Don’t listen to mortgage industry on rooftop solar financing
The debate over cap and trade and Senate Bill 32 this year overshadowed a significant environmental policy accomplishment that Gov. Jerry Brown can add to his climate-change legacy.
Brown’s signing of Assembly Bill 2693 will improve the administration of the property-assessed clean energy (PACE) program, adds important consumer protections that could serve as a national model, and will pave the way for reduced costs and a more energy-efficient future for millions of California homeowners.
PACE enables local governments to make financing available to property owners who may be unable to afford the up-front costs of energy improvements, such as solar panels and rainwater capture systems. The financing is an alternative to short-term, high-interest bank loans and has helped 100,000 California property owners save money on their utility bills while helping the state reduce greenhouse gas emissions and water usage.
Despite this success – or maybe because of it – PACE has been targeted by the mortgage industry, which is trying to undo the financing model that drives the program. They argue that many consumer-oriented problems are related to a policy that gives PACE assessments priority status over mortgage loans. However, while the mortgage industry claims this model is putting consumers and the industry at risk, some of these lenders are now offering and advertising their own “green financing” products to homeowners.
Such actions raise suspicion about the authenticity of their claims and led Brown to recently call America’s biggest mortgage lenders “stubborn, unreasonable, and acting like East Coast bankers.” In 2014 he helped set up a $10 million mortgage loss reserve program to reimburse lenders for any losses as a result of PACE payments paid while in possession of a property during foreclosure. However, not a single claim has been filed.
AB 2693 by Assemblyman Matt Dababneh, a Los Angeles Democrat, accurately identified the right issues and prescribes reasonable solutions that preserve the program’s unique structure and benefits, while improving consumer disclosures and safeguards. For example, the law will prevent homeowners from taking out more financing than they can afford. It also will require administrators to provide consumers with important disclosures such as notice of a special tax lien, the total amount of interest charged, and notification that some lenders may require the homeowner to pay off the total amount of the assessment if refinancing or selling.
California is on track to meet its energy-efficiency and water-conservation goals, thanks in large part to this innovative program. Residential improvements in California to date will save 9.1 billion kilowatts of energy, 3.4 billion gallons of water and $2.5 billion in utility bills, and account for 2.5 million tons of reduced emissions.
The program’s success is why companies administering PACE look forward to implementing AB 2693. By demonstrating that California has developed the right policy enhancements for this program, we hope to inspire other states to follow our lead and expand the program across the country.
