‘Ygrene’ energy superfund financing.
First off I want to state I know next to nothing about financing projects for energy upgrades. That has never been my end of our business. I will try to relate everything I have learned and been told about this financing company.
Ygrene has been in business for around 2 1/2 years. They are in several counties in Northern California and have just got legislation passed to operate in every California county. They are also in Florida and expect to be national in a handful of months.
In the time I have been on the HEP website I have only noticed a few comments where energy upgrade contractors have ran into walls when it came to getting financing for their energy upgrade contractscontracts.
With Tgrene I have been assured that if a homeowner has 15% equity in the property, they are automatically approved and the contractor has 10% to work with. They operate via different legislation than other finance companies.
They have made impressive strides in the greater Sacramento area as I am told by a few contractors. They are getting many calls from homeowners now for referrals to contractors. There are no fees to be listed with them or to get a referral to a contractor that can provide the services the are interested in.
This sounds like a ground floor opportunity to me. This also applies to commercial businesses.
I talked withg their regional director, Mr. John Meninitis, this am. I invited him to join this site and hopefully he can find the time to answer specific question where I cant.
Ygrene has an impressive website with some impressive statements from well - known people in government.
I have dug into the internet as best I can on this company and have found no negative anything to report. I am told there is no listing fee charged for contractors to be listed for referrals and no fee to homeowners / business owners to get a referral to a contractor.
I hope Mr. Meninitas can come on here to answer any questions that I did not know to ask.
This is as I understand it .
Regional Account Manager
cell: 916 295-9315
fax: 916 560-5097
Ygrene Energy Fund
2600 Capitol Ave
Sacramento, CA. 95816
AZpperently John must be out of state again. So, I will try and add in what I have learned about Ygrene as best I can.
Again, I am NOT an expert in financing for energy upgrades. So, here goes;
Their finance rate is 3%.
If the homeowner has 15% equity in the home they are automatically approved. The contractor would then have an amount equal to 10% of the homes equity to work with on the contract.
Credit rating is not considered and makes no difference.
The first payment is not due for 18 months.
T^he homeowner does not even have to be working to be approved.
Please compare these to whatever terms you deal with now and please let ME know.
I have been asked if they take tax credits, etc, like some of the TV commercials speak of. That I do not know but hopefully John can answer those questions when he gets back.
Again, I am no expert in financing but this sounds pretty darned good to me so that's why I am sticking my neck out here.
I think it would be best to keep the questions and answers on this open forum for all to see.
As I have mentioned, I have seen or heard nothing negative about Ygrene. I brought this company to the attention of a relative who is a finance person for a large solar company in NorCal. She had not heard of Ygrene. She hopes that Ygrene has found some way / loopholes to avoid many negative things in regard to any financing through the PACE program.
I hope so too as some of those issues were serious ones.
As I mentioned, lets keep the questions and answers on this open forum and not behind closed doors so that all might gain the knowledge (especially me).
There is an old axiom in business, "Believe but confirm".
Hi again John,
If you could directly answer these questions and comment on anything else related, I would appreciate it.
I have been told that any financing through the PACE program has some problems that homeowners are rarely told about before signing on the dotted line. Example;
1. If they go to sell the house, they must pay off the loan first as a lien has been placed against it, many times in the $30,00.00 to $40,000.00 range. Is this the case with Ygrene financing?
2. If they go to sell the house they are also hit with an early payoff charge that is also large. Is this the case with Ygrene financing?
3. The contractrors fees are very high compared to average / normal charges. Is this the case with Ygrene financing?
4. The PACE loans would not transfer to a new homeowner from the previous one. Is this the case with Ygrene? I believe your video says that it is transferrable to a new home owner.
How does Ygrene get around all these problems and issues of PACE financing?
There are many very experienced and very intelligent professionals on this site. Please answer these directly and please dont answer with "watch the videos".
With the above questions, let me first state 'let the buyer beware'.
