Lol I guess I would need to be careful for libel against PACE people... although damages would be hard to prove on TMC
I think this article best summarizes what is most often wrong with PACE loans:
As we previously investigated, a green energy program that targets low-income homeowners continues to leave a trail of financial hardships and foreclosures in its wake. KPIX 5'S Susie Steimle got an exclusive interview with the state agency tasked to oversee the troubled program.
sanfrancisco.cbslocal.com
For those who don't want to read that article, basically PACE loans put a lien on your county property tax profile for your home's parcel. So while a normal "secured solar loan" has al lien on the solar panels and ESS, the PACE is linked to your home. Sure, somebody out there may have a good experience with PACE loans. But the way PACE loans can be abused makes them rife for fraud.
We may hate banks, insurance companies, and hedge funds, but they're the ones that buy up the loan assets from lenders of secured solar loans or normal unsecured personal loans. At least the banks have mechanisms to protect their assets, which in theory also protects the borrower in some way. (Yes, I know banks still screw people through other means; but we're just talking about loan origination at the moment).
This brings me to why I believe PACE loans are trash. They aren't regulated and those loans have no underwriting. If a homeowner gets a Mosaic or Greensky secured solar loan, at least the lender vets the installer and borrower. And, the homeowner needs to sign off that the system was "received as designed/expected" before the cash is moved. This means if a homeowner goes with some "Acme Solar Pros LLC" for your project, at least somebody took a look at Acme to have a license/bond/etc... and the homeowner had to attest the system was functional before the cash was paid to Acme for services. The rules were there to protect all interested parties.
But with PACE loans, the homeowner and the county tax assessment are basically the only 'checkers'. The County isn't going to vet a company like the "Pace Funding Group" referenced in the article since the PACE program doesn't allow the county to impose underwriting. After all the county isn't a bank and the county gets to roll PACE loans into a big securitization without the same underwriting pain as a normal loan. The PACE loan simply abuses the concept that the loan is backed by super valuable collateral in the form of property taxes on parcels. This is why in that article you'll see a fake installer just doing a trash install but not caring if the system works or not. The PACE loan has no recourse against the installer for simply doing a trash job. And as a result, to me the PACE loan is trash since the program is so easy to abuse.
The PACE program also ignores any underwriting on the borrower since the whole point of the PACE program was to find a way to get financing to poor people who may not pass a normal underwriting model. So the PACE program brings together the worst of to the worst. It allows a loan to be originated with basically zero underwriting. And, the company doing the loan origination isn't on the hook for how the green energy system or how the loan performs over time.
You can thank your lawmakers for this well intended but misguided policy. Yes, some people have benefited from PACE. But no, the people often offering PACE options now-a-days aren't the types of folks with your best interest in mind.
