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Property Assessed Clean Energy (PACE) Lending

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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. Federal consumer protection regulations are needed because all PACE loans are not subject to appropriate, standardized consumer protections. The enactment of S.2155 in 2018 authorized CFPB to issue rules to shield consumers from the well-documented dangers posed by PACE loans. Those proposed rules were released on May 1, 2023. Without such federal standards, more states will continue to act independently and create unequal consumer protections. Fortunately, two states have now subordinated PACE loans to mortgages, but more work is needed. 

Recent MBA Activity Related to Property Assessed Clean Energy (PACE) Lending

CFPB Proposes Long Anticipated PACE Financing Rules; Regulation was Authorized by Congress in 2018 (May 1, 2023)

Ohio Becomes Second State to Subordinate Residential PACE Liens to Mortgages, Following Minnesota's 2018 Law (January 3, 2023)

Missouri Enacts Residential PACE Consumer Protection Law (August 28, 2021)

L.A. County Ends Controversial PACE Home Improvement Loan Program (May 21, 2020) 

MBA Letter to CFPB on Advance Notice of Proposed Rulemaking on Residential Property Assessed Clean Energy Financing (May 3, 2019)

President Signs PACE Consumer Protection Law; CFPB to Promulgate Rules (see page 53) (May 24, 2018)

Minnesota Enacts PACE  Consumer Protection Statute; First State to Subordinate PACE Loans to Mortgages (May 19, 2018)

California's 2017 and 2018 PACE Consumer Protection Statutes Available HERE

Statement of Alfred M. Pollard, General Counsel, FHFA, Before the California Legislature, Keeping Up with PACE (June 9, 2016)

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