month it also closed for Greystone the first Fannie Mae M-PIRE loan for $865,000 loan.

The M-PIRE pilot launched in fall of 2013 with three DUS lenders--Wells Fargo, Greystone and Beech Street. The underwriting criteria allows for potential energy savings to be included in the loan, which increases the loan amount, which then funds the improvements in the property. Energy and water costs can account for as much as 20-35% of a property's operating expenses, Fannie Mae notes.

The Fannie Mae M-PIRE mortgage product is available to affordable and market rate cooperative and conventional rental housing owners in the five boroughs of New York City.

Fannie Mae has been investigating a national product based on the M-PIRE model as well.

Meanwhile, the GSE continues to push its other green initiatives into the multifamily community. Last November the US Environmental Protection Agency announced that 17 apartment and condo buildings were the first existing multifamily housing properties to earn the new ENERGY STAR multifamily certification for superior energy performance. The EPA and Fannie Mae had worked on that designation.

Fannie Mae also continues to add to the industry's knowledge base about the advantages of green. Last year, for example, it reported that there is a huge gap between the operating costs of energy efficient and inefficient buildings, with the least efficient properties spending $165,000 more in annual energy costs.