It’s so true that as the old saying goes “the devil is in the details!” The rush to solar and other energy savings schemes has spawned lots of opportunities and pitfalls for homeowners. Often times something that looks awfully good ends up being a terrific headache.
We’ve written in previous newsletters about the dangers of leasing a home solar system. One of the consequences could be to wreck your chances of selling the home down the road. (This article was in our 4/21/15 newsletter).
We’ve also written about ways to purchase solar systems and other energy savings options like insulation upgrades, new energy efficient heating and air conditioning systems, etc. through the use of special borrowing programs such as “CaliforniaFIRST, PACE,” etc. (This article was in our 5/10/15 newsletter).
The idea of this article was purchasing your solar system rather than leasing it would eliminate the dangers of selling the home. In theory, that was right. In reality, it could be very wrong.
The detail is in how you buy that solar system, HVAC system, etc. Using the special borrowing programs noted could still land you in great difficulty when you want to sell your house later. These loan programs were authorized by the state and are paid off as a special assessment on the property. They are paid monthly wrapped into the mortgage payment. They are structured by the state to be paid off first if there is a foreclosure.
This detail is not acceptable to the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. Their loans must be ahead of these assessments and paid before them if there is a default. What this means is that if a buyer for your house wants to get one of these mortgages, which are the great majority of all mortgages, the loan will be denied.
This is happening more and more often now. The poor sellers are put in the position of paying off the assessment balance in full before they can sell the house.
The lenders and state and federal entities involved here are “talking” about ways to fix this problem. But if they do anything, it will not be soon.
If you are thinking about doing one of these types of loans and there is a possibility you might want to sell anytime during the life of the assessment, we strongly urge you to be very careful and investigate very thoroughly before making your decision.
For a more in-depth discussion of this issue and examples of real-life effects on some home sellers, go to this Wall Street Journal article; Clean-Energy Loans Make for Messy Home Sales or if you’re not a subscriber, just Google “Clean-Energy Loans Make for Messy Home Sales” and click the first link in the results.
If you have already done one of these and cannot figure out how it is structured, call Libby at 925-628-2436. She can look at the details of the loan and let you know what you’ve got.