Practical Guide to Home Upgrade Financing Part 1

Transcription

1 Practical Guide to Home Upgrade Financing Part 1 February 27,

2 Energy Upgrade California Home Upgrade Energy Upgrade California offers rebates for saving energy and making homes more comfortable Tiered incentives drive comprehensive upgrades while allowing entry level installations Points based Home Upgrade offers up to $2,500 Modeled savings based Advanced Home Upgrade offers up to $4,500 Bay-Area Regional Energy Network (BayREN) is the contact for Home Upgrade projects within 9 Bay-Area counties Contact Information PG&E Home Upgrade Build It Green, , info@builditgreenutility.org BayREN Home Upgrade Home Upgrade Advisor,

3 PG&E s AC Quality Care Rebate Program AC Quality Care is a rebate program aimed at improving the maintenance and operation of heating/air conditioning in homes. Homeowners can get up to $700 in incentives for quality care of their HVAC systems. Contact Information AC Quality Care Build It Green, (ACQC), acqualitycare@builditgreen.org The program is based on Air Conditioning Contractors of America s (ACCA) quality maintenance standard: ACCA 4 Quality Maintenance 3

4 Our Presenters Financing options overview Bruce Mast, Director of Business Development, Build It Green EGIA GeoSmart Loans Erin McCollum, Trade Ally Program Manager, Electric and Gas Industries Association (EGIA) Matadors Community Credit Union Mark Tsimanis, Chief Lending Officer, Matadors Community Credit Union 4

5 Attendee Guide Questions may be submitted through the Questions Pane on your control panel, at any time during the Webinar. A Question/Answer session will follow Mike s presentation. A recording of the Webinar will be available after the event, along with a PDF of the presentation slides. You can expand or collapse the control panel at any time by clicking on the red/white arrow in the top left corner of the panel. Please feel free to submit questions. 5

6 Bruce Mast Director of Business Development, Build It Green. Bruce has nurtured Build It Green's growth since its infancy in 2002, leading efforts to articulate a green vision for the organization, translate that vision into practical program designs, and obtain support from government and utilities. Previously, Bruce consulted for energy utilities, providing market research, competitive assessment, business plan development, program design and implementation, and program evaluation services. 6

7 The Changing World of Energy Efficiency Financing: 2013 and Beyond Bruce Mast, Build It Green February 27,

8 Agenda Part I The Importance of Financing to Your Business Part II Overview of Existing Financing Programs 8

9 Part I The Importance of Financing to Your Business 9

10 Financing Is a Crucial Part of Your Business Financing should be an integral part of your sales and marketing process. It can be the difference between success and just getting by. Have multiple options to meet the needs of: Cash Buyers Payment Buyers Credit Challenged 10

11 Financing Statistics Even the folks with cash out there don t want to part with it all up front. 11

12 Different Types of Customers in the Marketplace Cash Buyers -Those that have the cash and are hesitant to write that big check. Payment Buyers -That need the lowest monthly payment to pull the trigger. Challenged Credit -In this tough economy you cannot forget the 40% of the applications that can t be approved by A paper lenders. Most importantly, financing helps the homeowner overcome cash separation anxiety! 12

13 Impact of Offering Financing Options Cash With Financing Options Leads Sold 3 5 Avg Ticket $9,000 $10,800 Revenue $27,000 $54,000 Net Sale Per Issued Lead $2,700 $4,500 Lead Cost % 22.20% 13.00% *Based on an average of EGIA member contractor experiences and industry information. Actual results may vary. Assumes $300 lead cost 13

14 Financing Best Practices Consistency Be Methodical! Never prejudge your customer, every customer, every time. A survey of top salesmen shows they: Sell between 50-75% of their job with financing. Have a 20-25% higher closing ratio. Have 15-20% larger projects. Sell higher efficient products. The top salesmen in our network say consistency is what wins the day! 14

15 Part II Overview of Existing Financing Programs 15

16 Financing Types Type Examples Customer Eligibility Unsecured GeoSmart, credit cards FICO scores, debt, income Secured EEMs, 203k, HELOC FICO scores, debt, income, home equity PACE SCEIP, HERO, CA 1st Home equity 16

