Chance Gates' Blog

An Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.

To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.

EEMs are typically used to purchase a new home that is already energy efficient such as an ENERGY STAR qualified home. The term EEM is commonly used to refer to all types of energy mortgages including Energy Improvement Mortgages (EIMs), which are used to purchase existing homes that will have energy efficiency improvements made to them. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment. EIMs allow the borrower to use the money saved in utility bills to finance energy improvements. Both EEMs and EIMs typically require a home energy rating to provide the lender with the estimated monthly energy savings and the value of the energy efficiency measures — known as the Energy Savings Value.

EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs.

Conventional Energy Efficient Mortgages

Conventional EEMs can be offered by lenders who sell their loans to Fannie Mae and Freddie Mac. Conventional EEMs increase the purchasing power of buying an energy efficient home by allowing the lender to increase the borrower’s income by a dollar amount equal to the estimated energy savings. The Fannie Mae loan also adjusts the value of the home to reflect the value of the energy efficiency measures. For more information about Fannie Mae’s EEM you can call 1-800-7FANNIE (732-6643). Visit Fannie Mae’s web site to find a Fannie Mae-approved lender in your state. A PowerPoint presentation is available with more information about Freddie Mac’s EEM .

FHA Energy Efficient Mortgages

The mortgage loan amount for an FHA EEM can be increased by the cost of effective energy improvements. The maximum amount of the portion of the EEM for energy efficient improvements is the lesser of 5% of:

• the value of the property, or
• 115% of the median area price of a single family dwelling, or
• 150% of the conforming Freddie Mac limit.

For more information on FHA EEM loan limits refer to FHA Mortgagee Letter 2009-18. No additional down payment is required, and the FHA loan limits won’t interfere with the process of obtaining the EEM. FHA EEMs are available for site-built as well as for manufactured homes. Applications for an FHA EEM may be submitted to the local HUD Field Office through an FHA-approved lending institution. HUD has a searchable list of approved lenders . Information about the FHA EEM can be found on FHA’s web site . Additional information is available from HUD’s Office of Single Family Housing by calling (800) 569-4287. There is also a fact sheet about FHA’s EEM (70KB). The Systems Building Research Alliance website has information about FHA EEMs for ENERGY STAR qualified manufactured homes.

VA Energy Efficient Mortgages

The Veteran’s Administration (VA) EEM is available to qualified military personnel, reservists and veterans for energy improvements when purchasing an existing home. The VA EEM caps energy improvements at $3,000–$6,000. Borrowers should ask their lender about a VA EEM at the beginning of the lending process. More information about VA EEMs can be obtained from the Web site for the U.S. Department of Veteran’s Affairs or by calling (800) 827-1000. Chapter 7 of VA Pamphlet 26-7 (Revised) (1.5MB) contains lender guidance on the VA EEM.

To learn more about EEMs contact Fannie Mae, Freddie Mac, the FHA or the VA. Additional information about writing energy-efficient mortgages can be found on the Web sites for the U.S. Department of Housing and Urban Development (HUD) and the Residential Energy Services Network (RESNET) .

ENERGY STAR Mortgages

An ENERGY STAR mortgage pilot program is underway to demonstrate that financing can be a useful tool for enhancing the success of investing in energy-efficient homes by lowering borrowing costs, as well as demonstrating the importance of utilizing a network of qualified energy auditors and contractors to ensure that cost-effective energy efficiency improvements are realized.

By incorporating the costs of energy efficiency improvements into the loan itself, an ENERGY STAR mortgage allows borrowers to pay for those investments over the life of their loan and deduct the interest from their federal and state income taxes. One of the key benefits of an ENERGY STAR mortgage is that a borrower can finance and make energy-saving improvements to their homes without paying more for financing than they would for a typical mortgage. Participating lenders also offer borrowers an additional financial benefit above and beyond the value of the home energy savings, such as discounted mortgage rates, reduced loan fees, or assistance with closing costs.

Read more at http://www.energystar.gov

As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog. Please feel free to use my back door to the MLS and search the houses available in the Reno/Sparks and most of Northwest Nevada neighborhoods. I can be reached by email @ chance at ballard-company.com or  http://www.myspace.com/chancegates .  You can also follow me at http://www.twitter.com/chancegates

The best thing about animals is that they don’t talk much.

Love is an energy which exists of itself. It is its own value.

We can only be said to be alive in those moments when our hearts are conscious of our treasures.

