Earlier in September, the bill was passed by the legislature and awaited the governor’s approval. The bill was created by Senator Nancy Skinner, Assembly Members Matt Dababneh and Ian Calderon. Its purpose is to strengthen consumer protection by reinforcing PACE laws at the state level.
PACE Financing is an initiative backed by nearly every municipality in California. It helps homeowners make affordable, energy efficient upgrades to their homes by attaching the financing costs to the value of their properties. The cost of the project is 100% financed with no money down, and is paid back over 5 to 30 years through a special assessment added to the property tax bill. In this way, homeowners have an easier time paying for their home improvements while contributing to keeping our planet green.
In addition to upgrading homes, reducing energy and water usage and creating jobs in local communities, the program is enabled by a municipality but funded and run by private PACE Administrators at no cost to the local government. This is because, by allowing the financing to be attached to the property, municipalities are greatly reducing the cost of lending to homeowners in the community.
Pace Avenue educates homeowners in California about PACE Financing. With any new type of program, there is a learning curve for all the stakeholders. This legislation is an important step forward for PACE Financing. It addresses some of the early issues that have arisen while the program has been in its infancy. Though most homeowners in California are unaware of PACE today, we believe that anyone who owns or is looking to purchase a home should and will know about PACE. As a company, we have specifically chosen to focus on PACE Financing to close the knowledge gap and see this brilliant program succeed.
According to the LA Times, some homeowners were not satisfied with PACE Financing found it difficult to pay the bills because they did not fully know what they were signing up for.
Since the founding of PACE in 2007, the initiative has greatly increased in popularity and demand. It is the fastest growing consumer product in the U.S. In California alone, PACE has been able to help 150,000 homeowners upgrade their homes with improvements that suited their style with successful financing.
Because of its success and an increasing consumer base, a reconsideration of the rules and laws surrounding the deployment of PACE Financing was needed. This bill adds a number of requirements to increase consumer protection across the burgeoning industry. Many of these changes have already been adopted by the underwriting teams of the PACE Administrators (companies that manage the disbursement and collections of funds). These include:
- Establishing a thorough background evaluation of a homeowner mortgage and tax payment history
- Requiring the most recent and accurate value of a home
- Determining the homeowner’s ability to pay annual PACE financial commitment as well as personal debts or other financial commitments
- Establishing a licensing and regulated structure of PACE
These regulations continue to support PACE and its growth across California by establishing protections that will ensure that the initiative is deployed properly in communities across the state. At Pace Avenue, this is at the core of what we believe. As the industry evolves, PACE is going to be an incredible tool for homeowners. The best thing for the long-term success of PACE is to make sure that it is used by the right customers in the right way and for the right reasons!