Prepared Remarks of Secretary Shaun Donovan at Recovery Through Retrofit Progress Report Event

White House

Tuesday, November 9, 2010

Thank you, Secretary Chu -- for that introduction and for your partnership. And let me thank Vice President Biden, for his extraordinary leadership to strengthen America's great Middle Class.

Also, allow me to thank everyone else here today for their work to bring the benefits of energy efficiency home to more Middle Class families as well.

Today's announcements are so exciting because the Federal government is unveiling a set of tools to help take energy efficiency efforts developed in our communities and in the private sector to the scale America needs in the 21st century -- so more families can realize the benefits of lower home energy bills, less pollution, and--most important of all--more jobs.

Unfortunately, families today have very few options for affordably financing energy improvements to one of products they own that needs them the most:

Their homes -- on which Americans currently spend $200 billion every year in home energy bills.

For most homeowners, the options available to finance home energy improvements simply may not make economic sense -- whether it's home equity lines, unsecured personal loans or credit cards.

That's why countless communities--suburban, rural and urban--have taken strong steps to drive demand and build their own local retrofit programs.

But given the scope of the challenge, it is clear that an additional option is needed -- one that is available through mainstream lenders, that homeowners across the country can access to make energy improvements of their choice.

To solve this challenge, HUD turned once again to the Federal Housing Administration -- which throughout our history has pioneered innovative products like the 30-year mortgage.

Under the leadership of Commissioner Dave Stevens, the agency has already done so much to provide affordable homeownership options and keep our housing market afloat during this economic crisis, while ensuring that we protect the taxpayer.

Dave, and Vicki Bott who runs the FHA's single-family operations, both bring extensive private sector experience to the FHA as well as a deep commitment to public service -- and to finding practical solutions to difficult problems.

The result of their hard work is FHA PowerSaver, which I'm pleased to announce to you all today.

Beginning as a two-year pilot, PowerSaver will allow homeowners to borrow up to $25,000 over a period as long as 20 years to make energy efficiency and renewable energy improvements to their homes.

Allow me to explain three features of PowerSaver, which we believe give it the potential to help create a market for home energy improvements.

First, it is designed to be a mainstream mortgage product affordable and available to American homeowners.

This means private lenders, including national and local banks, credit unions and community lenders, will not only be participants in this process, but central to its success.

To encourage their participation, FHA will guarantee up to 90 percent of the loan with a streamlined insurance claims process.

PowerSaver lenders will be eligible for incentive grant payments from FHA to enhance benefits to borrowers, such as lower interest rates.

Beginning today, we are seeking a limited number of lenders to participate in the program. We have posted instructions on HUD's website explaining how lenders can apply -- and will announce a list of participating lenders early next year.

I would add that because liquidity is so crucial to ensuring homeowners can access these loans, we've designed PowerSaver to be viable on the secondary market -- and HUD's financing arm, Ginnie Mae, will be a resource to us in that effort. And I want to thank Ted Tozer who heads up Ginnie Mae for his leadership.

Secondly, PowerSaver provides real protections for the taxpayer -- requiring responsible underwriting criteria and guidelines and financed independently of our flagship FHA Single Family program.

PowerSaver loans will only available to borrowers with solid credit, manageable overall debt and some equity in their home.

Lenders will be required to have real "skin in the game" as well, giving them an incentive to make quality loans with sound underwriting.

And to ensure that homeowners make the most informed decisions possible, FHA will also strongly encourage homeowners to get an energy audit, such as DOE's Home Energy Score that Secretary Chu just described -- so that they are aware of the most impactful, cost-effective improvements that can be made to their homes.

Lastly, PowerSaver will take advantage of the data we gather on its performance.

With better data that proves these investments pay for themselves in the long run, we believe PowerSaver can unlock a much broader scale of transformation -- driven not just by the public sector but also through private investment.

And we intend to prove it by tracking energy saved, bills reduced and value created.

Information on PowerSaver is available on the HUD website -- and we hope communities will take full advantage of it as they educate and inform lenders and consumers alike of the benefits PowerSaver will provide.

And so, this is an exciting moment -- one that wouldn't have been possible without the work of my colleagues from across the Administration, particularly Secretary Chu, Kathy Zoi and the rest of the DOE team that has been essential to developing PowerSaver, as well as Brian Deese and Pascal Noel at NEC, Brian Levine in the Vice President's office and Nikki Buffa and the team at CEQ.

Over the past 21 months, community after community has told us that they need a flexible tool that helps them to finance home energy improvements in their markets -- dictated not by the one-size-fits-all approach of yesteryear, but tailored to local conditions and local needs.

With PowerSaver, that is exactly what we are providing -- making good on our commitment to reducing our dependence on foreign oil, helping families save on energy costs, and creating jobs for the Clean Energy Economy of the 21st century.

That is what this effort is about -- and now, let me introduce someone who knows how to create those kinds of green jobs, a champion for Middle Class families, my colleague at the Department of Labor, Secretary Hilda Solis. Thank you.

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