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FHA PowerSaver
FHA SINGLE FAMILY HOUSING PILOT PROGRAM
NOVEMBER 9, 2010
September 10, 2010
BACKGROUND & PURPOSE
Helping homeowners make cost-effective home energy
improvements is a top priority of Administration and HUD.
The Vice President launched the “Recovery Through Retrofit”
interagency initiative in fall 2009.
DOE provided substantial grant funding for local retrofit
efforts through the Recovery Act in 2009-2010.
Congress directed HUD to create an innovative pilot program
and provided $25mm to support in FY 10 budget.
Many communities had planned to utilize “PACE” financing,
but it ran afoul of federal regulators’ concerns.
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September 10, 2010
BACKGROUND & PURPOSE
Goals for the pilot
Facilitate the testing and scaling of a mainstream
mortgage product for home energy improvement loans
that includes liquidity options for lenders, resulting in
more affordable and widely available loans than are
currently available for home energy retrofits.
Establish a robust set of data on home energy
improvements and their impact – on energy savings,
loan performance, property value and other metrics –
for the purpose of driving development and expansion
of mainstream mortgage products to support home
energy retrofits.
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September 10, 2010
ACTIONS TO DATE
Developed product leveraging the framework of
Title I.
Federal Register
Solicits lender participation.
Defines product parameters.
Defines use of Energy Innovation Funds.
Selected city/states based on developed “green”
action plans for DOE grant funds.
Developing liquidity options within the
marketplace.
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September 10, 2010
TARGET MARKETS
Participating lenders will be required to target
markets that have already taken affirmative
steps to expand home energy improvements.
There are many suburban, rural and urban
areas that will be eligible on this basis –
provided a participating lender serves their
market.
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September 10, 2010
TARGET MARKETS
The locations listed on the following page are
all eligible markets for lenders to serve in the
Pilot. In addition, FHA will consider lenders’
interest in other communities, subject to an
assessment of such communities’
infrastructure for implementing residential
retrofit programs:
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September 10, 2010
TARGET MARKETS
State Community State Community
AL Huntsville MO Missouri statewide
AZ Phoenix NC Greensboro, Carrboro, Chapel Hill, Charlotte
CA Los Angeles, San Francisco Bay Area, Sacramento, San NE Omaha, Lincoln
Diego, Santa Barbara County
CO Boulder County, City and County of Denver, Garfield NH Berlin, Nashua, Plymouth
County, Eagle County
CT Consortium of 14 Connecticut Towns: Bethany, NJ Camden
Cheshire, East Haddam, East Hampton, Glastonbury,
Lebanon, Mansfield, Portland, Ridgefield, Weston,
Westport, Wethersfield, Wilton, Windom
FL Jacksonville NY New York statewide
GA Atlanta, Decatur OH Cincinnati, Toledo
IL Chicago region OR Oregon statewide
IN Indianapolis, Lafayette PA Fayette County, Philadelphia
KS Riley County SC Charleston
KY Northeast Kentucky TX Austin, San Antonio
LA New Orleans VA Charlottesville, Hampton Roads/Virginia Beach
MA Lowell WA Seattle, Bainbridge Island
MD 16 towns in Maryland: Berlin, Cambridge, Chestertown, WI Madison, Milwaukee, Racine
Cumberland, Denton, Easton, Elkton, Frostburg,
Oakland, Princess Anne, Dundalk, Westminster, Havre
de Grace, Salisbury, Takoma Park, University Park
ME Maine statewide US Virgin US Virgin Islands
Islands
MI Detroit, Grand Rapids, and southeast
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September 10, 2010
FHA POWERSAVER & STANDARD TITLE I PI
FHA PowerSaver Loan Standard Title I PI Loan
FICO •660 minimum •No requirement
Property Valuation •Exterior-Only Inspection Residential Appraisal •No requirement
Report (Form 2055); or
•Other approved valuation method
CLTV •100 percent •No requirement
Property Types •Single Family Residence that are detached from •Single Family Residences
other dwellings •Condominiums
•Co-operatives
•Manufactured Homes
Occupancy •Owner-occupied •Owner-occupied
•Non-owner-occupied
•Investor
No of units •1 •1-4
Loan Term •15-years (20-years for renewable upgrades) •20-years
Disbursement of proceeds to •50% at closing/funding. •100% at closing/funding
the borrower •50% when retrofit improvements are completed.
