PACE Residential Loans Focus on Ohio Regulations


Ohio enacted basic enabling legislation at PACE in 2009. But local municipalities must opt ​​in to their own program through what’s called a Special Improvement District.

In 2016, the Port Authority of Toledo-Lucas County authorized the launch of an R-PACE pilot program overseen by Lucas County Land Bank.

Ultimately, the decision was made to partner with a for-profit R-PACE lender with the resources to help develop this pilot program, explained David Mann, president and CEO of Lucas County Land Bank.

That company was going to be Renovate America of California. But Renovate went bankrupt before it could fund projects in Lucas County. The main drivers of this included tougher rules and a myriad of lawsuits, according to Bloomberg.

Renovate’s assets were acquired by Ygrene, which was appointed seller of the land bank program in 2021.

This program has helped several dozen homeowners without major issues over the years since it was first implemented.

Its apparent success apparently played a role in Ygrene’s efforts to try to expand the program across the state.

But issues raised by groups like the NCLC and ProPublica, among others, have led to distrust of Ygrene and R-PACE programs that are not strictly regulated.

In January, Summit County decided to adopt the Lucas County program for these same reasons.

Frank Ford, senior policy adviser at the Fair Housing Center for Rights and Research in Cleveland and chair of the Vacant and Abandoned Property Action Council (VAPAC), said one of the main reasons the Lucas County program has worked well is boils down to its built-in consumer protections that go beyond Ygrene’s intrinsic practices.

The land bank itself reviews a borrower’s ability to repay the loan, pre-approves contractors, and inspects work done before the contractor is fully paid, for example.

Other protections include that a PACE loan cannot exceed 20% of the property’s value, while the annual payment cannot exceed 10% of the owner’s annual income.

Part of the purpose of House Bill 646 is to incorporate certain consumer protections like these into state law to regulate the actions of lenders interested in providing R-PACE financing throughout Ohio.

This includes measures such as requiring a PACE lender to conduct a financial assessment of a borrower’s ability to repay debt, requiring disclosure of a borrower’s costs, and capping the total amount of a loan.

But the legislation could also create the only instance in state law where a tax assessment becomes contingent on private financing.

Juan Martinez, general manager of R-PACE for PACENation, said this is the anti-competitive element that the PACE industry is challenging and is driven by mortgage lenders who want to control the sale of their own products to finance home renovations. .

“In states that have adopted policies that make PACE liens contingent on first mortgages or require lender consent (Colorado, Vermont, and Oklahoma for example), resident PACE has never been able to take off,” Matt said. Koppitch, a former Ygrene. lobbyist and attorney at Bricker & Eckler, according to Statehouse testimony on May 31. “No state with subordinate PACE privilege has ever funded a PACE project.”

Since an R-PACE lien otherwise takes priority over an existing mortgage, another concern is that a homeowner who suddenly cannot pay their PACE bill could lose their home due to foreclosure. Liens could also make it more difficult for a homeowner to sell or refinance.

These factors could negatively impact the housing market, said Ohio REALTORS lobbyist Beth Wanless.

Koppitch, however, testified that Ygrene has yet to rule out anyone who could not afford his PACE valuation.


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