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New PACE Loans Take Us to 2008 All Over Again…

Home loans with no credit check required? I've got a bad feeling about this...
Kathryn is founder of Ms. Cheat Sheet – The Daily Show for business news and education. She has over 10 years of experience working in asset management. She spent seven years as a Director at GAM, a $40 billion asset management company in Los Angeles. She started her asset management career at Julius Baer as a hedge fund research analyst in New York. Kathryn quit her job on Wall Street to educate and entertain viewers on business topics that are overly confusing (or boring!)
Kathryn is founder of Ms. Cheat Sheet – The Daily Show for business news and education. She has over 10 years of experience working in asset management. She spent seven years as a Director at GAM, a $40 billion asset management company in Los Angeles. She started her asset management career at Julius Baer as a hedge fund research analyst in New York. Kathryn quit her job on Wall Street to educate and entertain viewers on business topics that are overly confusing (or boring!)

Jeff Turner via Flickr

In an un-shocking turn of events, we’re back to 2008.

New PACE loans, offered by sketchy lenders who are trying to make a quick buck on the housing recovery, allow borrowers to take out a loan against the equity in their home.

Hold on… it’s bad.

The loans encourage homeowners to buy energy-efficient solar panels, window insulation and air-conditioning units. Ok fine.

Large loans for solar panels, YAY. With no credit check required, BOO. With the loan amount based on the value of their home, BOO.

It Gets Worse

Contractors are encouraging homeowners to get a PACE picante loan AND THE CONTRACTORS GET KICKBACKS FROM THE LENDERS. Poor Ms. White’s annual property tax bill went form $1,215 to $6,500 with her new PACE picante loan.

Hot hot hot. Not.

This is all in the WSJ.

Originally published in the Ms. Cheat Sheet newsletter. See more from Kathryn Cicoletti at Ms. Cheat Sheet here.