A study conducted last year provides yet another line of defense for the PACE programs shut down by Fannie Mae and Freddie Mac. According to the results of the internal analysis, energy-efficient homes have default and delinquency rates 11 percent lower than other homes. This contradicts Fannie's and Freddie's logic that PACE programs "pose unusual and difficult risk-management challenges" for lenders. In fact, programs that encourage homeowners to improve the efficiency of their homes have the power to benefit both borrowers and lenders, as Jonathan Hiskes explains on Grist:
Congress members, mayors, and governors around the country have spoken in support of PACE, as well as the Department of Energy. Read the full post at Grist. Image courtesy of Grist.
"If you're Fannie or Freddie, in many ways PACE should be the best tax or assessment you've ever seen, because it improves cash flow," said Cisco DeVries, president of Renewable Funding, a company that sets up PACE programs for cities and counties. "Homeowners are reducing their energy bills. No other assessment does that. For a sewer system [a common use of tax assessments], you have access to sewers, which is great, but it's not like your cash flow improves."
The nation's largest PACE program, in Sonoma County, Calif., has also found that energy-saving improvements tend to make homeowners more financially secure. The property-tax delinquency rate for the county's 900-some PACE participants was 1.2 percent, compared with 3.5 percent for the county as a whole, according to deputy county counsel Kathy Larocque.