Purchase or Refinance a PACE or HERO Property

The Property-Assessed Clean Energy (PACE) program as well as The Home Energy Renovation Opportunity (HERO) provide homeowners the ability to finance energy and water efficient upgrades. One of the key features of the programs is that the cost of the upgrades can be repaid through the homeowner’s property tax assessment. Although this is a great concept, many homeowners are finding out that things can become challenging when they refinance or sell their home. Fortunately you have options.

The notion that all lending agencies share the same guidelines is a great example of the confusion within the mortgage industry in general.

There are indeed some mortgage companies and banks that cannot provide financing on a property that is enrolled in either PACE or HERO. This limitation however is more of a limitation of the mortgage company itself and not a limitation of Freddie Mac and FHA. And even though Fannie Mae has expressly stated that they are unwilling to insure a loan that is made against a PACE or HERO property, it is inaccurate to state that Freddie Mac shares the same guidelines.

The truth is, the rules and restrictions of one lender is not necessarily the rules and restrictions of all lenders.

Unfortunately this confusion is perpetuated by the secondary market lending practices adopted by many retail mortgage banks. Here’s what I mean: Once a loan is made, a mortgage bank will typically sell the servicing to replenish warehouse capital space in order to fund new loans as well as reduce their risk of servicing too many loans. These loans are bundled and sold to companies that will collect the payments called Servicers. Many companies do not have the ability to distinguish or separate these bundles, so the loans within these bundles are underwritten to both Fannie Mae and Freddie Mac guidelines. This represents the “safest” position for the mortgage bank to operate, the flexibility to sell loans to an investor that will purchase Fannie Mae or Freddie Mac insured loans.

In a situation where Fannie Mae – one of the two largest mortgage insurers – will not allow a loan on a PACE or HERO property, a mortgage lender or bank will in turn create an “overlay” or underwriting requirement prohibiting any loan that does not fall under BOTH systems. This allows the bundle of loans to be purchased and insured by either Fannie Mae of Freddie Mac.

There are many mortgage companies, brokers, and banks that have the ability to distinguish between Fannie Mae and Freddie Mac and provide loans that are directly insured by Freddie Mac thus having no issues with PACE or HERO.

The ability to lend on PACE and HERO programs can make a huge difference in the energy bills of consumers, not to mention a better world for us all.

We actively provide Conventional and FHA financing for properties enrolled in the HERO or PACE programs. Please call or email for more information.


I HIGHLY recommend Chad and his team.

Chad and The Chad Baker team really helped me from start to finish with my loan process. They were extremely responsive and provided me updates on a daily basis. I had a few personal issues that they helped me work through so I could get the best loan program and best rate. Very knowledgeable about the industry, rates and trends.I HIGHLY recommend Chad and his team. I’m happy to offer a reference upon request. Please ask Chad for my contact information.”

Chad Baker and his team are amazing!

My husband and I found Chad through an article he had written. Every aspect of working with Chad and his team was exceptional. From our initial phone call where he explained the many options we had, to advice he gave in dealing with somewhat challenging sellers, and closing our loan ahead of schedule, the loan process with Chad and his team went very smoothly. I especially appreciated the one-on one guidance from Juliann, who really made me feel like I was her only client. I look forward to working with Chad and his team again and would highly recommend them to anyone looking for a mortgage.

When looking for a house, we had couple recommendations for a lender. After talking with all the lenders, many were difficult to work with and couldn’t get it done as quickly as we needed. I was referred to Chad Baker’s team and I am glad we did. Not only did they get the things done quickly for us, they were very easily to get ahold of. It wasn’t rare to get a response within 15 minutes whenever an email was sent. I could not express how friendly and outgoing this team is. And on top of that, they came back with the best offer for us amongst all the other brokers. I am glad I worked with these guys. If you are looking for a lender…MAKE SURE TO CALL CHAD BAKER AND TEAM!!! Thanks Chad for all your hard work. Next time we buy another house I am calling you first!

I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for LendUS. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2017. Got a question for Chad? Call (858) 353-8331 or submit your question online