PACE Loans Pose Significant Risk of Home Loss Due to Property Tax Repayment Structure
Property Assessed Clean Energy (PACE) loans, designed for home improvements like energy-efficient upgrades, carry a significant risk of homeowners losing their homes. This risk stems from the repayment mechanism, where the loan is added as an assessment to the property tax bill. If a homeowner falls behind on PACE payments, the delinquency is treated similarly to unpaid property taxes, which can lead to a tax sale of the property. The U.S. government does not pay for or insure PACE loans; instead, these programs are approved by individual states and managed by local governments or private companies contracted by them. Salespeople promoting PACE loans may claim that improvements pay for themselves through reduced utility bills, but they are not required to substantiate these claims, and such benefits are not guaranteed.
