ALERT Message: May 10, 2016
The Bad Consequences of PACE Loans-- Support AB 2693
If you get a PACE (Property Assessed Clean Energy) or similar type loan to pay for energy efficiency (solar panels for example), water conservation and seismic strengthening improvements, you will mostly likely NOT be able to sell your house or refinance it. Paid through property taxes, these tax-lien loans are NOT eligible for financing through Fannie Mae and Freddie Mac because they have so-called "super-priority" status. This means Fannie Mae and Freddie Mac will NOT lend on properties that have existing PACE liens. In order to sell a house whether in foreclosure or not, or refinance a property, the PACE loan, which could reach tens of thousands of dollars, must be paid off first.
Mortgage lenders do not like PACE-type loans because they will not receive any proceeds from the sale or refinance until the PACE Loan is repaid. And many homeowners have found it almost impossible to suddenly fork out $20,000 to $30,000 to conclude their real estate transaction. The California Association of Realtors is spearheading the AB 2693 bill to require â€œTruth in Lendingâ€ disclosures that would explain these disadvantages before consumers obtain such loans. Call or write to our state senator and state assemblyman to voice your support for full disclosure. Currently, there is NO language in these loans that explains these potentially dangerous consequences of using PACE loans.
State Senator Bill Monning (Senate District 17): (831) 657-6315, (916) 651-4017, State Capitol, Room 313, Sacramento, CA 95814
State Assemblyman Mark Stone (Assembly District 29): (831) 649-2832, (916) 319-2029, P.O. Box 942849, Sacramento, CA 94249