Picking Up the PACE

A bill aimed at regulating loans created by the Property Assessed Clean Energy (PACE) program is making national industry headlines. The PACE Act of 2017 aims to amend the Truth in Lending Act, a chief regulation governing big banks and mortgage companies, to include PACE lenders. If the bill is passed, PACE lenders would be forced to disclose to borrowers the amount they would owe over the lifetime of the loan and come up with a standard way for reporting loan terms to borrowers.

paceThis is of particular interest in California where, according to Geoff McIntosh, President of the California Association of Realtors, “The use of Property Assessed Clean Energy liens, which lacks industry oversight, has grown more in California than in any other state.” Traditionally, these loans were geared at making an increase in home energy efficiency attainable through financing opportunities made possible by PACE; however, as the Wall Street Journal reports, “PACE lenders face few restrictions compared with traditional lenders and are minimally supervised through a patchwork of state and county oversight.” So now, as reported by Housingwire.com, some bipartisan members of Congress “are pushing for changes to the rules for PACE loans to ensure that the homeowner is fully aware of the nature of the program before agreeing to the loan,” as the PACE Act is intended to necessitate that the same disclosure forms required for other types of home loans also apply to PACE loans.

Proponents of the bill like California Congressman Brad Sherman maintains, “PACE programs provide an important source of financing for consumers looking to make energy-efficient changes to their homes. But the current process presents homeowners with many challenges and can result in homeowners being misled about the terms of their loans.” On the other hand, although not outwardly opposing the bill, New Jersey Senator Bob Smith is putting his residential PACE bill intended for legislative introduction on the back burner “until I can figure out what the appropriate protections are so consumers are not adversely affected,” as cited by the Wall Street Journal. Meanwhile, backed by the California Association of Realtors and the Mortgage Bankers Association, “Lawmakers say they are optimistic the legislation will pass because it is a small change to existing regulation and it has bipartisan support,” according to the Wall Street Journal, suggesting that regardless of opinion, legislation is likely to pick up the PACE Act.

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