Residential thinking..

I mentioned housing back in December of '07, and though the idea behind the post hasn't become reality, I stand behind what I said.

The question right now is, how is Obama going to help to create this scenario. As it stands, we have the 15% Investment Tax Credit, but this isn't enough to give the market a sense of direction.

One item that I'd like to see would be a kind of a Government loan guarantee to banks that would support the financing of alt-energy projects. Domestic Energy Installations pay for themselves over time, and so the guarantee itself, would likely cost the Taxpayer very little. If the Government were to guarantee lending on some limited time and scale basis, banks would be incented to start to produce the lending programs that will benefit both, the banks, and the borrowers over the long term.

American housing crash and solar...

My wife is in mortgages (still employed, thank goodness). I've had plenty of time to delve into what's going on in housing over the last few years, and saw the current crisis coming a mile away (I didn't know the effects of the outcome, but I sure as heck saw that the prices weren't sustainable).

So, in envisioning the future of energy in America, I've come to the following conclusions.

Adding Solar Panels to existing and new homes adds value to the home, plain and simple. Having a home that generates its own power has benefits ranging from plain financial (payoff over time from metering), to home security and confidence (living in the county, our power has gone down for multi-day periods several times each of the last couple winters). There is also a "fad" effect going on in places where Solar is becoming the thing to do, or a status symbol.

The infrastructure to support solar installation of all types is developing, and great efficiencies will be found in this area as workforces and contractors are trained in the specific specific tools and techniques (these efficiencies are separate from efficiencies gained at, say, LDK, in the production of the panels themselves).

There is money to be made in Solar. As housing prices are collapsing, opportunities will exist for developers to buy common property cheap, and convert it to something special that is in special demand (green).

The financials need to get on board, and they will. Akeena Solar has already teamed up with a bank to provide financing for their solar installation customers.

As it is, I can go to the bank and get a loan on a car, boat, or home. Well, in lending for these things, the bank is counting on getting their money back plus interest. Well, a car, boat, or home, don't necessarily pay themselves off in the end, but energy sources do. There is a measure of safety in investing in Energy, though the system is not yet in place to realize it.

Consider the appraisal of a home. One, the appraiser needs comparisons. At this time, the rarity of solar installations make comparisons difficult or impossible. California may be different from where I live, but where I live, appraisers don't give added value to a property for Solar Panels. You could put a deck on the house and add thousands of dollars in value, but if you put in panels, you gain nothing.

The lending system simply hasn't yet crunched the numbers. They haven't written the rules that will allow underwriters to sign off on a loan that assigns value to Residential Solar Energy Generation while defending the long-term financial interest of the lender. They will do so, because it's in their best interest to provide services to the growing number of potential green-conscious borrowers.

Prices will come down. We see bashers talking about an impending polysilicon glut, but they never mention the other side of the coin, which is that with lower prices, demand increases. In fact, some of the same people that say there will be a glut, also say that prices will never come down to the point at which people would buy the products.

So, anyway... just some thoughts...

Mortgage Meltdown...

It seems to me that it's pretty obvious that foreclosures are not in the best interest of the Banks, or the homeowners going into foreclosure.

The way that seems most likely that they will "solve" this problem will be for the Fed to lower rates, or otherwise bail out the holders of bad debt.

On the other hand, as far as mortgages that are going to go into foreclosure we're not done yet, as mortgage rate increases have yet to hit many people, and right now even mortgage-holders with the best credit are unable to refinance out of a suddenly bad deal. Support for the holders of future bad debt without looking at the other end of the equation, the homeowners, seems to be a losing proposition.

Is there any way that some remedy could be had that would help to minimize these future forclosures without causing more harm than good?

Say you have a homeowner. They have a job, and are paying their mortgage. Some time in the next year or so, their rate is going to jump, and they can not now refinance as they'd planned. Nobody wins if they foreclose in this market, and the bank was hoping to make a ton of cash off of that increasing interest rate. Could something be done to, say, modify that person's loan and find a new balance between profit to the lender vs affordability to the customer without need for refinance?

Thinking about it, there's such a web of contracts involved, and complexities like mortgages being broken up into bits, packaged, and sold around the world, that I don't know that any such thing could be done... so that basically leaves a vast Government bailout to the same people that created much of the problem in the first place by creating a culture drunk on risk.

Am I totally naive? :)


X-Posted to LJ


Addition: It seems to me that the Government should team up with the lenders and set up a program by which borrowers are supported in refinancing out of bad mortgage agreements, so that they can lower their monthly payments and stabilize their interest rates, the cost of which is shared by both the bank and the taxpayer. It has to be fair, though, and so the lenders should take the most significant part of the loss (loss as compared to original projected profit off of the original predatory loan, anyway), as they're the ones that used poor judgement in the first place. This would be a bailout, but one in which the needs of the "little guy," the borrower was well considered. Nobody benefits from foreclosures.

Of course, the chance of GW supporting such a move is approximately nill, but that's another story.