Value proposition for the lending community

The development of high performing and efficient buildings made possible by PACE financing reduces risk to investors – including the first mortgage holder – in a number of ways including 1) Reducing functional obsolescence of outdated, inefficient assets 2) Reducing deferred maintenance issues arising from limited reserves and 3) Hedging against rising energy and water supply costs through lower energy and water consumption and/or onsite electrical generation. Because the PACE assessment trumps the first mortgage, Virginia law requires that existing mortgage holders give their consent in the form of a lender subordination agreement before a PACE assessment is allowed on the property. In addition, in the unlikely event that a property ends up in foreclosure and the first mortgage holder or local government takes possession, only the delinquent PACE payments would be due – in the same manner that back taxes are made whole by the new owner.

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