For Mortgage Lenders

Because PACE assessments represent financing that, in the instance of default, constitutes a senior lien on the property, an important part of the program is “lender acknowledgement” or “consent,” which means obtaining approval for a PACE assessment from any holders of mortgages on the property. PACENow has published a guide to obtaining “lender consent”: 8.30.2013-Lender-Support-Handbook, and an update: Lender-Support-Update-20143.

Surprisingly, PACE is as beneficial for mortgage holders as for property owners, tenants, and PACE investors, because it increases a property’s value without adding to the owner’s total liabilities. A $1 million investment in new energy-conserving equipment adds at least that much value to the property, while the owner’s liabilities remain unchanged; this means that PACE improves the loan-to-value ratio for the mortgage lender, and, with the energy savings, typically improves the borrower’s a ability to repay the mortgage loan.