by John Tenpenny
Real estate agents in California are complaining that the financing surrounding a government program aimed at funding energy-saving home improvements is making homes more difficult to sell.
More than 50,000 California households have signed up for Property Assessed Clean Energy (PACE) financing since state legislators passed a law in 2008 allowing residents to borrow money for such things as solar panels and energy-efficient windows.
Financing for the program has been taken up largely by venture capital-backed startups because banks dislike PACE loans because they take precedent over mortgage debt in the event of a default.
Because the improvements stay with the home, and subsequent owners will reap the benefits of them, the assessments are intended to remain with the property in the event of a sale.
But some homeowners trying to sell their houses have found potential buyers scared off by the higher tax assessments. And now agents in the state are organizing against PACE, saying it makes getting new mortgages much tougher and can leave sellers stuck in their homes.
In Riverside County, an inland part of Southern California where PACE has been particularly popular, Paul Herrera, government affairs director for two realtor groups, told Reuters he gets daily phone calls from agents reporting difficulties selling homes with PACE assessments.
Both Federal Housing Administration and the Federal Housing Finance Agency have been reluctant so far to support the program because the first lien position of mortgages is not assured, but President Obama has said he wants the program to succeed and the White House has said it will work with the FHA
to boost adoption of PACE financing nationwide. Nearly 30 states have passed laws to enable residential PACE, but states other than California have sat on the sidelines pending a resolution to the controversy.