The PACE of Foreclosure in Green Mortgages:
GreenLoans putting homeownership at risk
PACE (property Assessed Clean Energy) loans might not be as clean as their title suggest. The Government encouraged the program, but in 2010, FNMA (Federal National Mortgage Association aka Fannie Mae) halted participation in the program due to the acceleration clause. PACE loans take priority over other liens, regardless of position and if the PACE loan goes into default, the entire amount due for the year becomes immediately due in full.
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Just as with other home improvement financing, homeowners most injured by the additional cost are senior citizens, non-english speaking and low income residents. The companies who install eligible products, such as solar screens, AstroTurf and pool covers and others, are offering financing that may be higher than what is available to the homeowners elsewhere in the market. To make matters worse, the energy savings aren’t always there, and the $10,000 tax write-offs weren’t of much use to fixed income or low income homeowners.
Because the financing is repaid through property taxes paid over 15 to 20 years, the bill passes to the next property owner, which means, if the financing makes the home unaffordable for the current homeowner, it could be difficult for them to sell or “short sale” the property due to the escalated taxes bill on it. The utility savings do not seem to be greatly impacted for small homeowners.
While the concept of PACE is attractive, and it can greatly improve our energy efficiency and ecology as a nation, it may still be harmful to many struggling homeowners to shoulder the cost. PACE’s higher interest rates, at least twice that of first mortgage interest rates, can lead well intentioned homeowners right into foreclosure…and that is why FNMA pulled out of it. It was years before FHA agreed to participate, and stock of PACE foreclosed REO is piling up.
If you tried to do the right thing by participating in PACE and ended up barely able to pay your mortgage, or even went into mortgage default, let us help stop your foreclosure. Contact us today.
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