March 2010

Read the HousingWatch piece at:

My take on PACE programs is that they cause far too much concern downstream to be leaned on as the “Holy Grail” of energy efficiency finance (or green real estate finance).  In some ways, PACE programs have greatly slowed momentum and even stalled already slow market adoption rates of green banking and green job growth.  Our problems are bigger than PACE programs, which are complex at best and extremely risky at worst.

In fact, simple programs like myEnergyLoan exist to compliment Energy Efficient Mortgage or Energy Improvement Mortgage loan products.  These programs utilize private bank money to get an even better result, with greater security for the investors and clearinghouses.  There are uniform ways of determining incentive dollars which literally have the ability convert conventional capital to natural capital – freeing mortgage lenders to choose the loan that best suits client needs – myEnergyLoan invented the most widely adopted method for doing this very thing.

Don’t misread this, however, as my position is not so severe that I reject PACE programs…I  like them for many reasons.  For instance, they provide the funds for upfront energy efficiency improvements and that’s a really great thing, considering home values leave little, if any, equity to support the improvements.  They also provide an ability to pass along the cost burden from owner to owner, rather than forcing the original borrower to shoulder the entire cost of efficiency that future occupants (or investors) will enjoy.  That’s a meaningful contribution to green lending.

Training is desperately needed in order for loan officers to recognize these different programs and the opportunities that they provide…consider that a well trained loan officer could utilize FHA 203K loans to add solar to homes with literally no money out-of-pocket for qualified borrowers – while at the same time providing funds for weatherization and appliance upgrades.  These programs exist already, so why plow billions of dollars into PACE programs without at least understanding and utilizing existing options?  Using our program as an example, the myEnergyLoan Green Lending Network exists to train loan officers and bank executives (and at nominal expense) how to address this market at a critical time on most bank life cycles.  The tide needs to change one lender at a time, one loan officer at a time, one loan at a time.

As one commenter on an AOL HousingWatch blog points out – private funds are what will get us out of this mess, not endless public entitlement programs which lead to deeper and deeper national debt, offsetting the savings and national security that we should all be enjoying as a result of increased energy efficiency and energy independence.  Some of these programs actually lead us into uncharted water where results are hard to predict even for the most anal actuary, which is a real shame considering green buildings offer an overall lower risk gradient, making underwriting decisions for green buildings so much simpler.

My strong opinion on PACE is that before PACE programs should be wholeheartedly adopted, banks and investors that deliver to Fannie and Freddie (at the least all tarp-recipient banks) should be regulated such that they have to include Energy Efficient Mortgages and Energy Improvement Mortgages as available loan options.  The EEM and the EIM are elected loan products for banks and when you consider that many mega banks have massive fossil fuel energy loan departments and major fossil fuel energy holdings in their own portfolios, they have absolutely no reason whatsoever to elect to offer them on their own…especially when fossil fuel scarcity is already driving up profits for them with no end in sight.  In light of the fact that most major banks are now boasting about their own LEED-certified buildings, one would think they would offer green loan products so that their clients can benefit as they do themselves.  Community banks are the best positioned to actually take advantage of this before the big banks figure out that greenwashing their way through this market is a huge mistake.

One group,  Natural Capital Group (NCG) utilizes an innovative program called the BLUEPRINT FOR GREEN Energy Finance Program.   Through a unique strategic partnership with myEnergyLoan, for instance, NCG compliments PACE programs and is positioned to bring large-scale private investment to virtually any state or municipality without compromising public interest or public benefit funds.  Together, we deliver a robust program that includes comprehensive training, education and marketing support to lenders who voluntarily agree to provide lender incentives to offset closing costs and reduce interest rates because it simply makes great business sense to do so.  Public benefit funds can be better used by matching myEnergyLoan incentives dollar for dollar, providing overall affordability with longer lasting impact – and there is NO downside for anybody involved in the transaction.  Oh, except for the lender who earns slightly less yield (% profit), but who originates larger loan amounts in order to increase total earnings (if that’s a downside)!  In any event, green loan volume benefits the lender because volume is still volume – and with less risky collateral – the positive impact on bank deposits notwithstanding.

FACT:  I recently (last week) surveyed 63 banks to see if they offered the EEM or EIM program, including the countries largest lenders.  Only one large lender responded with guidelines as requested and only 3 out of 63 responded that they do, indeed, offer the EEM and/or EIM.  This means that two of the positive respodents couldn’t locate EEM guidelines – even though they said they offer them. 

Think this through a little bit more and you might draw a similar conclusion…green banking is solution banking and it is best when applied locally, using private monies supported by local politicians and policy makers who provide seed money through Federal subsidies like ARRA funds and state block grants.  But this is not a one-size-fits-all market and all of these tools can actually be put to good use.

Who better than myEnergyLoan to bring you this positive news and clarity on the PACE programs that are causing such heated debate?  We have been innovating green real estate finance programs since 2005.  While nearly every bank in America was ignoring the shift to a green economy, we were financing it! 

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The Home Performance Resource Center has recently published a white paper on Best Practices for Energy Retrofit Program Design and we know that they hit this out of the park. GRAND SLAM, in fact.


“Despite the prospect of reduced household energy bills, homeowner acceptance of these measures has been hampered by a combination of upfront capital costs, low public awareness, consumer inertia and limited availability of dedicated energy retrofit services.”


“Rebates and other financial incentives have proven to a be a powerful tool for overcoming consumer inertia, particularly in emerging markets where public awareness about energy retrofits remains low…the most successful programs provide a simple, consumer-friendly process for obtaining incentives, with clearly defined requirements and minimal paperwork….”

further still…

“Programs that certify participating service providers build trust in the industry and make it easier for homeowners to choose…as with incentives, programs should design financing programs that are easy for consumers to understand and obtain.”

We are floored, but not surprised, by the clarity of this white paper. We also recognize that it precisely describes the myEnergyLoan program. Way to go, HPRS and EfficiencyFirst.

Download your very own copy of the HPRC White Paper by following this link:

You can soon find a link to the white paper at