Cal. Code Regs. tit. 4, § 10091.5 – Loan Eligibility and Minimum Underwriting Criteria.

(a) The Eligible Loan must meet the definition of one of the following products:
1. (1) A loan is an agreement between an EFI or EFL and a Borrower for a closed-end loan of a predetermined amount with periodic payments over a specified term to finance a Borrower's purchase of equipment. The Borrower will have ownership of the equipment from the time of purchase.
2. (2) A retail installment contract is an agreement of retail sale of equipment solely between a buyer and a seller that, pursuant to Civil Code Section 1802.6, provides for the repayment in at least four (4) installments, whether or not that contract contains a title retention.
3. (3) A lease/service agreement is an agreement that provides the Borrower with the use of equipment and could include ongoing service and maintenance, in exchange for payments in amounts that are due according to a schedule established in the agreement. The payments must result in the full satisfaction of the obligation. Those payments are made for a specified term. Title to the equipment may or may not transfer to the customer during the agreement. If the lease/service agreement includes ongoing service and maintenance, it must also guarantee the functionality of the equipment for the term of the agreement.
(b) An Eligible Loan is not:
1. (1) Secured by an interest in real property, except for a UCC-1 fixture filing.
2. (2) Financing for the construction or purchase of residential housing, except for reconstruction of a residential building that was destroyed, in whole or in part, due to a natural disaster.
(c) The refinancing of existing debt is only permitted when either:
1. (1) Both loans or lease/service agreements are made within three (3) months by the same PFI or PFL for the same project.
2. (2) The existing debt is an Enrolled Loan refinanced by the original PFI or PFL.
(d) Disclosure: For Eligible Loans that are leases, the PFI or PFL must disclose to the Borrower either:
1. (1) An annual percentage rate (APR), inclusive of any fees, as well as any advance payments that the Borrower is required to pay.
2. (2) The total cost of the Project for the Borrower comprised of monthly payments multiplied by the number of months in the agreement plus any fees [(monthly payments * number of months in the agreement) + fees]. Monthly payments as reported must be inclusive of, but not limited to, equipment and installation repayment, and any charges for financing, services, maintenance, or oversight of equipment.
(e) Loans' terms and characteristics must be consistent with the loan program described by the PFI or PFL in its application to participate pursuant to Section 10091.2(d), or any revised program details provided in a report to the Authority pursuant to Section 10091.12(c)(1).
(f) The Claim-Eligible Principal Amount of the loan proceeds must be used for Eligible Improvements to Eligible Properties in accordance with the following requirements:
1. (1) At least 70 percent of the proceeds must be used to fund EEMs as specified in Sections 10091.1(m) and 10091.1(r)(1)(A), other necessary and related costs, such as installation, permitting and other legally required improvements. When an EEM is removed from the list of EEMs or its specification is revised, that EEM and specification will continue to be eligible for inclusion under this subsection where the loan enrollment application is submitted within one hundred eighty (180) calendar days of EEM's removal or revision.
2. (2) No more than 30 percent of the proceeds may be used for additional related home improvements as described in Section 10091.1(r)(1)(B).
(g) The Claim-Eligible Principal Amount shall not exceed $50,000 per unit for the Eligible Property, unless the project includes the “Solar Photovoltaic + Battery Storage” EEM, as described in Section 10091.11(j), in which case the Claim-Eligible Principal Amount shall not exceed $75,000. If the Eligible Loan is underwritten without a credit score pursuant to Section 10091.5(i)(2), the Claim-Eligible Principal Amount shall not exceed $35,000 without regard to the number of units of the Eligible Property, and the cap of thirty-five thousand dollars ($35,000) shall apply to the Total Loan Principal Amount regardless of the Claim-Eligible Principal Amount.
(h) The interest rate, as calculated at a time pursuant to the PFI's or PFL's standard business practices, shall not exceed the interest rate on new 10-year Treasury bonds plus seven hundred fifty (750) basis points as of the first business day of the applicable calendar quarter. Following quarterly interest rate adjustments, PFIs and PFLs shall have five (5) business days to update their processes and systems, including but not limited to marketing materials and underwriting processes, to reflect the new maximum interest rate.
(i) Borrower credit score requirements:
1. (1) The Borrower must have a minimum credit score of 580 except as allowed pursuant to Section 10091.5(i)(2). For Borrowers with credit scores between 580 and 640, the PFI or PFL must verify the Borrower's income as part of the underwriting process if the Total Loan Principal Amount exceeds twenty thousand dollars ($20,000). The PFI or PFL must verify every Borrower's income, regardless of credit score, if the Total Loan Principal Amount exceeds fifty thousand dollars ($50,000).
2. (2) Eligible Loans may also be provided to Borrowers with no credit score, provided the Borrower does not have any unexplained derogatory credit reports.
(j) The Borrower's total debt-to-income ratio shall not exceed fifty-five percent (55%), unless the Eligible Loan is a Microloan.
(k) In addition to the underwriting criteria described above, PFIs and PFLs may use a Borrower's utility billing and payment history to aid in underwriting an Eligible Loan.
(l) A PFI or PFL may establish additional underwriting criteria beyond what is described in this section. A PFI or PFL has the responsibility for underwriting decisions and legal compliance with respect to the Eligible Loans the PFI or PFL makes pursuant to these regulations.
(m) A PFI or PFL may not enroll the Claim-Eligible Principal Amount of the Enrolled Loan in any substantially similar program.

