The Wall Street Journal’s Kirsten Grind raises a red flag over another mortgage-related investment scheme:
About $3.4 billion has been lent so far for residential projects, and industry executives predict the total will double within the next year. That would likely rank PACE loans as the fastest-growing type of financing in the U.S.
As the loans spread, so do problems that echo the subprime mortgage crisis. Plumbers and repairmen essentially function as loan brokers but have scant training and oversight. They often pitch PACE loans to help land contracting jobs and earn referral fees from lenders, according to loan documents and more than two dozen borrowers, industry executives and employees.
The referring contractor gets a cut. The municipality gets a cut. And taxpayers will wind up on the hook if things go wrong.
In case you’re wondering, yes, Rhode Island has this. Democrat Governor Lincoln Chafee signed the legislation into law in 2013, after Democrat Art Handy (Cranston) passed H6019 and a gang of Democrat state senators led by William Conley (East Providence, Pawtucket) passed S0900. The RI Center for Freedom & Prosperity did include this legislation in the 2013 iteration of the Freedom Index.