Environmentally and economically speaking, PACE was supposed to be awesome.
The clean energy financing model is designed to cut greenhouse gas emissions, create green jobs and lower household utility bills at virtually no up-front cost to property owners...
It’s often described as a low-interest local government loan, backed by bonds. The money can be used for renewable energy, water conservation or energy efficiency upgrades. The property owner pays it back over 20 years or less in annual installments – ideally close to the property’s annual utility savings – that show up as a line item on the property tax bill. If the home sells, the new owner takes over the payments.
Here’s the part Fannie and Freddie don’t like: If a property forecloses, its unpaid PACE bill becomes a “first lien.” The county gets paid its outstanding property taxes, including PACE assessments, before the mortgage lender can claim the rest.