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PACE: Fastest-Growing Loan Market Starting To Resemble Pre-Crisis Subprime Market


Property Assessed Clean Energy loans, known as PACE, are the fastest-growing type of financing in the U.S. lending industry, and as the market grows it's beginning to resemble subprimes just before they crashed.

PACE loans have raised around $3.4B for residential projects so far, which experts say will nearly double by next year, the Wall Street Journal reports. The loans are set up by local governments and designed to incentivize homeowners to make their homes more energy efficient by tapping into solar panels or investing in insulated windows and air conditioning units.

Though the goal is noteworthy, one of the program’s major problems is most lenders don’t take a hard look at applicants’ creditworthiness. The loans usually require no down payment, adding debt to property tax bills instead, which often leads to frustrated customers who end up struggling to make payments in a way that's eerily similar to that of the subprime crisis. [WSJ]