Presentation on theme: "POWERSAVER: A NEW OLD EE LOAN PROGRAM Matthew H. Brown Principal July 22, 2014."— Presentation transcript:
POWERSAVER: A NEW OLD EE LOAN PROGRAM Matthew H. Brown Principal July 22, 2014
P OWER S AVER : A R EMINDER OF W HAT I T IS 2 PowerSaver is a brand name for three kinds of loans for homeowners. 1.An Unsecured Loan 1.A 2 nd Mortgage Secured Loan 3.A 1 st Mortgage Secured Loan High-single-digit rates, fast approvals Mid-single-digit rates, to $25k, 2-3 week approvals Low-single-digit rates, at least $3,500 in energy improvements, very high loan limits, 2-3 week approvals What is Unique About PowerSaver? 1.It’s the only loan program that covers three different loan types in a single product. (Unsecured plus 2 kinds of secured loans). 1.It comes with federal loan insurance (no need for states or other sponsors to provide separate credit enhancements). 3.It comes with its own capital sources. (no need to provide capital).
P OWER S AVER : I T ’ S E ASY, I T ’ S A LL -E NCOMPASSING …B UT … 3 PowerSaver had a rough start and got a reputation as a good idea, but slow, clunky, and probably not worth the time. Why? -- It used to be slow and clunky and might not have been worth the time. The early versions of PowerSaver relied primarily on PowerSaver 2 nd lien secured mortgages. This implied: a.2-3 week origination times b.Mid-high single digit rates c.Just one, national investor Yet almost any unsecured loan program could match those interest rates, with lightning-speed origination times. Important Note: You’ll hear today about one state-based Power Saver program that DOES work well. But with a unique investor.
P OWER S AVER : I T ’ S E ASY, I T ’ S A LL -E NCOMPASSING …B UT … 4 PowerSaver also had very few investors, leading to a limited choice and limited flexibility. No investors = No unsecured loan Fannie offered unlimited capital, and government credibility. But Fannie’s requirements as to what loans it would buy were stringent. Lack of 1 st mortgage product kept loan caps low ($25,000 for the 2 nd ) and prevented borrowers from accessing the low rates & long terms of a 1 st mortgage. Spotty availability meant any kind of national or regional coverage was impossible, and states frequently couldn’t count on it being available for them. 1.At the start, PowerSaver had no unsecured loan investors. 1.At the start, PowerSaver’s only national 2 nd Mortgage investor was Fannie Mae 1.At the start, PowerSaver had no 1 st mortgage offering, and therefore no investor. 1.At the start, PowerSaver was available in just a few states.
P OWER S AVER : W HAT ’ S D IFFERENT N OW ? 5 Today’s PowerSaver is very different from PowerSaver of even 6 months ago. Now it has multiple tens of millions of committed dollar for unsecured lending. Although Fannie is still the main purchaser, new investors have made commitments ($40 million from California banks but w/o Fannie’s stringent terms). GNMA and other 1 st mortgage investors will buy the 203K loan. PowerSaver is available now in 40-45 states. 1.At the start, PowerSaver had no unsecured loan investors. 1.At the start, PowerSaver’s only national 2 nd Mortgage investor was Fannie Mae 1.At the start, PowerSaver had no 1 st mortgage offering, and therefore no investor. 1.At the start, PowerSaver was available in just a few states.
P OWER S AVER : W HAT ’ S D IFFERENT N OW ? 6 Today’s PowerSaver is very different from PowerSaver of even 6 months ago. Failure to meet these commitments will be highly problematic for these lenders. Unsecured lenders have figured out how to use PowerSaver to enhance their other unsecured loan products. AFC First & Kilowatt Financial offer integrated PowerSaver/energy loan products. Lenders are highly motivated because they’ve made commitments to investors to close & fund PowerSaver loans.
P OWER S AVER : W HAT C OMMITMENT DO E NERGY O FFICES M AKE ? 7 Energy Offices can use PowerSaver as a way to import energy efficiency & solar lending to the state. No outside credit enhancement money needed or wanted. Loan capital not needed (nor usually is it wanted) Originators/servicers are able to move in to any state in which they are licensed. Provided by HUD through federal loan insurance And, lenders each have substantial amounts of grant money that they can spend on any activity that benefits the borrowers (closing costs, marketing, fees, energy audits, etc.) Lenders now have commitments of capital or “buckets” that they must fill with loans Secured and Unsecured PowerSaver loans are available in 40-45 states now.
P OWER S AVER : W HAT ’ S N EXT ? 8 HUD, working with DOE and NREL, has hired HB&C, working with SRA International, to increase PowerSaver loan volume. We are: Working with states, national and regional associations, utilities, non-profits, industry and others to make PowerSaver more widely available and to drive loan volume. Looking to leverage other successful brands and efforts such as Home Performance with Energy Star. Actively working to find ways to get PowerSaver in to as many states as possible. Please contact me with questions: Matthew.Brown@harcourtbrown.com 720 246 8847