Property-assessed clean energy programs got a huge boost this summer when the White House and the Federal Housing Administration removed a substantial barrierfor residential PACE financing.
PACE programs allow investments in water- and energy-efficiency retrofits and distributed renewable generation to be paid back through property taxes, which lowers the risk for both lenders and owners and can potentially open up a far larger swath of the energy-efficiency market.
Before the August announcement, mortgage agencies were uneasy about the fact that most PACE obligations were first in line to be repaid. To solve this, FHA guidance will require PACE liens to be subordinate to FHA single-family first-mortgage financing.
But questions remain. One of the outstanding questions is this: if a home with a PACE lien goes into foreclosure, would the lender be worse off than if the home had no PACE lien? Read more.