When God loves a creature he wants the creature to know the highest happiness and the deepest misery He wants him to know all that being alive can bring. That is his best gift. There is no happiness save in understanding the whole.

I am convinced that, except in a few extraordinary cases, one form or another of an unhappy childhood is essential to the formation of exceptional gifts.

When you’re safe at home you wish you were having an adventure; when you’re having an adventure you wish you were safe at home.

Marriage is a bribe to make the housekeeper think she’s a householder.
Thornton Wilder

As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog.  You can email me @  chance at ballard-company.com or http://www.myspace.com/chancegates

By Steve Gelsi

RISMEDIA, June 25, 2010–(MCT)–For decades, the push for solar power has stalled not on public support, but on cost. That might be about to change with the launch of a unique tax program that’s exciting some industry veterans.

Gary Garber is one. Garber built his first solar panels from scratch back in 1976. They went up on his parents’ roof top in nearby Walnut Creek, Calif. Today he runs Sun Light & Power, a 60-employee solar panel installation firm that’s been behind some of the San Francisco Bay Area’s biggest solar power arrays.

Like many other “alternative” industries, solar energy has gradually gone mainstream, scaling up operations, driving down costs — even partnering with local governments to promote renewable energy.

Yet it still generates less than 1 percent of the nation’s electricity. Why? Because a typical residential system’s $25,000 price tag is a huge hurdle for most homeowners.

Clearing that hurdle is the main mission behind an effort gaining momentum around the country called Property Assessed Clean Energy, or PACE. It allows people to borrow money from municipalities for energy efficiency upgrades and pay it back through their property taxes.

Gerber said the key to the program’s success is that energy savings paid for by PACE can be used to offset those higher property taxes.

“Let’s say you replace your $100 utility bill with a $100 a month payment to your property taxes — it’s pretty close to a wash,” said Gerber, who also serves as president of the California Solar Energy Industries Association. “And if it isn’t a wash this year, then two or three years from now it will be, because energy costs are going up.

“You’re basically saying, ‘I’m going to pay the same amount for energy for the next 20 years. I’m going to peg my energy cost to today’s costs.’ That’s pretty compelling.”

PACE was launched in 2007 as a pilot project hatched by Cisco DeVries, a former assistant to the Berkeley mayor. When the Berkeley test took off, states began passing legislation to allow municipalities to create their own programs. DeVries now works as president of Renewable Funding LLC, a private company that helps cities start PACE programs.

At last count, 19 states have passed PACE legislation, including California, Florida, Texas, New York, Massachusetts and Maine.

Some local governments, such as Sonoma County, Calif., in the San Francisco metro area, and Boulder, Colo., have set up PACE programs on their own. Sonoma’s is called Sonoma County Energy Independence Program.

Santa Rosa, Calif., resident Ed Smith said he heard about the county program a few months ago at a local home improvement show and decided give it a try.

Smith had 32 solar panels installed on his home at a cost of about $5,000, including a discount for being among the program’s first participants.

He figures his property taxes rose $100 a month while his electric bill has dropped as much as $300 a month over the past four months.

“It’s been totally fantastic,” Smith said. “We’d been wanting to do something green. I’ve been recommending it to my neighbors. It would be a great thing for schools to do since they have flat roofs that catch a lot of sun. Plus school districts need to save money.”

John Haig, Sonoma County energy and sustainability manager, said there was a surprisingly strong response to its version of the PACE program. Its energy improvement loans charge 7 percent interest and participants can choose to pay them off in 5, 10 or 15 years.

So far, Sonoma County has been paying about $2 million a month for energy improvement projects. Haig said the money has helped local contractors withstand a slowdown in residential construction.

Sonoma County initially put up the money for the loans, but plans to issue bonds or other debt instruments backed by property owner payment schedules.

“The appeal of the program is inherent in the financing model,” Haig said. “It provides an ability of people to get over the first cost hurdle, which is what stops many people from doing these sorts of projects, and allows them to keep the financing with the property should they happen to sell it.

“They don’t have to feel like they’re going to have to pay for a solar array that they’re leaving in the home in five years, because it stays with the property and the next person picks up the cost,” Haig said.

Wayne Seaton, head of the sustainable public infrastructure group within Wells Fargo Securities’ government & institutional banking unit, said his group has been helping municipalities set up the necessary financing.

“Our role would be to enable municipalities to acquire funding mechanisms for PACE programs and to arrange for cost-effective financing,” Seaton said. “As PACE evolves, we’re confident you will see financing mechanisms coming to the marketplace including bonds.”

