Removing Barriers Blog

Letters Sent in Support of PACE Legislation
Posted April 27,2017 by CUNA Advocacy

CUNA joined a number of trade associations and sent two letters in support of legislation introduced in the House and Senate that would require Property Assessed Clean Energy (PACE) lenders to make important consumer disclosures to potential borrowers about the impact these loans could have on the marketability of their homes. In the Senate, the Protecting Americans from Credit Entanglements Act of 2017 (S. 838) was sponsored by Senators Cotton (R-AR), Boozman (R-AR), and Rubio (R-FL), while the House version (H.R. 1958) was introduced by Congressmen Sherman (D-CA) and Royce (R-CA).

PACE loans are troublesome for credit unions in states where they are authorized because they are recorded as tax assessments and can impair the priority of the underlying mortgage debt on the property, often unbeknownst even to the homeowner. This can create confusion and significant hardship for homeowner and lender alike, particularly when a homeowner decides to sell the property and realizes that a potential buyer is unable to acquire financing because of the existence of the superior PACE lien. Additionally, because there is currently no requirement to evaluate a borrower’s ability to repay these loans, many homeowners become saddled by PACE loans they cannot afford.

Much work remains to be done in states with PACE programs to ensure these liens are recorded appropriately relative to the underlying mortgage, and CUNA continues to advocate at the state level against expansion of the PACE programs where they do not already exist. Meanwhile, at the federal level, this legislation would provide significant clarity to homeowners evaluating whether a PACE loan is appropriate for their situation.

Read the full text of the letters -- Senate & House