Property Assessed Clean Energy (PACE) programs offer loans for energy-efficient home improvements, such as solar panels, HVAC systems, and energy efficient windows. PACE loans are offered through home improvement contractors and collected through a property tax assessment, which creates a tax lien that has priority over any existing mortgage. PACE programs must be authorized by state and local governments, but PACE programs are privately run with little or no government oversight.
Advocates in California have seen a sharp increase in homeowners harmed by PACE, particularly among older adults. There have been numerous complaints that home improvement contractors are selling unnecessary and unwanted home improvements through misrepresentation and in some cases outright fraud. Because these loans often carry high interest rates but have weaker underwriting than traditional mortgages, they increase the risk of foreclosure for cash-strapped homeowners. For older adults, they may also create a barrier to efforts to age in place or transition to more suitable housing.
• Andrew Pizor, National Consumer Law Center