Is Efficiency Maine a Predatory Lender?
Energy Policy May Be Taking Advantage of Low-Income Mainers
It’s been a while since publishing, but I’m still keeping an eye on energy policy in the state and have lots to share as soon as there’s time. I became aware of this issue last night, and wanted to bring it to your attention.
As many of you are aware, Efficiency Maine offers rebates for heat pump installations. The newest push from Efficiency Maine (as directed by the Governor’s office) is to install heat pumps in mobile homes owned by low-income individuals and families. On the surface, this sounds like a good way to assist our low-income neighbors, but there are a lot of concerns with this program.
To be eligible for the program, homeowners must agree to the removal of existing heating system.
The rule that required removing an existing heating system in order qualify for an Efficiency Maine rebate was supposed to have been changed almost a year ago - see the article here . Yet even this spring, I had heard from fellow Mainers that the rebate rules were still asking installers to document the removal of other heating systems. Now we see that Efficiency Maine is requiring low-income Mainers to follow a rule that was reportedly removed nearly a year ago. Amittedly, in order to install a heat pump in a mobile home, the existing furnace closet will be used. So by default, this requires removal of any kerosene or propane furnace that was in the closet (see issue #1), leaving vulnerable Mainers without a secondary source of heat.
Rebates do not cover the entire cost of the heat pumps, so Efficiency Maine is offering a loan to cover the remaining cost, which is $2,000.
While homeowners are given the option to pay this fee up front, there may not be many low-income homeowners who have $2,000 on hand to cover this fee. For all the low-income homeowners who don’t happen to have that $2,000 readily available, Efficiency Maine offers a 0% interest loan, but they’re charging a $500 loan origination fee. That’s a 25% fee! Standard loan origination fees for personal loans are between 1-10% of the loan. Setting the fee at 25% of the loan value is predatory lending.
Heat pumps may be a great option as a primary heat source, as long as there is a secondary source when temperatures get too cold for a heat pump to maintain temperature. Asking low-income mobile home owners, those who already struggle to make ends meet, to take on debt in order to meet the Governor’s ambitious energy policy goals is unscrupulous.