La Platas Countys interest in financing solar panels for homeowners has been stopped in its tracks by federal mortgage regulations.
Fannie Mae and Freddie Mac which control nearly all of the nations mortgages have announced they will not approve mortgages for properties that have renewable-energy improvements financed through a property-tax assessment.
Theyve stopped all ongoing programs,said Walter Serfoss, La Plata County sustainability coordinator. Theyre all halted for the time being.
The financing is designed to eliminate the upfront costs of projects such as electric solar panels, which can cost from $20,000 to $40,000. Colorados Legislature in 2008 and 2010 authorized programs that would allow homeowners the opportunity of joining a special district to offset these upfront costs, and for counties to pool their efforts. Counties would manage these programs and fund them by borrowing money through a bond that is repaid with property taxes.
According to a plan put to county commissioners by Durango company CarbonZero, those homeowners who join these districts and take advantage of the installation would pay electric bills similar to current billing, but the energy would be from a renewable source. Residents could opt out of the district.
Ive just been keeping an eye on it but not counting on it, said John Shaw, the owner of Shaw Solar, discussing the consequences of the Fannie Mae/Freddie Mac policy on energy-loan districts and his business, which might have benefitted from a special district. It doesnt surprise me, because there are a lot of appraisal and lending issues with solar.
La Plata County commissioners decided in December that they would wait to see how it works in other counties before deciding whether or not to form a district here. That wait may now prove to be indefinite.
Given the recent federal policy decisions, it would be unwise for La Plata County to initiate a program until the complications resulting from these decisions have been resolved, said Commissioner Wally White, chairman of the county Board of Commissioners.
However, the La Plata County Board of County Commissioners remains very interested in options to assist property owners with financing renewable-energy improvements to their homes, so we will continue to carefully monitor this issue.
Boulder County was the first in the state to form a district, and voters there passed a $40 million bond to start making loans and getting solar panels installed. Pitkin, Eagle and Gunnison counties all approved similar programs in the November 2009 election. All of them have been suspended since the Fannie Mae/Freddie Mac ruling.
Its the property-tax element that concerns Fannie Mae and Freddie Mac.
Property-tax assessments are the highest level of lien that goes on a property, La Plata County Finance Director Karla Distel said Wednesday. Its difficult to sever a special assessment from the general property tax.
Eric Colby, assistant vice president at First National Bank of Durango, said about 95 percent of the mortgages that originate at his bank fall under Fannie Mae or Freddie Mac. Mortgages are sold by the bank to investors who then collect the payments on behalf of governmental agencies. That kind of domination means that the agencies policies set the tone for the industry.
In a May 5 letter to the mortgage industry, Patricia J. McClung, Freddie Mac vice president of Offerings Management, said the agency had begun to get questions about these new energy-loan programs.
The purpose of this Industry Letter is to remind Seller/Servicers that an energy-related lien may not be senior to any Mortgage delivered to Freddie Mac, she wrote, asking those who sell Freddie Mac mortgages to check local areas to see if the locale where they sell has an energy loan program.
The policy comes just when the Colorado Legislature had made it easier to form the energy loan tax-assessment districts.
Distel said House Bill 10-1328, which passed in the most recent legislative session, allows counties to join together to form multicounty districts and also directs the Governors Energy Office to create a state energy-loan district.
That makes for a great economy of scale, she said. Its hard for any single county to provide for the bonding.
Serfoss said he doesnt know what will happen with homeowners who have already taken advantage of the program.
But going retroactive is not going to be pretty, he said.
Distel said she thinks the Governors Energy Office and other advocates will be working to change Fannie Mae and Freddie Macs policy on these energy-loan districts.
This mortgage position seems contradictory to some of the federal governments thrust on energy independence, she said. I wonder if the feds may act on that.