Frequently Asked Questions

Mortgage Broker and Senior Lender Considerations

Why would senior lenders consent to C-PACE?

Senior lenders often consent to C-PACE because the structure is designed to minimize risk and preserve lender control.

• Limited seniority: Only the past-due portion of the C-PACE assessment is senior to the mortgage, typically representing just 1–3% of property value 

• No acceleration risk: C-PACE assessments cannot be accelerated, reducing exposure in a downside scenario

• Payment safeguards: Many lenders require monthly escrow of C-PACE payments, similar to property tax escrows

• Foreclosure rights preserved: C-PACE does not restrict a senior lender’s ability to foreclose

• No intercreditor required: C-PACE does not require a formal intercreditor agreement with the senior lender 

How do banks use C‑PACE financing to lower risk? 

Banks use C-PACE to reduce exposure and optimize the capital stack throughout a project’s lifecycle. Benefits include: 

• Reduced exposure: Lowers bank hold by blending down senior financing 

• Stable debt service: Long-term, fixed-rate structure reduces payment volatility

• Relationship continuity: Allows banks to stay in the deal while managing concentration and liquidity