After 2 winters without heat, this Detroit resident got a new boiler with the help of pilot loan program

Michigan Saves’ Detroit Loan Fund ignores credit scores to expand loan access for energy improvements.
Charlotte Dawson-Blackley lived for two years without heat in her home on the Edsel Ford Freeway service drive between Van Dyke and Mount Elliott. Photo by Nick Hagen.

Charlotte Dawson-Blackley lived for two years without heat in her home on the Edsel Ford Freeway service drive between Van Dyke and Mount Elliott. 

She had moved back to Detroit from North Carolina to live in the house after her mom passed away in 2019. But when she arrived, the boiler wouldn’t turn on. So she relied on space heaters for warmth, which is unsafe and meant paying exorbitant electricity bills.

Living on a fixed income, Dawson couldn’t afford the upfront cost of replacing the boiler. And she didn’t want to have to move in with her kids. But she was running out of options. 

Then her daughter saw a Facebook ad through TRUE Community Credit Union. She thought the program advertised might be able to help her mom qualify for a loan to get the furnace replaced.

The ad led Dawson to the Detroit Loan Fund, a program she’d never heard of – because before last May, it didn’t exist. Last spring, the fund launched as a pilot program with a $2.5 million loan from the Kresge Foundation. It’s operated by quasi-public nonprofit green bank Michigan Saves, which partners with local lenders like TRUE to facilitate loans for energy-related home improvements.

Dawson received a $15,000 loan from TRUE at 7% to fund the cost of a new gas-fired steam boiler, thermostat, valves, and pipe replacement. The boiler was installed last fall. Her loan payment costs her $200 monthly, and her winter electricity bills have decreased.

New boiler in Dawson-Blackley’s basement. Photo by Nick Hagen.

Michigan Saves was founded in 2009 through a grant of $6.5 million from the Michigan Public Service Commission to Public Sector Consultants from the state’s Low Income Energy Efficiency Fund. 

That funding was allocated to a loan-loss reserve fund which protects underwriters in the event of a default, enabling lenders to offer more favorable loan terms and expand underwriting criteria. In the years since, the reserve fund has grown with additional state and federal investment. Michigan Saves has helped lend over $460 million in energy improvements for residential and commercial projects across the state.

But despite those expanded criteria, many low-income homeowners still won’t qualify for loans. In 2021, Michigan Saves approved about 70 percent of homeowners who applied for loans statewide, but only 40 percent of Detroit residents who applied were approved during the same time period. 

“We’re hoping to bring that Detroit percentage up with this program,” said Nishaat Killeen, a senior project manager for Michigan Saves.

That’s where the Detroit Loan Fund comes in. The $2.5 million functions as capital that Michigan Saves loans to homeowners and small businesses, nonprofits and houses of worship.  This allows Michigan Saves to assume the risk that other lenders may not be able to take on. It’s designed to help people like Dawson who may not meet traditional lending criteria.

Killeen said the program’s main goal is to expand access to credit for energy improvements so that people can feel more comfortable in their homes and save on their utility bills with energy efficiency measures.

Killeen said the Detroit Loan Fund doesn’t consider credit scores.

“For folks in the city of Detroit who may not qualify for our traditional loan products, those applications are getting a second look,” she said. “It’s not based on the credit score. We look at other criteria in the credit report, like the ability to pay. Is there enough disposable income to cover other debts and the addition of this loan?”

Homeowners must meet a certain monthly disposable income threshold – around $300. Lenders also look for bankruptcies. “Essentially, we don’t want to leave someone in a worse situation,” Killeen said. 

The program has nearly exhausted its $2.5 million budget, with more than 160 loans averaging about $8,600 – all within the city of Detroit; projects have occurred in 24 of the city’s 34 Zip codes. 

The vast majority of loans went to pay for high-efficiency furnaces and air conditioners, with other loans covering things like window replacements, roofing, and programmable thermostats.

“The program’s popularity on the residential side far outpaced our expectations,” Killeen said, “which speaks to the demand for something like this.”

With the program running through its initial funding, Killeen said Michigan Saves is looking for additional funding to keep it going. 

One avenue may be the federal Inflation Reduction Act’s Greenhouse Gas Reduction Fund. Michigan Saves has joined forces with other green banks nationwide through the Coalition for Green Capital to launch a nationwide green bank. 

“We hope to receive funding that would support an equitable transition to a carbon-free Michigan and would support the MI Healthy Climate Plan,” Killeen said. “This funding would allow us to expand residential programs like the Detroit Loan Fund and financing programs in the commercial building sector to reduce carbon emissions.”

For Dawson, she is glad to have a new furnace at a cost she can afford on her fixed income. But perhaps most importantly, she’s glad to have warmth in the winter without resorting to expensive and unsafe space heaters. 

“It doesn’t bother me at all to pay for the furnace on a fixed income,” she said. “Because it’s affordable.”


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