According to industry experts, a loan program called Property Assessed Clean Energy, otherwise known as PACE loans are said to be putting homeowners at financial risk. PACE loans allow homeowners to finance solar panels, new heating and air condition equipment or energy-efficient windows. The loans typically range from around $5,000 to $40,000, and credit union executives are saying that each loan comes with a problem. PACE loan lenders are given “first position” status on the homeowner’s mortgage, also known as a “super-priority lien”. So if a homeowner is looking to refinance the mortgage, sell the home or seek a loan modification, he or she is obliged to pay off the entire PACE loan first.
Kevin Pendergraft, CEO of Pacific Community Credit Union says “PACE loans look and act like loans, but they are really a tax lien on your property tax bill”. He also mentions, “If a consumer runs into financial problems, they will never be able to avail themselves of bankruptcy protection from this obligation. This is not stated upfront by the people who are selling these loans.”
The way PACE loans work, is that they’re typically offered by local contractors through door-to-door sales. Contractors may include a solar panel provider, an energy-efficient provider or a window installer. The PACE loan is paid through an assessment that appears on the homeowner’s semiannual property tax bill.
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