Homeowner-beware on government-financed home improvements

Published July 4 2018

The Pasco County Tax Collectorís Office has entered into collection agreements with certain providers of services through the PACE (Property Assessed Clean Energy) Program. This is a government-sponsored program used in Florida to finance energy-efficiency home improvements, renewable-energy improvements and wind-resistance improvements.

Like all businesses, there are those that do a good job and some that do not. Consider these questions before signing on the dotted line:

Is the PACE program free?

The PACE Program is not free. To participate, you must qualify for a loan for the improvements. The loan is added to your property tax assessment, increasing your property taxes each year until the loan is paid off.

How do I qualify for the loan?

You must have paid all your property taxes for the previous three years. There can be no involuntary liens on your home and no notices of default. You must be current on your mortgage.

How do I pay the loan?

The PACE Program loan is paid with your property taxes. If you have a mortgage, your lender probably includes the property taxes in your monthly payment, which will increase accordingly.

Do I pay interest for the loan?

PACE Program loans charge interest, usually between 6 percent and 9 percent per year, over 20 years. You should ask about lower-interest loans available, possibly through utility-sponsored or federal-weatherization programs. A lower rate may be available at a bank or credit union with a second mortgage or a home-equity line of credit. PACE also charges borrowers points and fees of at least 5 percent and an annual administration fee of approximately $35 for the life of the loan.

What if I have trouble making the increased tax payment?

If you default on your PACE Program loan, a tax certificate will be sold on the property. After two years of an unpaid tax certificate, your home could be sold through the Tax Deed Application process.

Can I refinance or sell my home while making payments on a PACE Program Loan?

Some lenders will not want to enter into new loan terms while a PACE Program loan is assessed against your home. The PACE Program loan can be transferred when you sell your home. However, Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs will not insure mortgages with PACE loans.

How can I protect myself?

Take your time before you sign. Ask for and read any documentation relating to a PACE Program loan. Ask for a printed copy, and donít sign anything that seems confusing.

If you take a PACE loan through these vendors, the Pasco County Tax Collectorís Office will collect the funds through your annual property tax bill: Florida PACE Funding Agency, floridapace.gov; Florida Green Finance Authority, flgfa.org; Florida Resiliency and Energy District, renovateamerica.com; Green Corridor Property Assessment Clean Energy (PACE) District, ygreneworks.com