Green financing has hobbled home sales in California
By Nichola Groom
(Reuters) - An innovative, government-sponsored program aimed at funding energy-saving home improvements has drawn praise from powerful supporters, including President Obama. But complaints from a growing number of homeowners, lenders and realtors in California suggest the financing is making homes more difficult to sell and disrupting the mortgage market.
More than 50,000 California households have signed up for Property Assessed Clean Energy (PACE) financing since state legislators passed a law in 2008 allowing residents to borrow money for such things as solar panels and energy-efficient windows. The financing method, authorized by cities and counties, and funded by venture capital-backed startups like Renovate America Inc, Renew Financial LLC and Ygrene Energy Fund Inc, is then paid off through special assessments on property tax bills.
Because the improvements stay with the home, and subsequent owners will reap the benefits of them, the assessments are intended to remain with the property in the event of a sale.
But some homeowners trying to sell their houses have found potential buyers scared off by the higher tax assessments. And now realtors in the state are organizing against PACE, saying it makes getting new mortgages much tougher and can leave sellers stuck in their homes.
In Riverside County, an inland part of Southern California where PACE has been particularly popular, Paul Herrera, government affairs director for two realtor groups, said he gets daily phone calls from agents reporting difficulties selling homes with PACE assessments.
Sancho Lopez, a Riverside police officer and homeowner in an adjacent county, experienced the problem first-hand. He and his wife financed the $40,000 cost of 21 dual-pane, energy efficient windows and two sliding doors with a PACE loan. When they decided to sell their house, their realtor warned them it wouldn’t be easy.
The house sat on the market for 10 months, and it is in escrow now, Lopez said, only because he has agreed to pay off the loan balance - now $46,000 because of interest and fees.
"I wouldn't ever do it again," Lopez said of the PACE program he used to pay for the windows. Continued...