PACE loans sounded good when I first heard of them. Then the stories started coming about people loosing their homes. This is recent news. The cause is not because of the down turn in 2007 but because of how the loans are written.
PACE stands for Property Assessed Clean Energy. These loans are offered by contractors who deal in solar energy and window retrofitting. The loans have priority, recording before a first trust deed, similar to a tax lien. Lenders require these loans to be paid prior to recording a new first trust deed, when a property is sold or refinanced. PACE loans typically have a hefty pre-payment penalty as well as sporting higher rates between 7-12%. Many counties around California have supported these loans. Numerous home owners in Bakersfield and San Bernardino have lost their homes due to these loans. Some owners have a PACE loan recorded against their property in Lompoc, but Santa Barbara City has not supported this type of predatory lending.
Alert those you know and care about, this is not a good way to obtain the money for a home improvement — there are too many unintended consequences.