Home Energy Loan Program

The Montgomery County Home Energy Loan Program (HELP) is on hold until further notice. This is a result of recent statements made by Federal Housing Finance Agency (FHFA) related to the relationship between loans like those that would be offered under HELP and existing mortgages held by HELP participants. A more detailed explanation of this issue is provided below. Efforts are underway at the federal level to address FHFA’s concerns. Until this situation is resolved, the County will not move forward with HELP. This website will be updated regularly as circumstances warrant providing information to residents interested in obtaining a HELP loan.

Issue With HELP

HELP is a Property Assessed Clean Energy (PACE) program. Although there are a number of variations of PACE programs, they all operate under a key fundamental principle – the PACE loan has “first lien” priority equivalent to property taxes. This means that in the event that a property owner defaults on the payment of a mortgage and a property is sold at tax sale, any unpaid payments on a PACE loan would be paid off before the mortgage holder recovers any funds. This is critical to ensuring that local governments that sponsor PACE programs can offer cost effective programs.

FHFA regulates Fannie Mae, Freddie Mac and the Federal Home Loan Banks, which are collectively associated in some way with over 50%of the mortgages held in the United States. According to FHFA, PACE loans would violate the principles governing loans regulated by the Agency (the complete FHFA statement can be found at www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf). As a result, residents holding an FHFA regulated mortgage could be in default of their loan agreement if they obtain a HELP loan. Similarly, anyone with a HELP loan may be prohibited from refinancing under an FHFA regulated loan, and buyers assuming HELP loans may have to pay them off in full if they were financing using an FHFA regulated loan. The County does not want to jeopardize the status of any resident’s mortgage by issuing HELP loan and will not implement the program until a solution has been found.

Advocating for HELP

Federal leadership is needed to implement a permanent solution that will enable Montgomery County, and other communities, to proceed with HELP. We will continue to advocate for PACE programs like HELP as a key tool to overcoming the initial costs of energy efficiency and renewable energy retrofits.

If you would like to support a federal solution to this issue, you can obtain information on the national campaign to support PACE programs at http://pacenow.org/blog/, including advocacy toolkits and key federal contacts. Additional advocacy tools can be found at ICLEI’s “Save PACE Now” site at http://www.icleiusa.org/blog/archive/2010/07/15/take-action-now-with-icleis-save-pace-action-kit.

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Program Description

The Home Energy Loan Program (HELP) would offer a cost-effective option for Montgomery County homeowners to finance energy efficiency and renewable energy home improvements. Through HELP, homeowners could finance home energy improvements by repaying the loan through their Montgomery County Property Tax bill over a 15-year period. The benefit of this mechanism is that the value of the home energy improvements is bundled with the house itself. This frees a homeowner from the financial burden of the investment should he or she move before the loan is repaid.

HELP is part of a nationwide movement of Property Assessed Clean Energy (PACE) programs designed to assist consumers in overcoming the initial investment barriers to installing energy-efficient and clean energy technologies. As noted above, PACE programs throughout the country have been affected by the FHFA stance.

Background

Residential homes are responsible for 33% of the County's quantifiable greenhouse gas emissions. Energy efficiency and renewable energy home improvements can reduce these emissions, but residents could often use help to make the financial investment for such projects.

The Montgomery County Sustainability Working Group (SWG) recommended that the County provide financing options to enable residents to overcome financial barriers of home energy projects. (See EER-4 and RE-4 of the Montgomery County Climate Protection Plan for more details.)

Council Bill 6-09 enacted in April 2010 directs the County's Departments of Environmental Protection and Finance to create the Home Energy Loan Program (HELP).

Montgomery County is in the first wave of innovative jurisdictions to implement Property Assessed Clean Energy (PACE) programs.

The White House Middle Class Task Force, and the White House Council on Environmental Quality issued a "Recovery through Retrofit" report in October 2009. The report prioritizes PACE programs to help families overcome fundamental barriers to investment in energy-efficiency including

Limited access to capital
High transaction costs for traditional loan products
Lack of coordinated energy-efficiency to the home buyer on the value of energy-efficiency investments
Risk of stranded investments if the home is sold before the improvements pay for themselves.

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HELP Benefits

HELP could provide financing for needed investments in insulation, air-sealing, energy-efficient lighting and heating, cooling equipment and other energy-efficiency and renewable energy home improvements.

Implementing energy efficiency improvements can: