Everyone’s talking about PACE, but what does it all mean?
The Federal Housing Finance Agency (FHFA), which regulates secondary mortgage giants Fannie Mae, Freddie Mac and the Federal Home Loan Banks, released a statement slamming PACE loans.
PACE (Property Assessed Clean Energy) programs are county or municipality based schemes offering homeowners loans to improve energy-efficiency of their home or equip their properties with photovoltaic solar panels. PACE loans are held as a lien against the property, and are repaid in the form of increased property tax payments over many years.
FHFA doesn’t like PACE loans because property tax assessments get first dibs in the case of default. This means if a property is foreclosed upon the county or municipality gets its money back first, and the mortgage holder gets whatever is left. Given that photovoltaic solar arrays commonly cost in the range of ~$20,000, we’re not talking about pocket change here.
What does this mean for your home energy efficiency plans? For most of us, nothing at all.
The fact of the matter is that in many locations taking simple steps like ensuring your home is properly sealed and insulated can save more energy than you could generate using an expensive solar array, and such home improvements are eligible for a Federal Tax Credit of up to $1,500. As designed, PACE loans would be helpful (if they were permitted) for many homeowners, but many projects wouldn’t have qualified, especially those that focus on non-energy benefits like improving comfort or the safety of the home.
The Federal Tax Credits for Consumer Energy Efficiency provides a tax credit of 30% of the cost of energy efficiency upgrades up to $1,500. The only caveat… the program expires on December 31, 2010.
So what are you waiting for?
Save money on the purchase and installation of home improvements, save money on your heating and cooling bills for years to come, improve the comfort and safety and your home, and help protect the environment as well. It’s a win, win, win, win–quadruple win!–situation.