The Property Assessed Clean Energy (PACE) program was rolled out in 2008 to provide financing for commercial and residential energy improvements, paid through participating homeowners’ yearly tax bills. However, to date few homeowners have been able to benefit. That’s mostly due to the Federal Housing Finance Agency (FHFA) labeling PACE loans “risky” in 2010. Financing for the program was largely halted across California. That’s all about to change.
Governor Brown recently announced a $10 million mortgage loss reserve for PACE loans to lessen the FHFA’s fears of risk. This loss reserve is available for lenders participating in the PACE program across the state, though the program’s availability varies by region.
Further, on the heels of Governor Brown’s announcement, Los Angeles County voted to enact their own PACE program. Participating LA County residents will engage in the PACE program through the pre-established HERO (Home Energy Renovation Opportunity) program. HERO currently finances 95% of PACE loans in California. For a list of all programs funding PACE in California, click here.
The PACE program will be of particular interest to your buyer clients who purchase outdated homes. With this revamp, it’s quite possible they can get a relatively low-cost PACE loan to install energy improvement that will reduce their monthly utility bills. This reduction can offset the cost of the loan, but it’s important to make a side-by-side comparison of expenses, via an operating cost sheet. [See first tuesday form 318]