A financing tool meant to help homeowners pay for energy improvements like solar panels has come to a halt after mortgage lenders Fannie Mae and Freddie Mac warned they may not accept loans for homes using that special financing.
Many homeowners want to install things like solar panels or wind turbines but find the upfront costs prohibitive, especially if those owners don’t expect to stay in their homes for the 20-30 years it can take for a return on their investment. Property Assessed Clean Energy (PACE) programs allow homeowners to fold those costs into their property tax bill and pay them back over 15 to 20 years. PACE programs, to which the Obama administration has devoted $150 million in stimulus funding for local governments to set up in their communities, are lauded for spurring the renewable energy market.
But since May 5, when Fannie and Freddie warned lenders away from PACE programs, no new PACE programs have come online, and existing ones are delayed, reports Grist.org and the New York Times. The company is concerned about what gets paid first, the mortgage or clean energy assessment, if a borrower defaults on a loan. “Typically, property taxes must be paid first from any proceeds on a foreclosed home,” wrote the New York Times.
Nevada is one of 22 states authorized to begin a PACE program, but the city of Reno has not set it up yet, so local residents should not be impacted, according to city of Reno environmental services administrator Jason Geddes.