Berkeley Mayor Tom Gates said his city is planning to pool resources with several other communities under a program called California First to relaunch its PACE program this year, three years after the pilot program.

“We’re really happy that this is one of the programs that got started in Berkeley, and it’s just taken off like wildfire,” he said. “We found that as good as the program was, you actually need to go to scale.”

Banding together with other communities will help cut administrative costs, he said.

“This is actually a free-market approach, believe it or not, that started in Berkeley; a free-market approach to take solar and make it go all over the United States,” Gates said. “It’s all done through lenders putting up the bonds and placing it on the property. So it’s a good mechanism that’s shown it can travel.”

Solar panel installer Gerber said other issues also need to be worked out, such as keeping interest rates low and assuring that contractors are paid promptly.

In the wake of the real estate crash, Fannie Mae and Freddie Mac, which guarantee many U.S. mortgages, are taking a close look at PACE loans. Some are wary of a program that would increase debt levels while home prices continue to drop.

“It’s got all the right economics to take off in a huge way and then cause huge losses,” David Felt, a retired senior Federal Housing Administration lawyer, told The Wall Street Journal recently. “When you’re able to market to people who can’t get financing for an ordinary home-equity loan, that should set off alarm bells.”

Gates said borrowers must have a good credit rating and equity in the home to qualify. He said the federal government could guarantee PACE bonds and help keep interest rates lower.

Shortly after Ronald Reagan won the presidency in a 1980 landslide, the solar panels installed by Jimmy Carter came down from the White House and the nascent solar business went from a new hero of the energy business to a near-zero.

Over the next 15 years, a period of cheap fuel prices and little government support, Gerber figures 95 percent of California’s solar businesses went bust. But he hung in there.

“I had found what I loved to do,” said Gerber, who kept busy servicing existing solar water heaters and construction projects. “It didn’t even occur to me to stop doing this.”

Toughing it out paid off for Gerber as the nation gradually turned its attention to achieving energy independence and lower greenhouse gas emissions. These policy shifts — and higher fuel prices—brought the solar installation business roaring back.

A nationwide solar tax credit now allows home owners to deduct up to 30 percent of the cost of their solar panels from their taxes, a program Congress has extend to 2016.

In addition, California and many other states require power companies to pay home and business owners for surplus power generated by solar panels through a program called net metering. That gives solar power owners the thrill of seeing their electric meters run in reverse as their surplus power flows onto the grid.

Meanwhile, utilities such as Pacific Gas & Electric Corp., California’s biggest electricity provider, have been investing heavily in solar and wind power to meet strict state-imposed renewable energy requirements.

Another boost comes from power-purchase agreements in which home owners and businesses buy electricity produced by solar panels owned by someone else. This approach is being championed by solar-power company SolarCity.

The Solar Energy Industry Association, the industry’s national lobbying group, is promoting an investment tax credit to defray solar panels’ manufacturing costs.

These and other programs helped U.S. solar power capacity jump 37 percent last year, according to the SEIA.

Yet Gerber said the industry still needs subsidies to compete with fossil fuels, which already receive ample government support.

“We’re getting to what we call grid parity, with the … cost of solar energy getting closer and closer to the standard cost of conventional fuels, which are subsidized,” he said. “If we took those incentives away for oil and coal and nuclear, solar would win right now.”

Incentives or not, solar energy continues to draw support from non-profits, businesses and individuals seeking looking to generate electricity with few environmental risks.

In one of its high-profile projects, Gerber’s company installed a 66-kilowatt solar panel array from SunPower Corp. at Berkeley’s David Brower Center, a large facility housing nonprofit groups and other tenants. The Web site for the building features real-time data on the amount of electricity being generated.

Amy Tobin, executive director of the center, provided a quick tour of the roof on a recent cloudy day and said that people often ask to see the solar panels.

“It’s amazing,” she said. “Look … it’s raining and we still have energy being generated by these panels on the roof.”

Gerber said he’s happy to see solar becoming more mainstream, but still laments the years when America mostly turned its back on solar power.

“We have a technology that, if we had stayed on the right trajectory, we would not be talking about the energy crunch that we’re looking at today,” he said.

As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog.  You can email me @  chance at ballard-company.com or http://www.myspace.com/chancegates

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RISMEDIA, March 12, 2010—As spring approaches, many homeowners grow eager to start remodeling projects to update and refresh their surroundings. Before getting started, it’s a good idea to hire a professional remodeler for a workable plan and better results, according to the National Association of Home Builders (NAHB).

