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The parent company of Rocket Mortgage is making a foray into the solar-energy industry in a bid to make it easier for homeowners to install solar panels on their properties.
The first piece of Rocket Companies’
RKT,
new initiative is a new refinance product that allows homeowners to consolidate pre-existing loans used to finance energy-efficiency improvements with their overall mortgage. The product is designed as a rate-and-term refinance rather than a cash-out refinance, which Rocket said offers more flexible guidelines including a higher loan-to-value ratio.
The refinance will be available to anyone with a solar loan, including so-called PACE loans and private loans. Homeowners who refinance will still be able to receive federal tax credits for installing the solar panels. But unlike with other loans tied to financing solar panels, borrowers who take out one of these refinance loans will not be required to put the proceeds of that tax credit toward paying down their debt.
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‘It gives you the ability to do what you will with that tax credit.’
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“It gives you the ability to do what you will with that tax credit,” Joel Gurman, an executive vice president at Rocket Companies, told MarketWatch. “You can pay off your principal balance, but you don’t have to.”
Another benefit, Gurman noted, is that by consolidating their solar-panel debt with their mortgage, they will in most cases be reducing the amount they pay in interest on the energy-efficiency upgrades. Most loans on solar panels carry higher interest rates than standard home mortgages.
The refinance product is now available to consumers, and it’s just the first piece of Rocket’s broader push into solar energy. In the fourth quarter, the company will begin testing a new platform designed to simplify the process of financing and installing solar panels.
Homeowners will be able to use the platform to calculate whether they stand to benefit from installing solar panel and their options in terms of financing — with Rocket as their lender. The company will then facilitate the installation of the solar technology they purchase. Following the testing phase, Rocket plans to fully unveil the platform in early 2022.
“We’ve got our ‘Push Button, Get Mortgage’ concept — we want to move to a place where it’s ‘Push Button, Get Solar,’” Gurman said. The loans Rocket will offer on the platform will be its own proprietary loan product, and not PACE loans.
Loans for energy-efficiency upgrades have faced criticism
Loans for energy-saving home improvements have become increasingly popular in recent years, but have also attracted criticism. PACE loans, which stand for Property Assessed Clean Energy, have been used for more than 300,000 home upgrades since they first were introduced in 2009, according to PACENation, an industry group.
The loan programs are set up by local governments to encourage energy-efficient upgrades — including solar panels, but also projects like installing artificial turf lawns or pool covers.
The loans can carry high interest rates, and not all homeowners are ultimately able to avail themselves of the tax benefits involved. They also can complicate home sales, since the PACE loan must either be passed onto the new homeowner or paid off when a property is sold.
Mortgage and banking industry groups have also expressed concerns in the past about how PACE loans could take priority over the home mortgage if the loan goes into delinquency. In 2019, the Consumer Financial Protection Bureau began soliciting input on new regulations over the loans.
Gurman said that Rocket’s new refinance product could alleviate some of the headaches involved with energy-efficiency loans, since it would roll everything into one loan.
Regardless of the challenges these loan programs have presented some homeowners, millions of Americans have sought out solar energy options. A recent study from the Solar Energy Industries Association and Wood Mackenzie estimated that one in eight homes will have solar technology by 2030.
Shares of Rocket Companies are down nearly 12.5% year-to-date, while the S&P 500
SPX,
is up more than 17% over that same time frame.
