Fannie Mae rolled out new rules on properties with solar panels last week. If the solar system is being purchased and financed by the current homeowner and the solar company places a UCC filing against the home for their solar system, then here are Fannie's new rules-
The payment to the solar company must be counted in the borrower's debt to income ratios like a property tax payment. Thus, some buyer's loan if they are buying a home with solar system could be denied because of excessive debt to income ratios. As a listing agent YOU MUST FIND OUT THE PAYMENT TERMS FROM YOUR SELLER.
Second, the dollar amount of the UCC Filing is now considered a second lien against the property. Thus, the new homeowner's loan just got more expensive. How much more expensive? At a bare minimum Fannie Mae will charge an additional fee of 37.5 basis points to the buyer of the home. On a $300k loan this fee is $1125 and this fee could be thousands of dollars depending on loan to value and credit scores for the borrowers.
Third, because the UCC filing is now considered a second lien against the home the new buyer MUST PUT MORE THAN 5% DOWN AND PROBABLY AT LEAST 10% DOWN TO BUY A HOME WITH A SOLAR SYSTEM that is being financed and has a UCC filing against the home!
Fourth, the appraiser can consider the solar panels in the value of the home, which is good news.
Thus, if your home sellers' home has a solar system you will need to find out first the following-is the system-
Owned outright by the homeowner.
Being purchased by the homeowner by way of a loan.
Leased by the homeowner
Part of a Power Purchase Agreement
Second, you will need to find out if there is a UCC filing against the home. How do you do this? You will need to order an O&E Report as I have been told about 95% of O&E's will show this UCC filing!
Next, if the solar system is being purchased and financed, but the solar company has NOT placed a UCC filing against the home then Fannie says there is no second lien against the house which eliminates my 2nd and 3rd bullet points above. However, bullet point #1 still applies.
Now, here are the rules on solar systems that are being leased or have a Power Purchase Agreement-
The monthly lease payment will have to be counted in the borrower's debt to income ratios unless the lease guarantees a certain amount of energy will be produced.
On a Power Purchase Agreement the payment to the solar company does not have to be counted in the borrowers debt to income ratios.
The value of the solar system can NOT be counted in the home's appraised value.
If the home has a UCC Filing against it for the solar system Fannie Mae does NOT count this UCC filing as a second lien unlike the above scenario. Which is great news.
In summary, it's best by FAR to have a solar system that is leased or under a Power Purchase Agreement. Second best is a owning the solar system outright. Third best is a solar system being purchased by loan in which the solar company has NOT placed a UCC filing against the home.