Frequently Asked Questions for Lenders
All Applicants must provide the written consent of the existing mortgage lender or other real property lienholder of record on the Eligible Property prior to Final Application. The Lender Consent template that Applicants need to complete is available. See the Program Manual for additional details.
The Supplemental Agreement PACE Financing and Special Charge Agreement is a written agreement between a Borrower, a PACE Lender and the PACE Commission, that is recorded in the appropriate jurisdiction’s property records, and sets forth the terms of the PACE Financing. In addition to any financing agreements required by the PACE Lender, the Borrower, PACE Commission and PACE Lender are required to execute the PACE Financing and Special Charge Agreement in conjunction with the PACE Financing closing.
The Applicant must complete a Final Application, according to the requirements set forth in the Program Manual, and submit it to the Program Administrator for review. Upon the Program Administrator’s acceptance of a Final Application from the Applicant, a Notice of PACE Wisconsin Approval will be sent to the Applicant and its designated agent. Upon receipt of the Notice of PACE Wisconsin Approval, the Applicant may proceed with closing of the PACE Financing. For information regarding the PACE Wisconsin eligibility and application process.
The annual installment of a PACE Loan is equal to the annual repayment obligation under the terms of the PACE Financing, which amount may include interest and other fees pursuant to PACE Financing and Special Charge Agreement. The PACE Financing may have a loan term up to the useful life of the equipment and improvements being financed. Each PACE Financing installment payment shall include an Annual Fee, as described in the Program Manual.
PACE Lenders may charge a market interest rate on PACE Financings, plus applicable fees. The PACE Lender should disclose this interest rate in its financing proposal made to the property owner.
The PACE Financing term should not exceed the expected life of the proposed improvements as described in the Energy Assessment. For projects that include multiple improvements, the weighted average useful life of the new equipment must equal or exceed the term of the PACE Financing. Depending on the equipment installed PACE Financing terms are often made for up to 20 years long.
Upon closing the Program Administrator will record the PACE Financing and Special Charge Agreement with the register of deeds in which the subject real property sits. The PACE Financing and Special Charge Agreement memorializes for the public record that there is a PACE Financing and Special Charge outstanding against the Borrower’s real property, among other terms.
PACE Wisconsin utilizes a "direct billing and payment" system in which the PACE Lender collects payments for the PACE Financing directly from the Borrower without involving the political subdivision that imposed the Special Charge. This repayment system allows the PACE Borrower to make payments of annual installments (or other periodic payment as specified in the PACE Financing and Special Charge Agreement) directly to the PACE Administrator or its servicer, who will be responsible for directing payments to the applicable PACE Lender.
The PACE Statute establishes that a delinquent PACE Special Charge becomes a lien on the property, with same priority as a special assessment. Upon a default, the Servicer and PACE Lender would certify the amount of the delinquency to the Program Administrator, who would then work with the appropriate County and municipality to place the amount of the PACE Financing delinquency on the next available tax roll for collection pursuant to the existing Wisconsin statutory tax collection procedures in Wisconsin Statutes Chapters 74 and 75.
No. To participate in the program, PACE Lenders recognize that neither the Wisconsin PACE Commission nor its Members have an obligation to settle or reimburse PACE Special Charges to PACE Lenders.
No. Since the source of funds for the PACE Financing secured by the Special Charge will be a private third-party, the County will have no basis to settle the PACE Special Charges with the municipality in which the encumbered property is located.
A Tax Certificate for a delinquent PACE Special Charge is issued at the same time that a Tax Certificate would be issued for any other delinquent property taxes. If there are multiple tax delinquencies that would be the subject of a Tax Certificate (which would likely be the case in the event of a PACE Special Charge delinquency), all delinquent amounts would be evidenced by the same Tax Certificate. The redemption period for a special charge Tax Certificate is the same two year redemption period for any other Tax Certificate.
In many cases, the PACE Financing will be part of a financing package and the property subject to the PACE Special Charge will also be encumbered by a mortgage securing other credit extended by the PACE Lender (or another lender) to the property owner. Failure to pay the PACE Special Charge will almost certainly constitute an event of default under the mortgage and related loan documents entitling the PACE Lender (or other lender) to foreclose the underlying mortgage. In those cases, just as with any private mortgage foreclosure, the County will have no involvement and the tax foreclosure process will not be necessary.
In the unlikely event that a PACE Special Charge must be foreclosed upon, the following would apply. If after the two year redemption period the Special Charge delinquency evidenced by the Tax Certificate is not paid, then the County would be responsible for instituting foreclosure proceedings on the Tax Certificate, except in the case of a "brownfield" or other concerns with the property leading the County to a good faith determination that it would not be in the County’s best interest to foreclose.
If the County does not bring a foreclosure action against the subject property, then the PACE Lender is authorized by the PACE Ordinance to bring a foreclosure on the PACE Special Charge in place of the County. To assume this authority, the PACE Lender must agree to comply with all of the statutory procedures for a tax foreclosure.
The in rem foreclosure procedure is an electable procedure pursuant to Wis. Stat. § 75.521. In addition to uniformity, the PACE Ordinance requires that the County utilize this procedure to foreclose upon a PACE Special Charge because of the statutory presumption Wis. Stat. § 75.521(12) gives to the validity of special charges (as well as all special assessments and taxes) and the liens thereof.
The County follows the procedure for the sale of delinquent real estate as laid out in Wis. Stat. § 75.69.
The County follows the procedure for the distribution of proceeds as laid out in Wis. Stat. § 75.36.
The PACE Special Charge is foreclosed out. Therefore, the PACE Financing no longer encumbers the real property. The PACE Financing and Special Charge Agreement, however, may contain terms which require the County to pay over any surplus proceeds from a foreclosure sale to the PACE Lender, up to the outstanding balance of the PACE Financing.
Once the PACE Financing has been repaid in full according to the terms of the PACE Financing and Special Charge Agreement, repayment of the Special Charge installments will cease and the Program Administrator will record a termination of the PACE Financing and Special Charge Agreement with the appropriate country register of deeds.