Our Energy Efficient Mortgage Process
Having done so many Energy Efficient Mortgages, we have found that EEM Facilitators offer significant advantages to this process. This is not required by HUD, but we would not do it any other way. For more information on this, please refer to the document “Why Facilitators are the key”
There are several very capable EEM Facilitators. We primarily work with Bobbi Glassel at Synergy EEM. Bobbi does an excellent job of making our clients feel very comfortable with this process. We have also worked with Federal Energy Services and Cherry EEM Management. All have done an excellent job and I am sure that many of the other facilitators in the state are also very capable; we have just not had the pleasure of working with them yet.
Any time we have a client that is going to be utilizing an FHA or VA loan for their financing we explain the advantages the EEM offers during our initial conversation with that buyer.
When they eventually get an offer accepted we ask a few basic questions related to the age of the house and energy related components. If it sounds like they may benefit from an EEM we remind them about the program and explain the process. We let them know that the EEM Facilitator will be contacting them to assist with the EEM process and decisions.
The Facilitator takes it from there. They arrange for the HERS II Rating to be performed and they coordinate the Contractor Bids. They also assist the clients in understanding their options. The Facilitator then prepares all of the necessary paperwork for the buyer and the Contractor and returns it to us. There is tremendous urgency to get this paperwork back to us before we are ready to submit the loan to Underwriting. Otherwise this can delay the closing and threaten the transaction. The Realtors we deal with are very supportive of the EEM and are not concerned about this creating delays, the Facilitators insure this does not occur.
At the time we contact the Facilitator to have them coordinate with the client, we also inform the Escrow Officer thatan EEM is being included and they will need to do a holdback for these funds at closing. We want to be sure that the Escrow Officer is prepared for this additional paperwork. We also want to explain the process if they are unfamiliar with the EEM and answer any questions they may have.
Most Escrow Officers are familiar with this program by now and are very amenable to accommodating this. Some are not familiar with it and they will initially be very resistant as the only thing they hear is “Escrow Holdback”. In general Escrow Holdbacks are extremely problematic to Escrow Companies and they generally have very rigid policies prohibiting them. I have never had an Escrow Officer that did not ultimately agree to accommodate the Escrow Holdback for the EEM once it was properly explained, but they did often have to get an authorization to do this. You do not want to blind side an Escrow Officer at closing with this. It is not only extremely unfair to them, but it can cause a delay in closing and some very upset parties if they have to start the authorization process after the documents have been delivered. This is completely avoidable. Escrow Officers have a pretty tough job. Let’s make this part easier for them.
Once the Facilitator knows which option packet the buyer wants to include in their loan, they send us the HERS II Rating, bid, and Contractor paperwork. A copy is also sent to Escrow by the Facilitator. At this point, our Facilitator’s paperwork shows theEscrow Officer the amount of money they will need to hold back for the energy upgrade package. By the time we receive the paperwork from the Facilitator, we normally have the Appraisal, Preliminary Title Report, and allother documentation that is needed for underwriting.
The loan file is then underwritten, approved, and the documents are ordered. Escrow receives the loan package and the buyers go in and sign them. The package is returned for funding review, and the money is wired out to the Escrow Company. At this point we have the Escrow Officer confirm the amount they will hold for the EEM again.
When the sale records, we notify Bobbi of this and she gets in touch with the Contractors. Work begins as soon as the Contractor can accommodate it. It is normally completed in a matter of days to a couple of weeks depending on the scope of work to be done and the Contractors schedule. Once the work is completed, the Facilitator arranges to have the HERS II rater go back out to the property to acknowledge completion. The Facilitator faxes or emails over a finalized form which is signed off by the underwriter to authorize the release of the funds to the Contractor. This form is then sent to the escrow company and a copy is also sent to the Facilitator. Escrow releases the funds to the Contractor and the file is closed out.
Although it is true that this process involves a lot of steps, it is actually very easy for us due to the Facilitators. All we really do is inform the buyers of this opportunity, have Bobbi contact them, and inform the Escrow Officer that this is being included. Within a few days she provides all of the necessary paperwork to us and we add it to the loan package. After the transaction closes she provides the acknowledgment of work completion directly to whichever one of our Underwriters approved that specific loan. (I honestly kind of hope none of my past client’s ever read this. They are always extremely grateful that we provided them an opportunity to benefit from an EEM. I might not be such a hero if they realize how little effort this really takes on my part.)
I am not trying to say that I never have to get more involved. I do occasionally have to assist an Escrow Officer in understanding the program, or clarify it for a listing agent. I will say it is extremely rare that I have to do anything beyond that once I turn the client over to the Facilitator.
The exception is when the EEM is combined with a 203K or Streamline 203K. In those cases the EEM is treated more like the Full 203K or Streamline 203K. I will cover this in the explanation of our processes in those sections.
Note: Per HUD the EEM funds may be held by either the Escrow Company or the Lender. Most Lenders are not equipped to hold these funds so it can generally only be done by the Escrow Company. There may be a couple of lenders who do hold the funds themselves.
Please note: Some Lenders have additional overlays and restrictions. Wherever possible I will point those out. It is important that you check with the Lender that will be handling the transaction you are involved in to determine their restrictions, limitations, and overlays.
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
