PACE Financing may see its day in the sun after all - providing solar for all. The Obama administration along with The Housing and Urban Development, The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) has issued new, expanded guidance aimed at providing solar access to millions of homeowners. The Clean Energy for All Initiative expands access to clean energy to more homeowners than ever before. Middle class families, Veterans and Low-Income homeowners through Property Assessed Clean Energy Financing (PACE). PACE already provides homeowners in California access to reliable and affordable financing. Now, PACE is beginning to expand to Florida homeowners. Eligible home improvements include rooftop home solar panels, impact windows, HVAC systems and other hurricane fortification.
PACE financing is unique because it provides homeowners the ability to finance important home improvements like rooftop solar panels with terms of up to 25 years, with no money out of pocket. What’s more, acceptance is not based on a their FICO score or ability to monetize the Federal Investment Tax credit during a single year. A key feature of PACE financing, as an assessment, it is designed to transfer with the property during a sale. This makes long term, sometimes structural, home improvements more affordable because they don't have to be paid for with cash or equity.
PACE Financing Gets a New Day in the Sun
The new expanded guidance provides assurance that anyone with an FHA mortgage, including VA loans, are eligible for PACE financing. Previously, the FHA had limited support of PACE and of the transferability of PACE. With this new expanded criteria, the FHA has clarified the ability to use PACE with FHA products. Additionally, unlocking the ability of the PACE assessment to be transferred so long as specific criteria is met.
Florida, along with California, is one of just a handful of states with quality PACE legislation. These dedicated rules are needed for the expansion of PACE. In 2010 Florida’s state leaders saw the opportunity to expand access to solar energy and hurricane fortification. Unfortunately the financing has been limited or unavailable because of these mortgagee limitations. This new guidance sets forth the process for more of Florida’s homeowners to access PACE financing. This will make installing rooftop solar panels easier than ever before.
This strong support from Obama allows homeowners of all income classes to go solar right now. The FHA and VA finance and refinance approximately 20% of all mortgages in the US. This is a step in the right direction for residential PACE financing.
Fannie Mae and Freddie Mac, the nation's largest government backed mortgage lenders have not yet issued similar guidance. Fannie Mae will not purchase mortgage loans secured with an outstanding PACE loan. However, Fannie Mae has made modifications to their HomeStyle Energy loan program aimed at providing a transition out of PACE loans during a purchase or refinance.