“A professional remodeler knows how to translate a homeowner’s dreams and budget into a beautiful reality,” said Donna Shirey, CGR, CAPS, CGP, president of Shirey Contracting in Issaquah, Wash. and 2010 chairman of NAHB Remodelers. “They have the expertise and skills to satisfy a customer while keeping the budget in check.”

Here are five tips for planning a successful home remodel that you can enjoy for many years to come.

1. Compile a list of home remodeling ideas and draft a budget for the work.
You likely have some projects in mind, such as modernizing the bathroom, renovating the kitchen, replacing windows or repairing the roof. Prioritize your wish list: Maybe you don’t have the budget for your dream remodel, but professional remodelers can maximize your dollars by doing the work in phases, suggesting budget-friendly products and materials and implementing creative design solutions.

2. Look for a professional remodeler to help plan the project.
Start by searching NAHB’s Directory of Professional Remodelers at www.nahb.org/remodel. You’ll get a list of nearby remodelers to contact. Asking friends and neighbors for names of qualified remodelers will also help you find a match for your project.

3. Check the references and background of the remodeler.
After you start speaking with remodelers and find one or two who match your project’s needs, be sure to conduct some background research by checking with the Better Business Bureau, talking to their references and asking if they are a trade association member (such as NAHB Remodelers). Remodelers with these qualities tend to be more reliable, better educated and more likely to stay on top of construction and design trends.

4. Agree on a contract.
Talk over the details of the home remodeling project and begin reviewing the contract. You’ll want to check the remodelers’ insurance coverage, ask about any warranties on their work, know who is responsible for obtaining any building permits and understand the process for making any change orders after the contract is signed. Make sure that you and your remodeler see eye to eye before you sign on the dotted line.

5. Take advantage of the energy efficiency tax credits.
If your remodel includes replacing windows or doors, adding insulation, installing new roofing, upgrading heating or air-conditioning units, updating the water heater or installing energy generating products (such as solar panels, heat pumps or wind turbines) then you can take advantage of federal energy efficiency tax credits through 2010 that will help defray costs and maximize your remodeling budget while reducing home energy bills.

For more information, visit www.nahb.org.

You ever have on of those day when you don’t feel like working, that was me yesterday even thought I love working in the Reno/Sparks real estate.  For those of you who are use to a new article every weekday I apologize for not having one.

As a Reno/Sparks real estate consultant I always welcome any comments or questions on the Reno/Sparks real estate or any of the articles I posted.  You can email me directly at  chance at ballard-company.com

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RISMEDIA, December 12, 2009—Looking for fast, free ways to save on energy around the home this winter? According to Tom Kraeutler, host of the nationally-syndicated home improvement radio show, The Money Pit, there are many common-sense things you can do everyday in your home to lower energy bills.

Tip #1 – Lock your windows. Don’t just close them, but lock them to create an airtight seal that keeps out air leaks and drafts.

Tip #2 – Plug power-draining computers and electronic equipment into a power strip with a switch, so they can all be easily turned off when not in use.

Tip #3 – Turn off lights when leaving a room.

Tip #4 – Get free solar heat by opening the blinds and shades during the day.

Tip #5 – Chill out and do your laundry in cold water.

Tip #6 – Add a sweater and lower the thermostat. For every degree you lower your thermostat, you may be able to save 5% on heating costs.

Tip #7 – Run only full loads in your dishwasher.

Tip #8 – Remove lint often from your clothes dryer and its outside vent. And, run your dryer in the evening, when the extra heat helps warm your house.

Tip #9 – Close the doors (and the heating vents) in rooms with minimal use, like walk-in closets, laundry rooms and guest bedrooms, to reduce heat use in those areas.

Tip #10 – Snuggle up under more blankets at night and turn your heat down lower to reduce energy costs.

“Small things can add up to big energy savings in the home,” says Kraeutler. “You’ll be surprised to find your energy bills dropping by 20, 30 or more dollars each month when you consistently make the effort.
Read more: http://rismedia.com/2009-12-12/around-the-home-10-no-cost-tips-for-saving-energy/#ixzz0ZgYdqFR2

If you look on the back of the power bill, this is a temporary charge to foster the development of new alternative energy projects in Nevada.  Now please understand I have no problem with the development of alternative energy.  I just thought you would like to know what your being charged.

Being a Reno/Sparks real estate consultant I always appreciate any question or comments on the Reno/Sparks real estate or any of the articles I post.

Send all questions to chance@ballard-company.com

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