Bipartisan members of the California congressional delegation wrote to Bureau of Consumer Financial Protection Acting Director Mick Mulvaney to urge the bureau to implement consumer protections regarding Property Assessed Clean Energy (PACE) financing. The California Credit Union League worked with the members of Congress to create and build support for the letter.
“The California and Nevada Leagues have been working on PACE regulations in both states, at the state and federal levels. Our membership flagged this issue as one of potential harm to consumer and credit union, which is why we’ve been heavily engaged in building a regulatory framework around PACE lending,” said Jeremy Empol, the Leagues’ vice president of federal government affairs.
PACE loans offer financing for energy efficiency upgrades, but cause concerns for credit unions because they are recorded as property tax assessments, superior to an underlying mortgage, thus encumbering a credit union’s interest in a property in case of default.
The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) contains provisions requiring the bureau to prescribe ability-to-repay regulations that account for the unique nature of PACE financing.
“We encourage the bureau to make implementing regulations a high priority. Residential PACE lending programs should be subject to the Truth in Lending Act or similar protections created specifically for the PACE program,” the letter reads. “Otherwise, consumers can be left vulnerable to unscrupulous lenders, which we have seen in some cases in our states.”
The members of Congress also note any bureau regulations should:
The legislators also call for the bureau to consult with state regulators and other government agencies.
The letter was signed by Reps. Brad Sherman (D), Ed Royce (R), Julia Brownley (D), Pete Aguilar (D), Ken Calvert (R), Alan Lowenthal (D), Paul Cook (R), Adam Schiff (D) and Doug LaMalfa (R), all representing California.
The Federal Housing Administration announced in December it will no longer ensure new mortgages on properties that include PACE assessments, a CUNA-supported decision representing a victory for credit union lenders.