17 Financing Applicability Type Applicability Benefits Limitations Unsecured Smaller projects quick approvals, no appraisal, no home equity Secured PACE Larger projects, home purchases Medium & large projects; EE, renewable energy, H2O 1 st or 2 nd mortgage, longer terms & lower interest rate = lower payment Lien (not loan); personal credit not an issue shorter term and higher interest rate = higher monthly payment Longer qualifying time & more paperwork. Home equity & good credit required; may require appraisal. Home equity required 17

18 Financing Availability Program Category Availability EEM Secured Statewide, subject to lender availability (See HUD) 203k Secured Statewide, subject to lender availability (See HUD) GeoSmart Unsecured Statewide FHA Title 1 Secured Statewide (GeoSmart or see HUD) PowerSaver Secured Statewide (GeoSmart) CAEATFA Secured or unsecured CHF Secured (UCC 1 Fixture Filing) Statewide via Matador & others (see CAEATFA) 44 counties PACE Secured Sonoma Co. & Riverside Co., expanding statewide through CA 1 st & HERO Other Secured or unsecured Statewide (borrower originated mortgage, HELOC, credit card) 18

19 Energy Efficient Mortgage (EEM) Eligibility Requirements Property Eligibility Borrower Eligibility Loan Term Loan Disbursement Max Energy Efficiency Costs Borrower Requirement 1-4 unit existing and new single family homes Available to all persons meeting FHA s requirements Up to 15 or 30 years fixed rate mortgages Eligible for max FHA loan Cost of improvements or 5% of property value, whichever is lower Must make 3.5% down payment 19

20 203(k) Mortgage Eligibility Requirements Property Eligibility Borrower Eligibility Minimum Credit Score 620 Debt to Income Ratio 43% Loan Disbursement Min/Max Loan Amount 1-4 single family home or condominium Owner-occupied only Max mortgage amount cannot exceed loan-tovalue ratio $5,000 min./$35,000 max. 20

21 For More Information Program GeoSmart Clearinghouse CHF Loans Energy-Efficient Mortgages 203k Mortgages CAEATFA SCEIP Website then search EEM then search 203k x1_

22 Thank you! Bruce Mast Build It Green 22

23 Erin McCollum Director of Programs and Trade Ally Manager, Electric and Gas Industries Association (EGIA). Erin manages EGIA Trade Ally Programs and assures quality delivery and overall coordination of EGIA deliverables associated with Trade Ally network development, management and training. Prior to joining EGIA, Erin was Program Director for ACI where she developed and directed educational programs for contractors, program implementers, academics, and government officials involved in residential energy efficiency. 23

24 GEOSmart Finance Programs Overview February 27,

25 About EGIA The Electric & Gas Industries Association (EGIA) is a non-profit membership organization that serves a nationwide network of installation contractors, regional distributors, product manufacturers and utility and government programs that are delivering energy efficiency solutions to millions of homes and businesses. EGIA Membership by Region EGIA Membership by Industry* 25

26 GEOSmart Financing Clearinghouse 26

27 GEOSmart Financing Clearinghouse Programs 27

28 GEOSmart Financing Clearinghouse Programs 28

29 GEOSmart Financing Clearinghouse Programs 29

30 GEOSmart Financing Clearinghouse Programs 30

31 GEOSmart Financing Clearinghouse Programs 31

32 Sales Training & Promotional Materials GEOSmart Authorized Contractors have access to sales training and promotional materials that have been developed with input from top contractors throughout the country. These Tools Include: Online training presentations for Authorized Contractors Customer Brochures Sales Book Inserts for Every Financing Promo Splash Pages for Every Financing Promo GEOSmart Authorized Contractor Logo Phone Q & A Support 32

33 Get Started Visit the for more details 33

34 Questions? Erin McCollum Director of Programs and Trade Ally Services Office: If you have any questions you can contact EGIA Contractor Services by phone at (866) or by at 34

