Energy-Efficiency Loans Hit the Bullseye

By: Suzanne J. - Dec 18, 2015
Source: Self-Help Credit Union

At Self-Help, we’re always looking for “mission bullseye” opportunities – projects that get right to the heart of our mission, ideally in multiple ways at once.

Back in 2012 when Craft3, a fellow community development financial institution (CDFI), approached us about a partnership, we saw a bullseye.

Oregon-based Craft3’s mission is to strengthen economic, ecological and family resilience in Pacific Northwest communities. Along with partner Enhabit, they’ve been providing energy-efficiency loans since 2009. The loans help homeowners afford effective but expensive improvements like high-efficiency furnaces and water heaters.

Plenty of lenders offer energy-efficiency loans. But Craft3 added an innovative twist. The Craft3 program enables On Bill Repayment, or OBR, and lets borrowers make their loan payments through their monthly utility bill. Easy, convenient and effective.

The OBR program was a hit, and within a few years demand for the loans had grown beyond Craft3’s capacity.

Craft3 came to Self-Help in 2012 with an intriguing proposal: would we be interested in purchasing a portfolio of these energy-efficiency loans? The sale would give Craft3 more liquidity, meaning they’d be able to turn around and make more loans to homeowners. This kind of loan purchase was a new and untested area for us, but we saw a lot of reasons to say yes:

  • Creating opportunity for homeowners. These loans help households save money by lowering their utility bills.
  • Reducing carbon emissions. The improvements help minimize wasted energy and reduce home energy use.
  • Boosting the economy and benefiting workers. The program helps to build a network of energy-efficiency contractors, creating local, green jobs.
  • Spreading an effective model that others can replicate. The purchase was a chance to amplify the impact of a fellow CDFI and promote the innovative OBR model.

Verdict? It was a win. We purchased a $15.7 million OBR portfolio from Craft3 in 2013, and Craft3 got to work making even more loans.*

Cut to this year: The program is performing well. Homeowners are paying back their loans on time and seeing significant energy savings, and local contractors are building skills in a green sector. We decided to do it again. We recently completed our second purchase of these OBR loans, this time for a $6.4 million portfolio. You can read more about the recent purchase here.

So far the OBR program has helped 2,659 Oregon homeowners finance $35.7 million in energy-efficiency upgrades. These homeowners avert more than 6,800 metric tons of greenhouse gasses annually.

We’re thrilled the program has been such a success, and we can’t wait to find the next bullseye project.

*If you want to dive into the nitty-gritty details: A 2014 policy brief from the Lawrence Berkeley National Laboratory analyses the first portfolio sale in depth.