Article about PACE green financing program
Reuters has a story this morning under the headline “Green financing has hobbled home sales in California.” I found it at http://news.yahoo.com/innovative-green-financing-hobbled-home-sales-california-053520629–sector.html. I would be interested to hear other people’s reactions to it.
The article discusses a green financing option called PACE that gets paid back via a special property tax assessment. Realtors are upset because potential house buyers are scared off by the assessment. Mortgage lenders are upset because these “loans” are not subordinate to a mortgage like a home equity loan. Window installers and solar installers like the program because it provides a source of financing for customers.
Is this a problem of people using the program to do improvements that have a poor economic return, sort of like using government backed education loans for a degree in art history? Or, is the problem that realtors are not stepping up to the challenge of marketing the value of the improvement? One example in the article was someone spending $40K to replace windows in Riverside county. The article didn’t describe the repayment terms. Somehow, the guy who spent $40K on windows owed $46K when he decided to pay it off. The article also didn’t say anything about the approval process for the program. Is there an economic return criteria for the work to be done? Is there a home equity requirement?
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