California Revives PACE with $10 Million Reserve Fund

March 12, 2014
California has created a $10 million mortgage loss reserve program to revive and expand its Property Assessed Clean Energy program. The money is meant to minimize risk to mortgage lenders if a home falls into default and is unable to make its PACE payments.

California has created a $10 million mortgage loss reserve program to revive and expand its Property Assessed Clean Energy program, which makes residential energy and water efficiency projects more affordable.

PACE lets homeowners pay for energy efficiency improvements over time on their property tax bills.  Local government agencies sell bonds to finance the efficiency improvements. Liens are placed on the participating homes, which are paid off by homeowners monthly on their property tax bills.

Residential PACE programs ran into a roadblock in 2010 when the Federal Housing Finance Agency determined that they put first mortgage lenders at risk, including those backed by the federal government, when a foreclosure or forced sale took place.

Approved March 11 by the California Office of Administrative Law, the loss reserve program seeks to ease these concerns by providing funds to reimburse the first mortgage lender for the PACE payments  when the homeowner falls into default.

The California Alternative Energy and Advanced Transportation Financing Authority will administer the loss reserve program.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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