Nov. 16, 2020 - Created, Updated Apr. 6, 20211
The comments and videos linked below are all the opinion of Vance Jochim, FiscalRangers.com.
Latest update: Apr. 6, 2021: Bloomberg.com published a long article describing the horrors being encountered by homeowners who use PACE financing which is HERE.
The following memo needs to be updated - We researched PACE Commercial and PACE Residential finance programs and published videos on each of them. In a nutshell, PACE Residential Loans are very risky and should be avoided, and even local county or city governments should reject them in our opinion. We did issue an opinion that PACE Commercial financing might be a good idea for cities to approve since we expected Commercial Developers to be much more savvy about their risks.
Our separate Dec. 18, 2020 opinion video about apparent benefits to cities/counties of approving PACE Commercial financing programs is here. (Due to commercial developers being much more sophisticated about the risks of using them.)
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Below is the memo I sent to the Lady Lake, FL Town Commissioners in late 2020 who were being asked to possibly approve PACE financing schemes for their residents and/or commercial properties. This post will be replaced later with a rewritten overview of our opinion about both types of PACE financing schemes, but the above linked videos are a good source.
It is my opinion the PACE financing scheme is a RISKY sub-prime lending program to finance specific home improvement projects like window replacements, solar roof panels, air conditioners, etc. It was designed to circumvent normal financing methods based upon credit ratings. Instead, no credit reports are required and the financing is based strictly on equity in residential or commercial buildings that have a lien placed on them AND the collection risk is transferred to the County Tax Collector since, in my opinion, no rational lender wants the loans.-
They have to keep paying even if the project, such as solar, fails in less time than promised. Vendors avoid responsibility completely.
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Homeowners find the PACE loan is a lien or second mortgage on their property, preventing other home equity loans and they did not know that.
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Homeowners find they cannot sell their home with the PACE loan on their property tax bill. In some cases, Federal agencies that approve loans will not approve refinancing or transfer of mortgages with PACE liens.
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If a homeowner fails to pay their tax bill due to the added PACE loan, they can lose their house and county taxpayers will foot the bill for the collection process. Such financing should be CREDIT RATING BASED upon ability to pay and not based upon only equity in a home or commercial building. It should use the standard equity loan process based upon credit ratings and third party collection systems and be ALL third party administered and not involve the County tax collector.
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If a home improvement provides shoddy services or products, the homeowner is stuck with payments and no easy recourse since it is on their property tax bill.
