Home improvements made with loans from Renovate America financing.

Wall Street Journal staffer Joe Light reports that clean-energy loans make for messy home sales and refinances as homeowners are held up by Fannie and Freddie rules, driving the main lender to retool its PACE program.

Enthusiasm for low-interest rate loans for energy-savings-related home improvements sparked a surge in demand for the program, but now borrowers--caught in a vicious circle of regulatory impediments, wished they'd never participated in the first place. Light writes:

While the effort, known as Property Assessed Clean Energy, or PACE, has spurred solar-panel installations and other improvements that otherwise wouldn’t have taken place, it also has thrown a wrench into home sales and refinances, and proved costly to some sellers.

The problem is that the state laws that authorize PACE loans usually structure them as tax assessments, which are paid off before mortgages in the event of a foreclosure.
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