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Commissioners discuss concerns about PACE loans for home improvements

Posted 6/23/22

OKEECHOBEE -- Fliers local residents found in their mailboxes sparked a discussion at the June 23 Okeechobee County Commission meeting about the PACE loan program.

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Commissioners discuss concerns about PACE loans for home improvements

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OKEECHOBEE — Fliers local residents found in their mailboxes sparked a discussion at the June 23 Okeechobee County Commission meeting about the PACE loan program.

Commissioner David Hazellief expressed concerns about a flier he received about PACE loans for home repairs.

In December 2021, the board of commissioners approved a resolution allowing four PACE agencies to operate in Okeechobee County. PACE enables homeowners to obtain financing for energy conservation and efficiency, renewable energy and wind resistance improvements and repay the financing through voluntary non-ad valorem special assessments on their annual county property tax bill.

“When someone goes to purchase a house, first thing they do is financing. They get prequalified,” Hazellief explained. “At that point, the loan department has calculated the payment.”

He said the mortgage company has considered the ad valorem taxes in that loan and puts the money in escrow. Adding a PACE loan adds another charge on the ad valorem tax bill.

Hazellief also expressed concern that because they are on the tax bills, PACE loans take priority over the mortgage.

“If you have equity in your house, and go to the bank and get a home equity loan, that is in second position,” he explained.

“PACE loans are in the first position before the bank,” he said. “If you can’t make your payment, they can foreclose.”

 Stephen and Susie Burk of Okee-Tantie Title Company said they have some concerns about PACE.

“The underwriters are not very fond of these PACE-type liens,” said Mr. Burk. Banks require all PACE liens to be paid in full before a property is sold.

“The reality is, with us, they are going to have it pay it off in full even if they want to refinance for a better interest rate,” he explained. “Any title company and most, if not all, underwriters are going to require that lien be paid off.”

If the individual thinks he can walk away free and clear from the debt and pass it along to the next person, that is not accurate, Mr. Burk continued.

“The seller signs the agreement with the PACE company,” said Mrs. Burk. “This particular PACE lien trumps every other mortgage.”

“Most people, when they get these liens, don’t realize they have to pay these off,” before they can sell or refinance the property, Mr. Burk added.

Mrs. Burk said there is also confusion in regard to interest charged on the PACE loans, and in some cases buyer does not know how much is due.

“We want the best for Okeechobee County,” said Mrs. Burk. “What I am concerned about is how it is going to effect everyone going forward, when the owner wants to sell.

“I want the best for the buyer and the seller and I want the best for the county,” she said.

Hazellief said the major loan companies of Fannie Mae, Freddie Mac and FHA will not make a loan until a PACE lien is paid off.

“When they get that PACE mortgage, it’s going to move to first place,” said Mrs. Burk. “Our federal lenders are never going to agree to that. If they call the mortgage, the property owner is going to be losing his house.

“We have some banks in town that if you even change the title by adding your wife, they can call the loan,” said Mrs. Burk. And sometimes they do, she added.

County Attorney Wade Vose said banks can call in a loan for any reason that is in their loan contract.

Mrs. Burk said there is also some confusion when a PACE loan is added after the official tax roll is certified for the year.

“Before we will approve a mortgage, we check for encumbrances on the customer’s property,” said  Teresa Lara of SeaCoast Bank. “The bank will not be in third place. If they already have a mortgage and a PACE loan, we won’t do a home equity loan.”

Tax Collector Celeste Watford said she is working with the PACE  program because that is what the commission directed. “I will do the pleasure of the board,” she said. “We have no experience with PACE.

“I don’t know how to give you the payoff figures,” said Watford.
I will only know what is to be collected for that year. What they owe for the 10 year period or 20 year, I would have no idea,” she continued.

“It’s always a challenge to help our constituents when they come to pay their taxes,” said Watford. Life is happening ... gas is higher, insurance is higher.”

She said she is concerned some homeowners may not understand how much will be added to their tax bills at the end of the year.

“I do hope they read every fine line when they sign these documents,” she said. ‘It is a concern of mine they fully understand that whatever is on there, is on top of all their ad valorem and their non ad valorem taxes.

“We will do whatever we can to help the people and the board get through it.”

Hazellief said if home owners have equity in their homes, they can get a legitimate loan and know what the payment is. “It’s in second position, they won’t lose their house if they can’t pay,” he added.

Jamy Dinkins of Florida PACE Funding Agency of Orlando, said his organization has a lot of experience working with tax collectors and title companies.

“We have never had a single person lose their house due to PACE,” he said. If a borrower wants to know the payoff balance, there is a process for determining that amount within three to five business days.

He said the mailers and fliers are not sent out by legitimate PACE lenders.

“Those are people who are like the folks who call your cell phone and want to extend your car’s warranty,” he said. “These are scammers. They tell you want you want to hear, get your information and then sell that to a contractor.”

Dinkins said the contractors who buy the leads are not affiliated with the PACE agencies and cannot authorize PACE loans. The PACE agencies do not pay for leads, he added.

Dinkins said it would be a violation of state statute for the bank to call the loan just because a PACE loan has been placed on the property. He said Fannie Mae and Freddie Mac comply with state law in regard to mortgages.

They require it to paid off in full before the property is sold

Eddie Metzger III of Ygrene Energy Fund said it’s a “bait and switch.” The contractor can’t execute a PACE contract, but he can sell other programs to finance the work.

Hazellief said these scammers may sell leads to contractors who aren’t licensed in Okeechobee County.

He noted the flier claims to protect homes from hurricanes and hail and also lower the carbon footprint.

Commissioner Kelly Owens said it is hard to get a home equity home right now due to the economy.

“I feel this is a safe option for people who need to do improvements to their homes,” she said.

“We’re a buyer beware state, regarding real state sales,” said Owens.

“I’m not ready to discontinue this program,” she said.

“I got the flier in the mail too,” she added. Blaming the PACE agencies for the fliers  “would be like holding Ford responsible for warranty phone calls.

“I feel if we can give people in the community the opportunity get ahold of the funds at a reasonable rate, that is a good thing,” she said. If they can’t make the improvements to their homes, they might lose their insurance, which would also be a factor is risking foreclosure.”

“It would be helpful if the folks from PACE had a conversation with the title companies,” said Commission Chair Terry Burroughs.

Eddie Metzger of Ygrene Energy Fund said PACE loans help people who cannot obtain other funding. He said these are hardworking people who pay their bills but may not have a good credit score.

According to the three representatives of companies that handle PACE funding, about 30 Okeechobee County homeowners have obtained funding from PACE for home improvements since the program was approved.

PACE, loans, home repairs

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