On Monday, August 24, the Obama Administration announced a number of initiatives related to energy efficiency and renewable energy, including two programs of interest to the real estate industry:
Residential Property-Assessed Clean Energy (PACE) Financing: PACE financing allows homeowners to borrow money from a local government to make energy improvements to their home and pay back the cost over time through their property taxes. When the property is sold, the remaining PACE loan stays with the more energy efficient property and the next owner is responsible for repaying the loan.
To accelerate the use of PACE financing for single family housing, HUD’s Federal Housing Administration (FHA) announced that properties with PACE loans that are subordinate to the primary mortgage loan can be purchased and refinanced with an FHA insured mortgage. HUD is issuing a preliminary statement indicating the conditions under which borrowers purchasing or refinancing properties with existing PACE assessments will be eligible to use FHA-insured financing.
Increasing Homeowners Borrowing Power to Make Energy Efficiency Improvements: HUD and the Dept. of Energy are launching a program to use the existing Home Energy Score to help homeowners measure the energy us of their home and increase their access to financing tools to make home energy efficiency improvements.