Removing Barriers Blog

Letters sent to FHFA on PACE programs
Posted March 17, 2020 by dyi

CUNA submitted two letters (including a joint trades letter) to the FHFA in response to its Request for Information on PACE programs. The FHFA, as a regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, is seeking public comment on residential energy retrofitting programs financed through special state legislation enabling a “super-priority lien” over existing and subsequent first mortgages. The FHFA is particularly interested in feedback on potential changes to its policies for its regulated entities based on safety and soundness concerns.

CUNA stated that 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. 

While CUNA supports the goal of increasing access to energy efficient housing modifications, the absence of conventional consumer protections and adequate safeguards have left homeowners vulnerable and could lead to unexpected or unintended effects on the housing market. 

CUNA stated that it opposes requirements that lenders and loan servicers provide consumer disclosures and additional reporting regarding PACE liens, as these institutions are not responsible for the risk generated by PACE financing. Rather than requiring servicers and lenders obtain information regarding PACE liens, the GSEs could obtain this data from commercial data providers that track PACE liens. 

CUNA also urged the FHFA to work with the CFPB to quickly promulgate a PACE financing rule that subjects PACE programs to the Truth in Lending Act (TILA) requirements. The FHFA should also work with the financial services industry and consumer advocates to educate state and local lawmakers on the consumer protection issues regarding PACE financing programs.