The Federal Housing Administration (FHA) released guidance Tuesday making clear the circumstances under which it will insure mortgages on properties that include Property Assessed Clean Energy (PACE) assessments. According to the agency, it will now approve purchase and refinance mortgage applications in states that treat PACE obligations as special assessments similar to property taxes.
“Although FHA loans only represent a portion of mortgage loans, the California Credit Union League is working to determine the impact of the new guidance on California credit unions and their members and believes a comprehensive review and assessment is critical,” said Courtney Jensen, legislative advocate for the California and Nevada Credit Union Leagues.
“The league continues to advocate for additional guidance from the Federal Housing Finance Agency, which continues a policy of not accepting mortgages with a super-priority PACE lien. The league will also continue to push for underwriting standards for PACE lenders from the Consumer Financial Protection Bureau,” she added
Jensen also said the leagues are working to support California Assembly Bill 2693, which requires a new truth-in-lending disclosure to be provided to consumers three days before they sign up for a PACE loan, and also provides for a three-day right to cancel.
Under the new guidance, to qualify for FHA insurance on mortgages for properties that include PACE assessments, lenders must determine that the following requirements have been met under the laws in the state where the property is located: