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The primary lien holder absolutely has a right object (practically not legally). Because its a lien senior to the original lien. So in case of a foreclosure, th

by bko 5y ago

The primary lien holder absolutely has a right object (practically not legally). Because its a lien senior to the original lien. So in case of a foreclosure, the PACE loans would be repaid first. No other loan can trump seniority of the primary lien. PACE is an exception by law For instance, if someone buys a home for 100k putting down 20k (standard 20% in the US). Then the owner takes out a PACE loan for 20k, the loan to value for the bank is now 100% (as opposed to original 80%). In case of foreclosure, the 20k PACE is paid down first or becomes the obligation of the buyer. And these panel depreciate, so its unlikely the panels are worth 20k after a few years. So in case its liquidated for 70k, the PACE gets paid off 20k, and the bank gets 50k. Without the loan, the bank would get their back 70k.

sokoloff 5y ago
The R-PACE loan principal is not senior to the senior lienholder's position. Past due payments (only) are treated as tax obligations, meaning that only past due payments are senior to the first mortgage holder. In your example the original bank would likely get well over $65K of the $70K sales price, and the new buyer would be on the hook for the remaining (not yet due) PACE loan.
- bko 5y ago
  > The R-PACE loan principal is not senior to the senior lienholder's position. That's not correct. The loan is on the property not the person taking out the loan. And it is a senior claim to any other potential claim since its technically a tax obligation. >> Potential resistance by lenders/mortgage-holders whose claims to the property may be subordinated to the unpaid assessment amount should the property go into foreclosure. [0] >> For consumers, PACE type programs have several problems if programs are not properly designed and administrated. Because the financing is designed to stay with the property, eligibility is based primarily on property information rather than income and FICO scores ... A problem with PACE for both residential lenders and consumers is that the tax liens for PACE financing take priority over other lien-holders, and those lien-holders may not be notified or given an opportunity to object [1] The buyer of a property would have to pay that loan down although, like you said, not immediately. That's because the loan is on the property, rather than the individual who took it out. [0] https://www.energy.gov/eere/slsc/property-assessed-clean-energy-programs https://www.energy.gov/eere/slsc/property-assessed-clean-ene... [1] https://en.wikipedia.org/wiki/PACE_financing https://en.wikipedia.org/wiki/PACE_financing

by bko 5y ago

sokoloff 5y ago

The R-PACE loan principal is not senior to the senior lienholder's position. Past due payments (only) are treated as tax obligations, meaning that only past due payments are senior to the first mortgage holder. In your example the original bank would likely get well over $65K of the $70K sales price, and the new buyer would be on the hook for the remaining (not yet due) PACE loan.

bko 5y ago
> The R-PACE loan principal is not senior to the senior lienholder's position. That's not correct. The loan is on the property not the person taking out the loan. And it is a senior claim to any other potential claim since its technically a tax obligation. >> Potential resistance by lenders/mortgage-holders whose claims to the property may be subordinated to the unpaid assessment amount should the property go into foreclosure. [0] >> For consumers, PACE type programs have several problems if programs are not properly designed and administrated. Because the financing is designed to stay with the property, eligibility is based primarily on property information rather than income and FICO scores ... A problem with PACE for both residential lenders and consumers is that the tax liens for PACE financing take priority over other lien-holders, and those lien-holders may not be notified or given an opportunity to object [1] The buyer of a property would have to pay that loan down although, like you said, not immediately. That's because the loan is on the property, rather than the individual who took it out. [0] https://www.energy.gov/eere/slsc/property-assessed-clean-energy-programs https://www.energy.gov/eere/slsc/property-assessed-clean-ene... [1] https://en.wikipedia.org/wiki/PACE_financing https://en.wikipedia.org/wiki/PACE_financing