All of us should read any contractor or financing document that we sign that obligates us to pay off a loan. Let me address a few questions, with hopes that John/Ygrene will chime in.
Residential PACE (not commercial PACE) stalled in California when FHFA indicated they would not buy loans that has a PACE lien on the property. When a PACE loan is established, it is a lien against the property, and goes on the property taxes. Both as a lien (full loan amount), and then each year's payment (sometimes broken into two payments, like our regular property tax bills here in San Diego). The lien is against the property, and takes precedence over the first mortgage because it is on the property taxes. FHFA indicates that since these loans are put on AFTER their first mortgage, and take precedence, they will not buy/fund loans with PACE liens. This effectively stopped the market. There were lawsuits and FHFA won.
In California, the legislature established the PACE Loss Reserve program, which was put in place to effectively protect the residential mortgage companies from any PACE defaults. Currently in the state, the default ratio is at 0.0075%. If a property owner defaults, the mortgage company or the county assessor can file a claim with the PACE Loss Reserve program to get paid back for any annual PACE payments they made while they held the property. (note when the foreclosed property is resold to a new buyer, the PACE lien remains with the property and gets transferred to the new owner).
This PACE Loss Reserve program provided enough protection so that local jurisdictions started approving residential PACE programs for their homeowners.
In response to question 1 - anyone who buyers a home with a PACE lien must qualify for the mortgage AND qualify for the remaining PACE lien, as the lien moves with the property. There are cases where the mortgage company will not fund the loan because of the PACE lien, and thus the property owner selling must pay off the lien at sale. We have also seen cases where a call to the mortgage company, discussing the PACE Loss Reserve program has allowed the buyer to get the new mortgage funded.
2. Each PACE providers fees are different. the PACE program is not cheap, but it is an excellent funding vehicle for EE and solar projects. We do see a lot of homeowners that want the PACE loan because they think they can transfer the cost of their retrofits to a new buyer when they sell the home. That is a whole other discussion about the value of EE and how is translates into the real estate market.
3. I don't think there are contractor fees for PACE programs. This is not a dealer financing or interest rate buydown program.
4. About 65% of residential PACE loans in California are transferring.
Note the specificity about the topic being residential PACE. Commercial PACE programs require mortgage sign off before the lien can be put on the property.
Within California, there are multiple PACE programs available to consumers and business owners.
Ygrene Works, California First, Figtree Financing, and the HERO program.
All providers have legislation passed to operate in the State, but EACH City and COUNTY must approve one or more providers to operate within their local jurisdiction. Some cities/counties have multiple providers, some cities have only one approved PACE program.
Ygrene originally operated under SB 555 (Mello Roos), which were custom-programs in very specific areas in the State (Sacramento, Chula Vista, Coachella Valley). I have to check and see if their new statewide program, Ygrene Works, is a SB 555 based program or an AB 811 program.
All the other programs operate under AB 811. (if you want more information on this, it is available in a 2013 report).
There are other local programs, such as in San Francisco and Los Angeles, which have been primarily commercial PACE programs, but have added or are adding this year, a residential program also.
You can find a PACE map on the Center for Sustainable Energy's website at www.energycenter.org/PACE where you can type in your address and city and find the approved PACE providers for that location. You'll see that more than 50% of the cities and counties in the State have some type of program, with the expectation of 90% coverage by year end.
Thanks Susan. It is appreciated.
Thanks for your articulate details. Home owners and those advising them should be aware that at time of resale, PACE will require at minimum, a few extra steps for the buyers.
The current default rate for residential in CA of 0.0075% at you stated- is impressive.
The transfer rate of 65% raises questions.
Watched the two videos. The first, the one with the 'Homeowner' was a waste of time.
Here is the URL to the other video that is more informative.
I was hoping to hear / see a side-by-side comparison of Ygrene's program vs other programs to see exactly why they would be considered over the rest but, no such luck there.
I hope John will come back on here and explain the benefits ( vs the others) in detail.