Tahoe real estate: For some, PACE makes sense, especially in Placer County (opinion)
Special to the Sun-Bonanza
mPOWER, Placer County’s Property Assessed Clean Energy provider, would like to offer some clarification to the Tahoe Sierra Board of Realtors opinion piece submitted last week by Ellen Grace, “What to know about the PACE Clean Energy Program.”
We would like to thank TSBR for its commitment to the energy efficiency and the environment. We share this goal. The opinion printed on March 21 provides a key message we both agree upon: Home owners need to understand the terms and conditions of financing programs, that’s why we require all applicants to participant in a 45 minute seminar that provides details and disclosures regarding the mPOWER program.
The example provided showed a lien of 15% on a $400,000 piece of property. While other programs allow up to 15% of value to be borrowed, mPOWER limits the loan amount to 10% of value which would be $40,000 in the example provided, or to the available equity in the property, whichever is less. These protections exist to prevent overburdening the property.
TSBR noted that a PACE lien can be very expensive. This can be true of ANY financing, which is another reason Placer County’s mPOWER program provides a seminar to ensure property owners understand terms and conditions.
As for expense, Placer County residents enjoy special access to the lowest PACE rates in California. The mPOWER interest rate is a flat 6% and there are no hidden fees such as fees charged to contractors that are passed on to property owners in the contractor’s pricing.
TSBR noted that property owners may not be able to refinance a mortgage with a conventional mortgage because a PACE lien puts mortgage lenders in a secondary position if the loan cannot be repaid. This statement is true as to the position of the lien.
mPOWER has monitored sales and evaluated recent property transactions involving mPOWER liens. Of the more than 1,380 projects financed, until recently, at least 91% of properties subject to refinancing and 70% of properties subject to sale were not required to pay off the PACE lien by the lender.
However, recent discussions between the Federal Housing Finance Authority, the California Association of Realtors and the California Bankers Association has resulted in most lenders now requiring PACE liens to be paid off when subject to refinancing or new financing.
In response, mPOWER now advises property owners who intend to refinance or sell their property that PACE financing might not be a viable option — another point we disclose in our seminar.
While the PACE lien may not transfer, upfront disclosure of the PACE lien’s existence and what it provided for the home can lead to solid discussions and solutions for prepayment if it is required by buyer or lender.
Sellers who can provide prospective buyers information reflecting reduced utility costs can achieve what market data shows: homes with energy efficiency upgrades tend to sell at premium prices.
If a property owner wants leave to leave an mPOWER lien in place, we ask that they contact us and we will direct that owner to a lender who allows PACE liens.
With that said, PACE liens make the most sense for property owners who want to invest in the efficiency of their homes over the long term because they plan to stay in their homes.
PACE financing is one OPTION that should be considered in light of all of a property owner’s financial plans and goals. Yes, TSBR is correct property owners need to be fully aware of the terms and conditions for ANY financing before entering into an agreement, and mPOWER still remains an affordable and reasonable option for many property owners.
Jenine Windeshausen is Placer County’s Treasurer-Tax Collector, and mPOWER Administrator. Visit placer.ca.gov/departments/tax to learn more.
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