Removing Barriers Blog

New PACE Home Mortgages Will No Longer be Insurable by the FHA
Posted December 07, 2017 by CUNA Advocacy

Earlier today, the Federal Housing Administration (FHA) announced it will no longer insure new mortgages on properties that include Property Assessed Clean Energy (PACE) assessments.  This announcement is a victory for credit union mortgage lenders.  PACE loans offer finance financing for energy efficiency upgrades, but can cause serious problems because they are recorded as property tax assessments, superior to an underlying mortgage, thus encumbering a credit union’s interest in a property in case of default.  

CUNA applauds FHA for recognizing the problems PACE loans present for mortgage lenders. We will continue to advocate on behalf of credit unions around the country at a federal level for appropriate underwriting and consumer disclosures for PACE loans, and at a state level to ensure they are recorded appropriately, subordinate to the underlying mortgage. 

CUNA has been engaged with both the House and Senate on legislation that would require PACE lenders to make important consumer disclosures to potential borrowers about the impact these loans could have on the marketability of their homes.  The CUNA-supported Senate Regulatory Relief bill – S.2155, that passed through Committee earlier this week, would subject PACE loans to similar consumer disclosures as home mortgages.