U.S. Department of Energy Energy Efficiency and Renewable Energy

Sample Lending Program in Portland, Oregon

The table below presents basic information about the Clean Energy Works Portland lending program. For information on other programs, see sample state and local lending programs.

BASIC PROGRAM INFORMATION 
Program Name, Location, and Geographic Scope:Clean Energy Works Portland (CEWP), Oregon
Throughout Portland metro region and across Oregon  
Launch Date:Pilot program launched in 2009
Web Site URL:Clean Energy Works Portland
Target Market:Residential
Particular Income or Credit Target:> 590 FICO
Brief Description of Program:The pilot program launched in summer 2009 (proof of concept) for 500 qualified homes in Portland (single-family, owner-occupied). This program was seeded with American Recovery and Reinvestment Act (ARRA), City of Portland, and Living Cities Foundation funds. It focused on financing energy efficiency, comfort, and home safety upgrades. Loans valued at approximately $5 million were made by late 2010. The pilot is now completed, and the state is scaling up with Clean Energy Works Oregon through a $20 million Better Buildings Award.
Financing Capital Source:ARRA and State Energy Program Funds
CREDIT ENHANCEMENTS
Credit Enhancements (if applicable):Loan Loss Reserve Fund = 10%
*Goal is to reduce % of loan loss reserve over time, closer to utility default rates of (1%–2%).
Source of Capital for Credit Enhancement:Energy Efficiency and Conservation Block Grant  formula and competitive dollars; local funds
Custodian of Credit Enhancement:Clean Energy Works Oregon
Interest Rate Buydown:Not applicable
Structure of Interest Rate Buydown (if Applicable):Not applicable
PARTNERS
Method of Selecting Participating Lenders:Direct negotiations
SECURITY
Security:Secured by deed of trust on homeowner property (blind)
Disconnection Threat for Nonpayment:None
REPAYMENT STRUCTURE
Repayment:To lender through a repayment structure on a monthly utility bill
MAJOR LOAN FEATURES
 
  1. Interest Rate – 5.99% (3.99% for <250% Federal Poverty)
  2. Loan Term – 20 years
  3. Loan Size – Max loan amount is $20,000
  4. Credit Score – >590
  5. Debt-To-Income – Not applicable
  6. Costs – There are $900 in fees per project: a $300 loan fee is applied to the loan by Enterprise Cascadia, and $600 is allocated for the initial home assessment. The assessment includes $300 for the Home Performance with ENERGY STAR assessment and another $300 to cover an Energy Advocate and administrative services; both assessment fees are generally covered by cash incentives made available through the Energy Trust of Oregon.
  7. Income Threshold – None
Origination/Servicing:Enterprise Cascadia
LOANS SALE BUILT IN TO PROGRAM
Are Loans Held to Maturity?Yes
If Loans are Sold prior to Maturity, Please Describe:Not applicable
CONTRACTOR PROGRAM 
Are Energy Evaluations Required:Yes
Contractor Program:Contractors join the Energy Trust of Oregon Trade Ally Network and are required to take a BPI training course provided by the Energy Trust to become an Energy Trust Home Performance Contractor. Once that is complete, contractors fill out the Home Performance Inquiry Form and apply for the most current phase of CEWP.
Notable:Underwriting Practices
  • Program uses:
    1. utility repayment history
    2. FICO history to provide the basis for risk assessment.
  • Program considers the length of time the customer has been serviced by the utility, the customer’s utility payment record, and the customer’s credit score.
  • Points are assigned to these criteria in the following manner:
    • Length of time serviced by utility: if less than 6 months, one point.
    • Payment history: If borrower is currently past due, one point.
    • Payment history: If borrower is past due more than 61 days, one point.
    • Notice of disconnection: If borrower has received notice of disconnection for lack of payment in the past 12 months, one point.
    • Credit score: if borrower’s credit score is less than 650, one point.
  • The sum of these points is totaled. Higher risk rating (more points) denotes greater credit risk:
    • Applicants with a Risk Rating of 5 or less are automatically eligible for a CEWP loan.
    • Applicants with a Risk Rating of 6 will automatically receive a second review and may be approved or declined based on further review.
    • Applicants with a Risk Rating greater than 6 are declined.
  • Applicants are automatically declined if:
    • The applicant is not on the title to the home proposed for retrofit.
    • If the applicant is not a resident at the home with a minimum of one year of home occupancy.
    • Credit history shows foreclosure pending, in bankruptcy, federal tax liens, child support delinquency, or any other judgment that would impact ability to repay the loan.
    • Utility score is greater than 1 and credit score is under 590.
    • Credit report shows mortgage currently past due.
Challenges:Demand creation: Difficulty predicting demand response to marketing efforts.
Transaction costs: Goal is to reduce transaction costs (loan fees and energy advisor fees) over time.