Wall Street Journal Reports Increase in PACE Loan Defaults
Tuesday, August 15, 2017
The Wall Street Journal is reporting today that there has been a substantial increase in loan defaults in the PACE program, jumping from 0.9% to 1.6% from last year. The report is based on an analysis of tax data from 40 California counties, which shows roughly “1,100 borrows have missed two consecutive payments this year through the tax year that ended June 30, compared with 245 over the previous year”. Missing two consecutive payments places the homeowners into default, and at risk of having their homes auctioned off by local governments within five years.
According to the Journal, Wall Street investors are pouring money into securitized PACE loans, citing a July $205 million deal from Renovate America, the nation’s largest PACE lender. However, investors are starting to act nervous, with one investor quoted in the report noting that a lack of data will limit investors’ ability to take risks on the bonds.
Several attempts at reforming the PACE program through legislation are currently being pursued both at the state and national level.
More information can be found in the Wall Street Journal here.