As Kermit in Sesame street sang: ‘It’s not easy being green’
Sonoma County in general has been promoting lowering our dependence on fossil fuels for a while now. Not only in big things but also in small things like using the old fashioned clothes line for drying clothes. That’s how I grew up in the Netherlands.
A great program that was developed a few years ago is the Sonoma County Energy Independence program (SCEIP
With SCEIP, a home owner can apply for a loan against the property for energy efficient upgrades: Windows, water heater, furnace, solar panels etc. It is a loan against the property, to be paid back in 15 years via property taxes. The current interest rate is 7%. The idea was to encourage home owners to make older homes more energy efficient. And that when a home owner does the upgrades, sells the home that the next home owner can not only benefit from the savings but also help paying for it. Great idea…
However, lenders do not see the loan as part of assessments on the property taxes. With property taxes generally one also pays for the school, fire department, road bonds… For instance the road bond used to build Fountain Grove Park way is being paid for by home owners as part of the property taxes. Some homeowners have paid it of. When a home is for sale in Fountain Grove it is part of the seller disclosures and a prospective buyer will also see it when he received a copy of the property tax bill.
Now we see homes coming on the market that have the energy efficient upgrades. When the first home went into escrow, it was interesting to see that the lender who was chosen to provide the mortgage for the buyer, did not accept the SCEIP assessment on the property and required that is was paid of before close of escrow. Reason: they see it as an other loan against the property, thus the SCEIP lien will become senior to theirs when they new loan gets recorded. This means that in case of default, they are not in first position and thus responsible for the SCEIP lien in case they foreclose on the property. Also the government loan programs FAFH – Fannie Freddie, do not recognize the program and require the SCEIP assessment to be paid of before they will put a loan on the property…
Extra note, the above is also the case when a home owner wants to refinance his/her property to take advantage of the current historic low interest rates…
Sonoma County is protesting this and has taken FHFA to court.The latest update is on the website.
While the above should not stop a home owner from taking advantage of this program, it is good to be aware of the above developments. AND when you buy a home ALWAYS read the preliminary title report as well as the copy of the tax bill.
Have a most wonderful day!
Mirjam