Vail Valley ‘smart loans’ program hits roadblock |

Vail Valley ‘smart loans’ program hits roadblock

Dominique Taylor/Vail Daily file photoA voter-approved program to help Vail Valley homeowners finance energy-efficiency improvements like solar panels is faces questions from the nation's biggest buyers of mortgage loans

EAGLE – The drive to start a new “energy smart loan” program in Eagle County has shifted into neutral.

County officials had found money and laid the legal groundwork for the “smart loan” program – which will provide loans for energy-efficient home improvements to local residents. The program was supposed to start taking applications this month, with work on projects starting this summer.

County officials will still take applications, but the loans won’t be written until the Federal National Mortgage Association – Fannie Mae – clears up the confusion created by a May 5 “lender letter.” One sentence in that letter is causing the confusion: “The terms of the Fannie Mae/Freddie Mac Uniform Security Instruments prohibit loans that have senior lien status to a mortgage.”

In short, that seems to mean that the nation’s biggest buyers of mortgage loans won’t accept notes that have smart loans attached to them. If Fannie Mae, and the other federally chartered mortgage buyer, the Federal Home Loan Mortgage Corporation – Freddie Mac – won’t buy mortgages, lenders are much less likely to write those loans. That could make selling or refinancing a home with a smart loan attached far more difficult.

County officials argue that since the smart loans are repaid through property taxes, they shouldn’t be viewed any differently than any other special assessment attached to a tax bill. And, in fact, a Fannie Mae lender letter in September of 2009 seemed to indicate the agency would treat smart loans the same way it treats special improvement districts – which raise a neighborhood’s taxes for sidewalks or other projects.

But local mortgage broker Chris Neuswanger said the smart loans are different than other assessments.

“A special district is done by a vote of the owners in a neighborhood,” Neuswanger said. “An individual homeowner has no say about whther to pay that tax.”

A smart loan, though, is assessed on one home in a neighborhood, and that home will have a significantly higher property tax bill.

The other side of that argument is that the smart loans are supposed to pay for themselves in energy-bill savings. However, there’s no hard-and-fast formula – the kind of thing lenders like to see these days – to tightly define those savings.

Given the current uncertainty, county planner Adam Palmer said there’s little choice but to not complete any loans until government officials and lenders have a clear idea whether Fannie and Freddie will purchase mortgages with smart loans attached.

“If we don’t have a solution in the next couple of weeks, we’ll postpone the program until we get some clarity,” Palmer told the Eagle County Commissioners Tuesday.

Commissioner Sara Fisher agreed, saying the county needs to be “as cautious as we can be” before closing any smart loans.

Commissioner Jon Stavney said both the state and federal governments back the smart loan idea, and wondered how long Freddie and Fannie – both of which are now largely government-owned – would oppose financing on smart loans.

“Our national energy policy is at odds with our housing policy,” Stavney said. “Where’s the consumer in all of this?”

Business Editor Scott N. Miller can be reached at 970-748-2930 or

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