[Photo by Christof Demont-Heinrich]

To choose an environmentally responsible mortgage, or not to?

It can be difficult to find a bank or lender that doesn’t use your money to invest in fossil fuels. [Flickr Creative Commons Photo by Visible Hand]
editor's blog logoI am a lifelong and committed environmental activist. And I have done many different things to both reduce my environmental impact and to raise environmental awareness and to effect political change to protect the environment — and human health.

These range from creating this web site more than a decade ago to driving an electric car for more than six years and playing a big direct role in getting a 5.5 kW home solar system installed on an Aurora, Colo. home I no longer own to getting a 19.7 kW system installed in the HOA community I now live in to eating very little meat and actively donating money to various environmental political organizations and causes.

There is always more I — and you, and all of us — could be doing to help keep our fragile, wonderful, amazing life support system known as Planet Earth running in a way that ensures living beings, including humans, are able to survive here for a long time.

One of the things we can do is to invest our money in socially and environmentally responsible ways, with socially and environmentally responsible companies and banks.

I am a bit ashamed to say that my current mortgage for my townhome here in Highline Crossing Cohousing in Littleton, Colo. is financed through Chase, which has one of the worst records on environmentally responsible lending and investing. In fact, JP Morgan Chase is exactly the OPPOSITE of environmentally responsible in how it handles the money it is getting from me for my monthly mortgage payment as well as that of tens of millions of other Americans.

According to the Banking on Climate Change 2020 report, across the past four years Chase has put a total of $268 billion into coal, oil and gas firms, making it the VERY WORST bank when measured along those lines!

Sadly, Chase has PLENTY of company: The past four years have seen the world’s top 35 private financial corporations sink $2.7 trillion — yes that’s TRILLION — into fossil fuels!

The 2020 Banking on Climate on Climate Change found that 35 of the world’s top banks loaned $2.7 trillion to fossil fuel companies over the past four years. 😔

This at a time when our planet is on the verge of a truly colossal environmental collapse fueled by the burning of fossil fuels. This collapse will mean profound suffering for billions of present, and future, humans and other living beings on earth, and death for untold numbers of humans AND other living beings on earth as well 😞.

Needless to say, I don’t feel very good about sending $1,300 to Chase every month knowing that my money is being sunk into an industry that I despise and abhor and which I would like to see erased off the face of the earth, ASAP!

I ended up with Chase being my mortgage holder like many people do: My smaller mortgage company sold my mortgage to Chase about one year after I bought my 1,300-square foot townhome here in Highline Crossing.

I have to concede that I had an opportunity to leave Chase in October when, due to what were then historically low interest rates, I decided to refinance. I stuck with Chase mostly because I was lazy: Chase contacted me to ask me if I wanted to refinance. I said yes, given that doing so cut $250 per month off of my monthly payments.

Saving $250 per month was BIG for me. I was spending 45% of my monthly income on housing (I also have to pay a $343 HOA fee here at Highline Crossing).

Now, I am down to 38% of my monthly income going to my housing, which is still too high, but lower than before. Part of the reason for my high housing costs is that I chose to live in cohousing because I wanted to live in a community-based place where I know my neighbors and we do things together, which we did do — or we did do, until the pandemic hit 🙁 The other reason for my high housing costs is the fact that the Denver-Boulder-Fort Collins-Colorado-Springs metro area has seen skyrocketing housing costs across the past six years.

So, I re-financed with Chase in October 2019 thinking interest rates would not go much lower. At that point, I had no idea that a global pandemic would hit and tank the economy, further forcing down interest rates.

Now, interest rates are 1% less than they were in October 2019 — or even greater than 1% less — and less than the current 3.875% rate I am paying Chase right now. This time, I am 99.9% they will NOT go lower.

Amalgamated Bank won’t invest money in fossil fuel companies and has invested $700 million in renewable energy — however, it will only hold on to your mortgage and not sell it to another bank if you pay a higher rate on that mortgage.

So, it’s time to refinance again!

Only, I do not want my money to go to one of the 35 big banks that are sinking TRILLIONS of dollars into the fossil fuel industries that are literally destroying our future on earth!

So, I spent some time online researching environmentally friendly lenders and banks. And I came across one of the ONLY national banks in the US that follows environmentally responsible lending and investing practices: Amalgamated Bank, which started on the East Coast, but now has a national presence, although nothing near the presence of Chase, or Bank of America, or Wells Fargo, etc.

Amalgamated Bank is a so-called B Corporation Certified company, meaning it has met certain social and environmental responsibility standards in terms of its lending, business and investment practices.

Among other things, Amalgamated Bank does not invest in, or lend to, fossil fuel companies, it pays to get 100% of its energy to run its offices from renewable energy sources, albeit via credits, or indirectly, and it has lent more than $700 million to renewable energy companies, projects, etc. It is also dedicated to social justice issues such as Black Lives Matters and to making sure that its own workforce is racially diverse.

That all sounds great!

But there’s a catch, at least on Amalgamated Bank’s mortgages: If you want to guarantee that Amalgamated will not sell the mortgage you establish with them to another financial company, including, potentially to Chase or Bank of America or other huge banks that invest BILLIONS in fossil fuel companies, you must establish a so-called “portfolio loan” with Amalgamated. And that means paying 1% more in interest.

Currently, Amalgamated is offering a rate of 2.625% on a fixed 30-year mortgage IF you are willing to let them potentially sell your mortgage to someone else in the future OR a rate of 3.625% on a fixed 30-year mortgage via a portfolio loan, which would guarantee that your mortgage stays with them.

For me, this means roughly a difference of $150 per month. That is, it will cost me roughly $150 more per month to establish a “portfolio loan” at 3.625% than it would to establish a non-portfolio loan at 2.625%.

In addition, while I could see a savings of about $200 per month over my current mortgage payments based on my current 3.875% rate IF I went with the non-portfolio loan and a MUCH lower interest rate, my monthly savings at the 3.625% rate would be only $50.

My townhome in Highline Crossing Cohousing. [Photo by Christof Demont-Heinrich]
None of this is including possible closing costs, etc. So, I might not save anything at all per month if I move from Chase at 3.875% to Amalgamated and its portfolio loan at 3.625%. BUT I would have the peace of mind that my $1,300 monthly payment would not be going to prop up fossil fuels.

So, basically, this is where the rubber hits the proverbial road — or does not.

Not an easy decision, especially for someone on a not very large journalism professor’s salary and in a post-divorce, single-income household.

I COULD pledge to spend $100 of the $150 in savings I would see on green causes if I did not go with the higher interest Almalgamated Bank “portfolio” loan and still save $50 more per month personally than if I chose the portfolio loan.

Would that be more effective/better than paying the extra $150 per month to make sure my loan stays with Amalgamated and is not potentially sunk into fossil fuels by a future bank that buys my loan from Amalgamated Bank?

I am not sure. I am not an expert on this sort of comparative analysis.

I DID open a credit card with Amalgamated Bank and I will use this card instead of my Bank of America credit card as soon as I receive it, and I will cut up my Bank of America card. I am also opening an online banking account with Amalgamated in an effort to support their social and environmental justice grounded business.

But, of course, my single BIGGEST expenditure is my mortgage. That is where, in the end, I should be making sure to put my money where my mouth is, shouldn’t it be?

I don’t know — what would you do, and why?