This announcement by President Obama will help advance PACE (Property Assessed Clean Energy) as an energy efficiency financing strategy for homes.
Pleasantville, NY (PRWEB) August 27, 2015
On Monday, August 24, 2015, President Obama announced plans to unlock residential PACE (Property Assessed Clean Energy) financing to make it easier for Americans to invest in energy efficiency and clean energy technologies for their homes. Under guidance to be issued soon by the Department of Housing and Urban Development’s Federal Housing Administration (HUD/FHA) properties that subordinate PACE project financings will be eligible for an FHA insured mortgage when sold or refinanced. Today, the FHA provides mortgage insurance for more than 7.6 million households and insures more than 20% of new mortgage originations in the United States.
PACE has already proven its effectiveness for homeowners in California, where over $1 billion in PACE funding has helped more than 50,000 households save money by reducing energy costs. PACE provides 100% funding that is repaid for up to 20 years with an assessment linked to their property tax bill, so homeowners can begin saving money on energy costs immediately.
Because they are linked to the property, PACE assessment should transfer to a new buyer upon sale of a home, but resistance to PACE from Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) has made this valuable option unavailable to some homeowners. FHA guidance will establish clarity and should allow established senior lien PACE programs to contractually subordinate PACE assessments, an option that is already being embraced in California by the HERO PACE program, and pending guidelines, by the CaliforniaFirst PACE program.
PACENow applauds the Obama administration for its support for PACE. "This week’s announcement by President Obama will help advance PACE (Property Assessed Clean Energy) as an energy efficiency financing strategy for homes. We look forward to learning more in the coming weeks and helping to develop FHA guidelines that can work as well for other mortgage lenders. PACE provides a huge opportunity for the country to advance efficiency and renewables, and PACENow, representing PACE market participants nationwide stands ready to help", says David Gabrielson, Executive Director, PACENow.
Other PACE market leaders welcome the President’s announcement. “Today, PACE became a national clean energy policy priority,” said Cisco DeVries, CEO of Renew Financial and the inventor of PACE, who added, “PACE financing has the ability to dramatically accelerate our transformation to clean energy. Perhaps even more importantly, PACE is an invaluable tool to help homeowners pay for energy upgrades that will reduce their energy costs. However, until now, regulatory uncertainty has limited the expansion of PACE financing for single-family homes.”
J.P. McNeill, CEO of Renovate America which administers the HERO Program in California said, “This is a significant step forward for PACE, as it unites national renewable energy and water and energy efficiency objectives with federal housing policy objectives. We are pleased the White House and FHA recognize PACE as ‘an innovative mechanism’ and enshrine in federal policy today a core principle of the program: ‘when the property is sold, the remaining PACE loan stays with the more energy efficient property and the next owner is responsible for repaying the loan’. As the policy guidance points out, PACE enables homeowners to benefit from the improvements immediately, spread the cost over time, and transfer the value of the retrofit from one owner to the next.”
It is very encouraging that this week's announcement notes that the FHA’s PACE guidance is being informed as well by ongoing conversations with the FHFA. PACENow will support efforts to develop solutions that can work equally well for all mortgage lenders.
This announcement has no impact on the ongoing HUD pilot for approving senior lien PACE projects for FHA supported multi-family housing projects. To date, over 100 commercial property mortgage lenders have agreed to PACE projects that make good business sense for their clients, increase the value of their collateral and make properties for habitable for occupants.
PACENow is a non-profit foundation funded advocate for Property Assessed Clean Energy (PACE) financing. PACENow’s mission is to promote improved energy efficiency in buildings and use of PACE. Our strategy is to be a trusted source for information and resources to a growing coalition of PACE stakeholders that includes local governments, businesses, industry service providers, labor and trade organizations, environmental groups and private individuals nationwide.