Property Assessed Clean Energy (PACE) Lending

MBA believes energy efficient home improvements can be beneficial for homeowners, but significant concerns exist when these improvements are financed with Property Assessed Clean Energy (PACE) loans-a financing structure lacking vital consumer protections and presenting lien priority risks to lenders, investors and guarantors.

Overview: Federal consumer protection regulations are needed, because all PACE loans are not subject to appropriate, standardized consumer protections. Following enactment of S.2155 during 2018, the CFPB is now authorized to issue rules to shield consumers from the well-documented dangers posed by PACE loans.  Without such federal standards, more states will continue to act independently and create a patchwork unequal and divergent safeguards. Also, PACE loans upend traditional lien priority, exposing investors and guarantors to increased loss severities. MBA supports the continued ban on PACE loans in housing programs offered through the GSEs, FHA and VA.

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