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Keeping People in Their Homes: Fannie Mae's National Energy Efficiency Research

Fannie Mae's National Energy Efficiency Research
Change in FICO scores between homes with Nest E Thermostats installed versus homes without during a 12-month period

Fannie Mae has been looking for innovative ways to keep people in their homes. From educational programs to homeowner friendly financial products and low-interest loans, they have been aggressively looking for ways to help homeowners navigate the sometimes turbulent financial waters. In the last few years those programs have begun to look at energy efficiency as one way to reduce a homeowner's monthly financial burden. And in 2018, in partnership with MKThink and Google, they launched a national consumer energy behavior study in 5 US markets to assess whether or not smart thermostats could improve homeowner financial health.

The following includes excerpts from the report published by MKThink and Fannie Mae documenting the results of the 2-year research effort which can be downloaded from Fannie Mae's website here.



"In the United States, approximately 48 million people are at or below the poverty line and may be suffering from energy poverty, which is defined as “spending about 10% or more of income on energy-related expenses”. This disparity is particularly prevalent among people who are below 50% of the Federal poverty level. This group will:

  • Spend, on average across the nation, 7% of their income on utility bills.

  • Spend, for some, more than 20% of their income on home energy bills.

  • Spend as much as 50% or more of their income on energy in states such as Maine and North Dakota.

Separate research has shown that using smart thermostat technology in one’s home can decrease energy use associated with Heating, Ventilation and Air-Conditioning (HVAC) by 10-12% on average, and in some cases up to 20%. For lower-income households, an Apex Analytics study (2013-2014) found that:

“The lowest income category [<$50,000 annual income], which tended to have more manufactured homes and less education, had the largest percent savings of any subgroup that the team analyzed. This income category also had very large and significant differences in savings from the other two income categories.”

Thus, smart thermostat technology can have a substantial impact on energy savings, especially for lower-income households.

Building on these findings, this study aims to understand if there is a correlation between Nest smart thermostat usage for very low-, low- and moderate-income homeowners and an improvement in financial health."


Study Questions

Study Questions

Fannie Mae proposed, as part of its Underserved Markets Plans to FHFA in 2017, to study the impact of smart thermostats on homeowner energy and financial savings. If smart thermostats could save enough energy and provide enough financial benefit, Fannie Mae could have a basis for including smart energy products, such as smart thermostats, in new home loan products to make housing more affordable.

The study focuses on the impact of smart thermostats on financial health as measured by FICO scores. Initially, the proposed study considered additional financial health indicators, including delinquency rates, HELOC utilization, and revolving credit utilization, but these were ultimately not examined.

The research questions guiding the research were as follows:

  1. Do smart thermostats have an impact on homeowner Financial Health?

  2. Does that financial impact vary by geography (climate), financial position (income), or when the thermostat was installed (calendar month)?

  3. Do smart thermostats have an impact on homeowner perceptions of financial and/or energy savings and related behaviors?


Study Design


Fannie Mae hired the San Francisco-based, built-environment innovation and strategy firm, MKThink, to execute the study in partnership with Google Nest and Motili. Google Nest donated the smart home thermostats and Motili provided the delivery and installation of those devices.

Fannie Mae designed the study to be a randomized, controlled study of very low-, low-, and moderate-income (< 100% Average Median Income, or AMI) HomeReady home loan borrowers. Some of the borrowers received the opportunity to participate in a national energy-savings campaign featuring a Nest E Smart home thermostat installation. Others did not receive the opportunity and were instead included in the randomized, control group.

The Nest thermostats were installed between August 2018 and April of 2019. Each month, starting from August 2018, credit bureau data (CBD) was collected by Fannie Mae on selected research segments, which included month of year, AMI, and Metropolitan Statistical Area (MSA) as well as loan-level FICO differences. Additionally, quarterly, surveys were sent out to the treatment group to understand the self-reported impact of the thermostats on their energy and financial perceptions and behaviors.

The study estimates the Intent to Treat (ITT) effect of offering a free Nest E thermostat on FICO scores by comparing the Offer group as a whole to the Control group. In this way, we avoid the pitfall of comparing outcomes across groups where households may have systematically “self-selected” in, on the basis of traits that may themselves be driving FICO migration. Where we find a significant ITT effect, we rescale the ITT estimate to infer the effect of the Treatment on the Treated (TOT); i.e., effect of the Nest E among those who accepted the offer. Where the ITT effect was not significant, no TOT analysis was conducted.

To maintain privacy and anonymity, no identifiable loan-level, financial information was ever shared and no study segment had fewer than fifteen loans.


Fannie Mae started with a goal of treating 1,000 HomeReady borrowers across 5 US markets. Over 15,000 borrowers were evaluated and 1,000 were randomly set aside for the Control group (200 per MSA). Of that group, 757 were used in the final analysis.

The remaining borrowers were included in outreach and referred to as the Offer group. This group was given the chance to join a National Energy Savings Study in which they could have a Nest E thermostat professionally installed free-of-charge for both the device and installation. Fannie Mae conducted three waves of outreach over nine months, leading to 578 confirmed members of the treatment group referred to in this study as Accepters. Those that did not opt-in to the study and did not have a Nest E thermostat installed were called Decliners. Both the Accepters and Decliners make up the Offer group as detailed in the table below.

Finally, there was attrition of 0-3% of the FICO records monthly during the study. All groups were affected but by no more than 20% in total.

FICO Records


Summary Results

Overall Change in FICO Records


Download the Summary Report

[click the image below]

Smart Thermostat User Behavior Study


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