35 Mark Tsimanis Chief Lending Officer, Matadors Community Credit Union (MCCU). Mark has been in the credit union industry over 20 years working in all areas of operation and lending. He has expanded MCCU s lending programs into emerging markets such as energy efficiency and solar loan programs. Mark has personally advocated for energy efficiency through multiple presentations to the California Public Utilities Commission and the Governor s Office. As part of its 50thanniversary as a company, the MCCU board reaffirmed its support of the strong advocacy of energy efficiency that Tsimanis has helped develop. 35

36 Matadors Community Credit Union and Energy Upgrade California February 27 th,

37 Agenda About MCCU About the program Loan Products Program Activity to Date Process MCCU HELOC MCCU Solar 37 37

38 About MCCU 1. A full-service financial institution specializing in EE, solar, home equity and auto financing 2. As a not-for-profit Credit Union, we deliver our products-services at low cost, in a friendly and efficient manner 3. Founded in 1963 to serve Cal State University Northridge students, alumni, faculty and staff 4. Now a thriving community-based financial institution that has not only focused on their local communities, but serves members throughout California 38 38

39 Program Team Program Sponsor Provides loan loss reserve coverage Determines financing program parameters Financing Partner Offers Energy Loans Provides customer service and ongoing servicing of loans 39 39

40 About the Program March 2011 Began as sole lender for Energy Upgrade California in Los Angeles County December 2011 Expanded EE financing across all of California for EUC contractors using the CAEATFA Clean Energy Upgrade Finance Program May 2013 New program regulations simplified the process and reduced paperwork More flexible requirements include the option for the contractor conducting their own test-out in lieu of a third-party conducting it

41 Loan Products Rate Term (years) Payment for $10,000 Payment Factor (Multiply Loan Amt) 4.99% 5 $ % 10 $ % 15 $ All are fixed-interest rate, UCC1 secured loans. These rates and terms are very competitive. No cost, risk-based pricing, or prepayment penalties. Financing Amounts: $5,000 - $50,000 Eligible Projects: Energy Efficiency and Solar (must comply with loading order & be interconnected) Must participate in an EUC whole-house utility incentive program through a participating utility (Advanced Path). For solar projects, interconnection must be done prior to funding Credit Requirements: Minimum FICO: 660 Maximum Debt to Income (DTI) Ratio: 50% 41 41

42 Program Activity to Date Activity Summary Total Dollar Funded: $6.6 million Total Apps Received: 1,020 Total Apps Approved: 585 Total Apps Declined: 260 Total Apps Cancelled: 175 Decline Ratio: 25% Decline Reasons FICO: 33% DTI: 32% Other: 35% 42 42

43 Process Step 1 Scope Project Property owner contacts an EUC Participating Contractor. Contractor reviews property, proposes a SOW, and introduces financing. Step 2 Submit Applications Property owner (or contractor) applies for financing submits credit application and income documents. Contractor applies for utility incentive. Step 3 Install Project Matadors issues a Commitment to Lend within 24 hours. Contractor receives Notice to Proceed from utilities. Contractor installs project. Step 4 Receive Funds 43 Property owner (or contractor) notifies MCCU that installation is complete and provides final invoice and rebate confirmation letter. Lender issues loan/euc documents and property owner signs and returns. Lender funds project. 43

44 MCCU HELOC Home Equity Line of Credit 3.99% - 18% Variable From $30,000 to $500,000 limits Up to 70% Loan-to-Value Appraisal Required 10-year draw with interest-only payments; 15-year amortized repayment Two weeks from application to funding No upfront fee (fee applied if closed within 3 years) 44 44

45 MCCU Solar Only Solar Loan 2.99% % Fixed From $7,500 to $50,000 limits Dealer Fee ranges from 3% -12% No Equity UCC Lien Primary residence single family only From 8-20 year terms Instant online decisions available 45 45

46 Contact Information Matadors Community Credit Union w. matadors.org (online application) e. p. (888) f. (818)

47 Thank you, Mark Tsimanis Chief Lending Officer (888) x 210 mtsimanis@matadors.org 47 47

48 Practical Guide to Home Upgrade Financing Question and Answer Session Please submit your questions through the Question pane on your Go-To-Webinar control panel. Please indicate to which panelist you would like your question posed. A recording of this Webinar and PDF presentation slides will be available on the Build It Green Website. Stay tuned for: Practical Guide to Home Upgrade Financing Part 2 48