Building on existing underwriting policies and consumer disclosures, Renovate America will add income review to its underwriting toolbox. Read an except from the article below:
Patrick Moore, Renovate America’s newly appointed chief lending officer, told Asset Securitization Report that borrower income data will be used in underwriting both PACE loans and an unsecured program funding through local government entities and unsecured loans to finance a wider range of home improvement projects. It will help determine approvals as well as potential loan sizes. The company has been collecting income data for its unsecured lending product, Benji, since 2016.
The move is being made in anticipation of proposed state legislation in California that would mandate “good faith” underwriting standards on PACE loans, including obtaining credit reports and “in some cases, verifying income, assets, and debt obligations,” according to Senate Bill 242.
The LA Times has done a well-researched piece on the work of PACE providers and government entities to strengthen one of the most successful policy ideas to deploy energy efficiency and renewable energy into American homes — strengthening our clean energy economy and residential infrastructure – and to expand access to credit for homeowners to make home improvements. To date, over $3.7 billion in PACE financing has helped more than 150,000 homeowners make improvements to their homes, many of whom would not have been able to do so without the option of PACE financing. This reporting comes at a time when the federal government is moving responsibility for infrastructure modernization to the private sector, and when states and cities are looking for effective options to advance clean energy.
The reporting captures broad support for PACE, as well as why the industry is working at the company, state, and federal policy levels to safeguard homeowners from misrepresentation, and to actually remove bad actors with poor consumer protection records from the PACE marketplace. The underlying allegations in the homeowner stories highlighted have solutions in the companies’ practices as well as pending California legislation (SB 242, carried by Sen. Nancy Skinner). A spokesperson for Governor Jerry Brown is quoted saying “The Governor continues to support PACE as a way for Californians to play their part in responding to a rapidly changing climate,” adding that he’s “open to additional opportunities to continue improving the program.” Even the sponsor of a bill currently opposed by PACENation in the U.S House of Representatives, Rep. Brad Sherman, says in the story he’s “certainly not hostile to the PACE program,” and that “it does an awful lot of good.”
A coalition of supporters, organized by Brightline Defense and including Build It Green, CalSEIA, Climate Action Campaign, the Center for Sustainable Energy, Cleantech San Diego, California Energy Storage Alliance, and Vote Solar have sent a letter to congress urging action on proposed legislation that would kill PACE financing, one of America’s most effective means of financing energy-efficiency and renewable-energy property improvements.
In a recent blog post, the National Association of Realtors (NAR) highlights the benefits of properties with solar panels, especially for Realtors, and encourages Realtors to learn about the options available for property transactions with PACE assessments.
PACE utilizes private capital to provide upfront financing for project costs such as the installation of solar panels or insulated windows. While every mortgage product may not be compatible with PACE, there are numerous options that are, and homeowners are encouraged to research the best solution for their needs. With increased popularity and a little due diligence by buyers, sellers and Realtors, buying and selling a home with solar or other energy upgrades will become more and more common in our future.
Read CDFA’s letter in opposition to S.838, the “PACE” Act of 2017, below:
To: Senate Committee on Banking, Housing, and Urban Affairs From: Toby Rittner, President & CEO Council of Development Finance Agencies
100 E. Broad Street, Suite 1200
Columbus, OH 43215 [email protected]
Re: Opposition to S. 838, the “PACE” Act of 2017
Senators Cotton (R-AR), Rubio (R-FL), and Boozman (R-AR) have introduced a bill in the U.S. Senate that would kill one of America’s most successful forms of financing for clean energy and energy efficiency: Property Assessed Clean Energy (PACE). The bill, known as the PACE Act of 2017, would define PACE as a mortgage loan by making it subject to the Truth in Lending Act (TILA) rules that regulate mortgage lenders. The imposition of TILA regulations on PACE would:
Require local governments to alter the way they collect property taxes and assessments,
Require local governments and contractors to become licensed as mortgage brokers,
Impose what could be lengthy delays in funding projects.
Property Assessed Clean Energy (PACE) financing empowers state and local governments to meet important public policy objectives and boost local employment at no cost to public budgets. PACE supporters are deeply concerned by the incendiary attacks leveled against this innovative and successful policy today from some on Capitol Hill.
Observers should look beyond the inflammatory rhetoric and focus on common sense and basic facts. The PACE industry has long been committed to putting the homeowner’s best interests first and is supportive of additional strong consumer protections at the federal level to safeguard homeowners making energy-efficiency, renewable energy, water conservation, or hurricane protection improvements to their homes. But these protections must not dismantle the innovative model at the heart of PACE financing.
Many of you no doubt saw the January 10th Journal article, “America’s Fastest-Growing Loan Category has Eerie Echoes of Subprime Crisis.” We hope you share our disappointment that the article was so unfair to PACE. It might have emphasized that to date, over 130,000 homeowners report high satisfaction using it to finance often-necessary energy-related investments in their homes. Instead of leaving the reader with the impression that PACE is a new and dangerous form of finance, it might have noted that for decades, local governments have relied on the same property tax line-item mechanism to fund improvements that benefit property owners and meet a public purpose. It could have emphasized that PACE providers are committed to serving that public purpose, and as such, take seriously their responsibility to protect consumers.
When an energy services contractor sits down with a family at their dinner table to discuss the details of an efficient HVAC upgrade, solar installation, cool roof, or other energy upgrades, one question always comes up: “How will I pay for it?”
PACE financing is, increasingly, the answer to that question. PACE offers a more affordable and accessible way to finance energy efficiency, water efficiency, and renewable energy improvements to homes and commercial buildings. PACE programs have already funded over $3 billion in energy upgrades across the nation, and this increased investment has created stable work for local contractors —
PACENation is your organization, dedicated to bringing PACE to every community in America. We’re working with groups throughout the U.S. to bring PACE to more places and make sure property owners, manufacturers, contractors, governments and investors understand its unique advantages. And as our market grows, we’re developing best practices and standards to help ensure the long-term success of PACE.
PACE is at a turning point, and PACENation will need additional resources to meet the needs of our rapidly growing marketplace. To that end, we are pleased to launch a membership program that will enable deeper engagement between PACE stakeholders and our organization and help bolster financial support for our efforts.
Last month, the US Department of Housing and Urban Development and its Federal Housing Administration issued long-awaited guidance that leads us on a path for broader availability of residential PACE financing throughout the United States. These two tremendously important federal agencies have, after thorough review, concluded that PACE is an entirely valid use of the local government assessment financing mechanism, used for decades by nearly 40,000 assessment districts throughout the US to fund projects that benefit property owners and meet a clear public purpose. PACENation applauds and strongly supports the guidance, and you can read our full statement here.