While CUNA supports the goal of increasing access to energy efficient housing modifications, the absence of conventional Property Assessed Clean Energy (PACE) loan consumer protections and adequate safeguards have left homeowners vulnerable and could lead to unexpected or unintended effects on the housing market, CUNA wrote to the Federal Housing Finance Administration Monday. The FHFA requested feedback on PACE loans, which can often take lien priority over existing and subsequent first mortgages.
“As PACE financing programs have grown in number over the past decade, these unconventional loan programs have remained a serious concern for credit unions, consumer groups, and other entities participating in the housing market,” the letter reads. “PACE programs vary by state, county and municipality, however most include a property tax lien that is often a super-priority lien over all other liens on the property. Sometimes, consumers are unaware of this lien priority, or do not fully understand the ramifications of it. This lien priority can make selling property and refinancing loans especially difficult for consumers.”
CUNA’s disagrees with the FHFA on several points including:
Instead of these policies, CUNA called on the FHFA to urge the Consumer Financial Protection Bureau (CFPB) to quickly promulgate a PACE financing rule that subjects PACE lending to Truth in Lending Act requirements.
The rule should address: