CUNA joined with nearly 30 other trade organizations to write in support of House and Senate bills that would require Property Assessed Clean Energy (PACE) lenders to make consumer disclosures to potential borrowers about the impact these loans could have on the marketability of their homes.
PACE loans are troublesome for credit unions in states where they are authorized because they are recorded as tax assessments and can impair the priority of the underlying mortgage debt on the property, often without the homeowner knowing.
“PACE loans are--in substance--consumer loans secured by real property and should be subject to federal consumer protection requirements, not dependent on a patchwork of limited or non-existent state/municipal laws that do not adequately protect homeowners,” the letter reads.
The bills would require Truth in Lending Act-rooted (TILA) requirements and considerations for PACE loans, including the Consumer Financial Protection Bureau’s Ability to Repay and TILA-Real Estate Settlement Procedures Act integrated disclosure
The Senate bill, the Protecting Americans from Credit Entanglements Act of 2017 (S. 838), was sponsored by Sens. Tom Cotton (R-Ark.), John Boozman (R-Ark.) and Marco Rubio (R-Fla.). The House version (H.R. 1958) was introduced by Reps. Brad Sherman (D-Calif.) and Ed Royce (R-Calif.).
CUNA along with the leagues have stopped unregulated PACE Loan expansion in Arkansas and Oklahoma in 2017 and Tennessee in 2016.