Our industry association is taking legislative action regarding PACE loans. Here’s the highlights below…I have seen too many clients caught in this trap, and it can be a trap when the borrower/homeowner doesn’t understand the financing terms. I haven’t worked with one person yet, trying to refinance, that understood what the PACE loan did to their financing options…good news is, many times there is a solution…
I have a link to write to your assigned legislative representative…these communications do work and do make a difference and I encourage you to act if you can. It only takes a few minutes; I can send you the link easily!!
PRESS RELEASE FOR IMMEDIATE RELEASE
February 09, 2022
Contact: Mike Pearson
The Florida Association of Mortgage Professionals (FAMP) applauds the legislature's efforts to increase access to clean, renewable energy sources to Florida Homeowners. However, House Bill 101(2022) and Senate Bill 228(2022) do not adequately address several key issues that have historically been problematic with PACE Financing:
The use of non-ad valorem taxes
PACE/REEF loans increased property taxes to pay the loan, these liens take priority over existing mortgages. Most borrower are required to completely pay off the PACE/REEF loan before selling or refinancing their existing mortgage. Since these loans are leveraged up to 100% of the value of the home, that often means borrowers are forced to find out of pocket money to pay off the loan or find themselves unable to sell or refinance to take advantage of lower interest rates.
Clear disclosure of terms to borrowers
PACE loans commonly over-promised energy cost savings rarely disclose the year over year decrease in savings that often follows as equipment degrades. Many borrowers are not clearly explained the terms of this type of financing and are shocked to see the increase in property taxes caused by PACE financing.
Ensuring borrowers can repay the loan
These bills do very little to ensure PACE/REEF loans are being issued to borrowers who have the ability to repay the loan. There is no assessment of credit history, no review of debt-to-income ratios, no review of payment history of non-mortgage debt, no review of other debt, i.e., child support. When estimated utility savings do not materialize, borrowers are often overextended. Instead of saving money, they now see large increases and have few options to undo the harm.
We have reviewed the bills and although the legislature has tried to make some improvements to the existing PACE program, we feel the bills fall short and we are unable to support these bills as currently written.
The Florida Association of Mortgage Professionals has been dedicated to the protection of our industry and consumers since 1960. We pride ourselves as the voice of the independent mortgage professional in Florida and beyond. Our mission is to promote and advance the common business interests of Florida's mortgage professionals through education, advocacy, technology, and ethical practice.