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Ex-SolarCity Execs Are Baking Solar Loans Into Mortgages

Brian Eckhouse

(Bloomberg) -- There’s a new way for homeowners to pay for rooftop solar panels. It’s called a mortgage.

Loanpal, led by two former SolarCity Corp. executives, provides loans for rooftop solar panels, then offers to bundle them into conventional 30-year mortgages. It allows customers to spread payments out over decades and, the company says, lower costs.

During October, Loanpal rolled about 500 solar loans into mortgages, up nearly five fold from one year earlier. The San Francisco-based company was the leading U.S. provider of residential solar financing in the first half of 2019, according to Wood Mackenzie Power & Renewables. It now writes almost $200 million in panel loans per month.

“Consumers ultimately want these loans to be rolled into first mortgages because they don’t want a separate loan for solar for 15 years,” Loanpal Chief Executive Officer Hayes Barnard said in an interview. “It’s like how they don’t want a standalone loan for granite counter tops or a standalone loan for their rooftop.”

It’s the latest wrinkle in rooftop-solar financing. For years, SolarCity, Sunrun Inc., Vivint Solar Inc. and other installers offered no-money-down leases, which helped solar go mainstream. Now the industry has shifted primarily to loans as banks have become more comfortable with the technology. Loanpal’s program is recognition that panels add value to houses just like remodeled kitchens and backyard decks.

“I don’t think a lot of customers inherently think of them financing these things together,” Michelle Davis, an analyst at Wood Mackenzie Power & Renewables, said in an interview.

Loanpal, led by Barnard and ex-SolarCity President Tanguy Serra, has written about $2 billion in residential solar loans since January 2018, the company said. The vast majority have not been bundled with mortgages.

It writes bundled solar loans in two steps. First, it provides financing to install the panels. Once they’re up, the lender offers the option to tuck that loan into an overall refinancing of the customer’s first mortgage.

The solar loans are funded through warehouse lines with Goldman Sachs Group Inc. and Western Alliance Bancorp, and the mortgages are sold to Fannie Mae, Freddie Mac and others.

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To contact the reporter on this story: Brian Eckhouse in New York at beckhouse@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Reg Gale

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