Personal History Relating to Residential Energy Financing
I understand that many of the people in this process do not really know who I am or what my background is in the Mortgage and Energy Financing areas. Although I have preferred to keep a fairly low profile over the years, I thought that some might find this helpful in understanding where I may have some useful insights.
I have been employed in the mortgage industry full time since 1993. When I entered this field I studied every guideline I could get my hands on. In this process I stumbled across an obscure reference to a HUD Pilot program that would allow buyers to include 100% of the cost of qualifying energy upgrades into their loan. This program required that their projected energy savings would off-set the additional monthly mortgage expense. This would allow my clients to make their homes more comfortable, affordable, and avoid issues with things like having an old and unreliable HVAC unit fail on them in the middle of the summer. As if this were not enough, it would effectively pay them to do this. The fact that they were also doing good things for the environment was a definite bonus, but it wasn’t honestly the biggest motivator to most people in that position.
I started promoting this program at the Realtor’s regional meetings. It didn’t take very long for me to hear from the local HUD office. They were getting a lot of calls from Realtors and Loan Officers that wanted to understand this program better. The challenge was that they didn’t fully understand the program themselves even though it was a HUD program. So I invited a guy that was involved in facilitating EEM’s and we went down one morning to the local HUD office and explained the program. It is very likely that I have personally done more Energy Efficient Mortgages than any other Loan Officer in the Nation.
In the last couple of years the Directors of the HUD Energy Task Force have spoken with me several times to determine why this program has been so successful in this region when it never gained any real traction anywhere else in the nation. There are several people and several factors that have accounted for this. If I personally deserve any of the credit, it would be for showing people how to present it from an interest-based perspective.
Although the program was designed to promote energy conservation it was some of the other benefits that motivated buyers to include this. When I sat across my desk from a young family that was trying to buy their first house, I knew that they were far more focused on how they would afford food and shoes for their children than they were about air quality or sustainability. It was not that they didn’t understand the importance of these issues; it was just not the biggest immediate priority to them. I showed them how financing a much more energy efficient HVAC unit helped them afford food for their kids. In the process, they conserved a lot of energy. I used a similar approach with the Realtors I dealt with. I showed them what was in it for them.
I was recently invited to a workshop held by the CPUC in San Francisco. This was a workshop that was designed to help Contractors and Utility Companies figure out how to structure the financing to support all of these programs. Ironically, there was not one single mortgage lender on the panel. I can tell you that there were a lot of flaws in the premises for many of the discussions in the descriptions of some of these programs. I have to say that the worst one that I saw that day though, was when someone asked one of the consultants on the panel why more EEM’s where not done. He responded that the program works best on the FHA platform and FHA financing is primarily used by 1st time buyers. He stated that no 1st time buyer is interested in adding an energy conservation program when they are dealing with the stress of a home purchase, and the concerns over payments. I am not sure how he would explain that 1st time buyers have accounted for a large percentage of my clients over the years, and I have never had one that did not include an EEM if it was feasible. Not only have they always taken advantage of this opportunity, but they have been incredibly grateful that I informed them of it.
I have also been very involved in the promotion and creation of Affordable Housing Products over the years. I have provided advice and assistance to the local housing agencies whenever they have asked.
When the market shifted back to responsible lending products a couple of years ago many of the loan Officers and Realtors that had recently joined the industry were completely unaware of the programs that were available for buyers. During the days of the Stated Income and Option ARM Loans there were a lot of Loan Officers that refused to provide these products that we thought were going to ultimately prove harmful to the clients. Most of us who took this stance were not able to survive in the business. But for the Grace of God, (and a good Home Equity Line on my house) I wouldn’t have made it through myself. When things came back around the majority of the interest based Loan Officers that had understood these products were no longer around. As a result, buyers were not being offered the opportunity to take advantage of these opportunities.
I decided that I needed to do something about this so I became an affiliate member with the Sacramento Association of Realtors and joined their Housing Affordability Committee. I started holding seminars at the association with panelists from all of the State and Local agencies to teach these programs to the local Realtors and Loan Officers. I used my connections from the years I had spent working with the various agencies to support and promote their programs to secure their participation as speakers. One of the areas that we covered related to the inclusion of energy retro-fit packages in the purchase financing for clients. SMUD participated in some of these events. I think it really helped them to appreciate how supportive the Realtors were for this.
In anticipation of the stimulus funding for energy conservation we structured the whole seminar last April around all of the different programs, incentives, and financing techniques related to energy financing. SMUD spoke at this event, and the National Field Director for the HUD Energy Task Force attended this event and recognized this association for their support products like the Energy Efficient Mortgage.
Since I have been very involved in creating programs over the years, and I am somewhat familiar with the guidelines of HUD, The National Housing Code, ARRA, HR 3221, FNMA, CEC, CPUC, HCD, SHRA, and others, I was asked by SAR to design a program for them utilizing the membership fundraising money. They wanted it to create the biggest benefit for the community. Per this request, I developed the ECO Program for them. I was also asked to provide a program concept to the State Association. I suggested a way that they could contribute to the efforts in the Energy Area by offering a credit to buyers for HERS ratings. I provided a structure where this could be compatible with every financing option, not just EEMs. This program is currently being offered throughout the state.
Although I really prefer to just focus on running my team and structuring financing for our clients, over the years I have appreciated the opportunities to contribute some input and offer some insights to various Agencies and Elected Officials. Sometimes I have even felt like I may have made a difference.
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
