Illinois PACE Financing Program

Summary

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Illinois has authorized certain local governments to establish such programs, as described below. (Not all local governments in Illinois offer PACE financing; contact your local government to find out if it has established a PACE financing program.)

Illinois has authorized municipalities -- cities, villages and incorporated towns -- and counties to enter into voluntary agreements with property owners to provide for contractual assessments. These assessments will provide financing to the property owner to install renewable energy technologies or energy efficiency upgrades that are permanently fixed to the property. The property owner then repays the assessments via his/her property taxes.