Note: Authority cited: Section 26009, Public Resources Code. Reference: Sections 26003(a)(3)(A), 26003(a)(6), 26003(a)(8)(A) and 26040, Public Resources Code.

History

1. New section filed 3-9-2015 as an emergency; operative 3-9-2015 (Register 2015, No. 11). A Certificate of Compliance must be transmitted to OAL by 9-8-2015 or emergency language will be repealed by operation of law on the following day.

2. New section refiled 9-8-2015 as a deemed emergency pursuant to Public Resources Code section 26009, including new subsection (c), subsection relettering and amendment of newly designated subsection (g)(3); operative 9-8-2015 (Register 2015, No. 37). A Certificate of Compliance must be transmitted to OAL by 12-7-2015 or emergency language will be repealed by operation of law on the following day.

3. New section, including 9-8-2015 amendments, refiled 12-3-2015 as a deemed emergency pursuant to Public Resources Code section 26009; operative 12-7-2015 (Register 2015, No. 49). A Certificate of Compliance must be transmitted to OAL by 3-7-2016 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 12-3-2015 order, including further amendment of section, transmitted to OAL 3-1-2016 and filed 4-13-2016; amendments operative 4-13-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 16).

5. Amendment of subsections (a), (a)(6), (a)(12), (a)(14)(C)(iii)-(iv), (b) and (d)-(g)(1) filed 9-5-2017 as an emergency; operative 9-5-2017 (Register 2017, No. 36). A Certificate of Compliance must be transmitted to OAL by 3-5-2018 or emergency language will be repealed by operation of law on the following day.

6. Amendment of subsections (a), (a)(14)(C)(iii)-(iv) and (d)-(g)(1) refiled 3-5-2018 as an emergency; operative 3-5-2018 (Register 2018, No. 10). A Certificate of Compliance must be transmitted to OAL by 6-4-2018 or emergency language will be repealed by operation of law on the following day.

7. Amendment of subsections (a), (a)(14)(C)(iii)-(iv) and (d)-(g)(1) refiled 5-30-2018 as an emergency; operative 6-5-2018 (Register 2018, No. 22). A Certificate of Compliance must be transmitted to OAL by 9-4-2018 or emergency language will be repealed by operation of law on the following day.

8. Certificate of Compliance as to 5-30-2018 order transmitted to OAL 8-3-2018 and filed 9-17-2018 (Register 2018, No. 38).

9. Renumbering of former section 10091.5 to section 10091.6 and renumbering and amendment of former section 10091.4 to section 10091.5 filed 5-24-2021 as an emergency; operative 5-24-2021 (Register 2021, No. 22). Emergency expiration extended 60 days pursuant to Executive Order N-40-20 plus an additional 60 days pursuant to Executive Order N-71-20. A Certificate of Compliance must be transmitted to OAL by 3-22-2022 or emergency language will be repealed by operation of law on the following day.

10. Renumbering of former section 10091.5 to section 10091.6 and renumbering and amendment of former section 10091.4 to section 10091.5 refiled 3-17-2022 as an emergency, including further amendment of subsections (f) and (g); operative 3-23-2022 (Register 2022, No. 11). A Certificate of Compliance must be transmitted to OAL by 6-21-2022 or emergency language will be repealed by operation of law on the following day.

11. Refiling of 3-17-2022 order on 6-20-2022 as an emergency; operative 6-22-2022 (Register 2022, No. 25). A Certificate of Compliance must be transmitted to OAL by 9-20-2022 or emergency language will be repealed by operation of law on the following day.

12. Certificate of Compliance as to 6-20-2022 order transmitted to OAL 8-19-2022 and filed 9-29-2022 (Register 2022, No. 39).

13. Amendment of subsection (h) filed 12-22-2023 as an emergency; operative 12-22-2023 (Register 2023, No. 51). A Certificate of Compliance must be transmitted to OAL by 6-19-2024 or emergency language will be repealed by operation of law on the following day.

14. Change without regulatory effect amending subsections (f)(1)-(2) filed 3-21-2024 pursuant to section 100, title 1, California Code of Regulations (Register 2024, No. 12).

15. Amendment of subsections (e), (f)(1), (g) and (i)(1) filed 4-15-2024 as an emergency; operative 4-15-2024 (Register 2024, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-14-2024 or emergency language will be repealed by operation of law on the following day.

16. Refiling of 12-22-2023 and 4-15-2025 emergencies on 6-14-2024 as an emergency; operative 6-20-2024 (Register 2024, No. 24). A Certificate of Compliance must be transmitted to OAL by 9-18-2024 or emergency language will be repealed by operation of law on the following day.

17. Certificate of Compliance as to 6-14-2024 order transmitted to OAL 7-19-2024 and filed 8-30-2024 (Register 2024, No. 35).

18. Amendment of subsection (b)(2) filed 10-20-2025 as an emergency; operative 10-20-2025 (Register 2025, No. 43). A Certificate of Compliance must be transmitted to OAL by 4-20-2026 or emergency language will be repealed by operation of law on the following day.

19. Amendment of subsection (b)(2) refiled 4-3-2026 as an emergency; operative 4-21-2026 (Register 2026, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-20-2026 or emergency language will be repealed by operation of law on the following day.