This Clean Energy Home Loan Program Has Problems. California’s Trying to Fix Them

A decade after California became ground zero for what is now one of the country’s fastest-growing home loan programs, the state has passed unprecedented regulations to protect borrowers from deceptive financial practices. The program, property assessed clean energy (PACE) financing, offers loans to help residential or commercial property owners pay for energy-efficient upgrades, such as solar panels, LED lighting and window insulation. The residential loans are typically around $25,000, and the terms are for up to 20 years. They are automatically paid back through the borrower’s property tax bill, making local governments responsible for collecting the payments.

The idea is that the energy savings generated from an upgrade would help property owners pay back the loan.  But in California, which accounts for most of the program’s growth and is home to the nation’s first PACE program in Berkeley, the government-supported financing model has increasingly come under fire from those who are concerned that homeowners are taking out loans they can’t afford on the advice of contractors eager to profit from the installation work.

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