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.


“Hi Juliann and Chad, I wanted to take a moment and thank you guys for what would have been impossible for us to do without you. We wouldn’t have our keys in hand if it had not been for your help in navigating the financing, and Juliann’s perseverance in getting the rest of the players in the transaction to deliver. Out of everything, our interaction with your office has been a highlight – and your customer service has been beyond everything we’ve experienced in the real estate industry. Is there a way we can provide any reviews, ratings, testimonials, or other statements that can express to your potential future customers how much you guys do to make the customer’s life easy? Please let us know how we can share our great experience with you to the rest of the public. Whether we refinance this under a VA, or get in a bigger/better house in a few years, we’re not going to go anywhere else for financing. We are customers of yours as long as you are in business. Thanks again for getting us in a house!”

Excellent customer service – highly recommended!. I was referred to Chad by one of my friend. During our initial meeting, Chad walked me through the lending process and provided multiple ideas to start the home search. He got me pre-approved in couple of days. After looking for months, we finally liked a house but it was over our budget. He came up with an intelligent financing strategy and provided an excellent rate that let us purchase our new house. Chad and his team are patient, professional and always available – literally 7 days a week, 24×7. I can’t remember the last company I worked with that returned calls and emails in such a timely manner! I will happily recommend him to others.”

“Juliann – Thank you very much for your patience and help with everything. I can say 150% that we could not have gotten through this without you. I have been through this process before a few times BUT never have received this type of care/attention. This process is intense and you managed to humanize this life changing experience for us – rather than being a loan number. If you or Home Point ever need an official recommendation from us, you can count us in.”

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 Cross Country Mortgage. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2019. Got a question for Chad? Call (858) 353-8331 or submit your question online