Droves of Californians are in danger of losing their homes after defaulting on loan payments from a government program meant to encourage individual investment in green technology, The Wall Street Journal reports.
WSJ found that across 40 counties in California, the number of people defaulting in the Property Assessed Green Energy program (PACE) rose nearly 450 percent from 2016 to 2017, from 245 homeowners to about 1,100.
PACE is one of the fastest growing loan programs in the U.S. The program is state-run and markets loans to homeowners through contractors like plumbers and repairmen. It has been adopted by over half of the U.S.
Contractors, essentially PACE loan brokers, convince homeowners to update their houses with solar panels, more efficient air conditioners, etc. Repairmen point people to the small, high-interest-rate PACE program loans to help them afford the upgrades, the WSJ reports.
The PACE industry group PACENation claims the loan program is worth it to homeowners because it pays itself off over 20 years at most. The “clean energy” improvements cut down utility bills and qualify homeowners for certain tax credits in the long run.
That promise is empty if homeowners cannot pay off the loan in the short term, however.
PACE loan debt is tacked on to a person’s property taxes as an assessment. After being talked into applying for a $42,200 loan by her contractor, her property taxes rose over 530 percent. The contractor convinced her to take the loan by promising that, because it came from a government program, she would not be liable for the debt, the WSJ reports.
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