Who can originate? •Lenders (Financial Institutions) •Lenders (Financial Institutions)
•Dealers
Discount Points •Third parties may pay and must be bona fide •Only borrowers can pay
Uses of Proceeds •EE and RE improvements only—FHA/DOE list •General home improvements, not necessarily EE or RE
(based on Home Star)
Fees and Charges •List of fees & charges for Home Energy Retrofit •Fees & charges for Title I PI & MF home loans
Loan Pilot. Specifically, appraisal fees can be
financed.
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September 10, 2010
FHA POWERSAVER & STANDARD TITLE I PI
FHA PowerSaver Loan Standard Title I PI Loan
Energy Innovation Fund For the Pilot, HUD will deploy up to $25 million appropriated by the N/A
Act for an Energy Efficient Mortgage Innovation Fund pilot program
directed at the single family housing market. HUD will utilize those
funds primarily to provide incentive payments with grant funds to
participating lenders to support approved activities that deliver bona
fide benefits to borrowers.
Loan Servicing •In addition to standard TI requirements, the servicer of a Retrofit Under the Title I program, lenders remain
Pilot Program loan, whether the servicer is the original lender or a responsible for proper collection efforts, even
subsequent servicer, as under FHA’s major single family program though actual loan servicing and collection may be
(commonly referred to as the Title II Program), is fully responsible performed by an agent of the lender.
for the required servicing responsibilities. As under the Title II
program, “the mortgagee shall remain fully responsible for proper
servicing, and the actions of its servicer shall be considered to be
the actions of the mortgagee.” HUD emphasizes that the servicer
shall also be fully responsible for its actions as a servicer. HUD
intends to seek recovery from servicers if FHA losses are
attributable to servicing errors.
•In addition, as noted, lenders that also service loans they originate
under the pilot program may utilize HUD incentive payments under
the program to reduce servicing costs that deliver bona fide benefits
to borrowers.
Insurance Claims Procedure Under the Pilot Program, the holder of the note will be accountable Under the Title I program, HUD requires that
to HUD for origination/underwriting errors, and the servicer will be insurance claims be fully documented.
accountable to HUD for servicing errors. If a claim would be denied
due to servicing errors, FHA will pay the claim to the holder of the
note and seek recovery of its losses from the servicer. To effectuate
this, the lender must obtain a subrogation agreement from the
subservicer at loan origination that will be assigned to HUD when
an insurance claim is filed. Losses to HUD will be mitigated by
recoveries from defaulted borrowers.
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September 10, 2010
WHAT YOU MAY HEAR
When will PowerSaver be available?
Comment period ends December 27,2010
Program to be available early 2011
Is there a secondary mortgage market outlet?
Some lenders will hold PowerSaver loans they originate,
others may wish to sell them.
FHA is currently working with Ginnie Mae to develop a
government-guaranteed securitization product.
FHA is optimistic that other options for liquidity for
PowerSaver loans will emerge.
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September 10, 2010
WHAT YOU MAY HEAR
What is required for lenders to participate?
First and foremost, lenders must be FHA approved as
FHA Title I lenders to be eligible to participate in
PowerSaver. Title II lenders selected to participate who
are not Title I approved lenders will be required to
obtain Title I approval in order to participate in the pilot
and may do so under an expedited process.
Non approved lenders may apply to become an FHA
approved lender through the current process.
Other criteria as outlined in the FR Notice and FAQs for
lenders.
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September 10, 2010
WHAT YOU MAY HEAR
What are the expected interest rates, fees and
charges?
Rates are expected to be available at affordable
and competitive rates.
Fees are based on existing Title I plus two changes:
Appraisal fees can be financed
Inspection fee will be $125 (previously was $75)
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September 10, 2010
RESOURCES
On the Title I Home Page
http://www.hud.gov/offices/hsg/sfh/title/ti_home
.cfm
Industry Fact Sheet
FAQs for Lenders
FAQs for Consumers
Press Release
FR Notice
Federal Register Notice [Docket No. FR-5450-N-
01]
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September 10, 2010
WHO TO CONTACT
Lenders are required to send their Expressions
of Interest to Participate to
FHAPowerSaver@hud.gov as stated in the FR
Notice.
For additional information as stated in the FR
Notice, contact:
Patricia McBarron
Office of Single Family Housing Development
202.708.2121
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September 10, 2010
QUESTIONS & ANSWERS
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