Yesterday the U.S. Department of Housing and Urban Development (HUD) announced a pilot program to finance $25 million in home efficiency upgrade loans: Backed by the Federal Housing Administration (FHA), these new FHA PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.
Under the Pilot Program, HUD, through FHA-approved lenders, will insure loans for homeowners who are seeking to make energy improvements to their homes.
This pilot loan program is interesting in the wake of the Property Assessed Clean Energy (PACE) controversy, wherein property tax-based financing of home efficiency improvements were rejected by Fannie Mae and Freddie Mac, among others. More information on the PACE controversy is available here.
A big issue with the PACE structure was that the PACE loans were superior in priority to the mortgages.
Will the FHA Powersaver loans be subordinated to the mortgages on the homes? The guidance does not say.