Removing Barriers Blog

The California Credit Union League Ends Session With the Passage of New PACE Regulations
Posted September 28,2017 by CUNA Advocacy

This session, the California Credit Union League continued its push for Property Accessed Clean Energy (PACE) loans protections. Building off last year’s enaction of League-supported legislation requiring truth-in-lending disclosures for these types of loans, another CCUL-supported bill passed the state legislature and is awaiting Governor Brown’s signature.  If signed ahead of the Governor’s October 15 deadline, AB 1284 would require the first-ever state regulatory oversight of PACE lenders, as well as new underwriting protections. The bill would be an important step toward protecting vulnerable Californians from bad actors.

AB 1284 includes the following provisions:

  • Authorizes the California Department of Business Oversight (DBO), the California regulator for financial service providers and products, to license PACE companies and regulate and examine the activities of the companies.
  • Requires PACE companies to enroll, train and monitor the activities of home improvement contractors and salespeople that act on their behalf.
  • Requires PACE companies to determine a property owner’s ability to pay the annual payment obligations of a PACE loan before a lien is placed on their property.
  • Subjects new limits on the amount of financing based on the property’s value for properties to qualify for PACE loans. 

CCUL will continue to push for additional protections as many consumers remain vulnerable due to the super-priority status of PACE liens. Because of that status, property owners are unable to refinance or sell their home without first paying off the remaining amount of their PACE loan. The League will continue to work with lawmakers, state regulators and other stakeholders to address remaining PACE issues.

Other important legislation worked on by CCUL include:  

  • AB 611 (sent to governor; support) — Authorizes mandated reporters to deny a power of attorney if they make a report to an adult protective services agency or a local law enforcement agency, and if they believe the elder or dependent adult who executed the power of attorney may be subject to financial abuse.
  • AB 814 (failed; oppose)— Would have granted pre-litigation subpoena power to city attorneys in cities with a population in excess of 750,000 or to a city attorney of a city and county when those city attorneys reasonably believe that there may have been a violation of the Unfair Competition Law.
  • AB 1305 (failed; oppose)—Would have removed statute that allows a lender to request a refund when sales tax is paid up front on an installment sale and the consumer fails to repay the financed purchase price (e.g., When a consumer purchases a $10,000 car through a credit union’s indirect lending program, the state receives sales tax on the entire loan amount up front. However, if the loan becomes uncollectible after only $5,000 is repaid, the credit union is able to seek reimbursement for the portion of sales tax paid on the unpaid loan balance of $5,000).
  • AB 1008 (sent to governor; oppose unless amended)—Prohibits inquiring about criminal convictions on a job application and requires that a conditional offer be made first to the applicant prior to considering a criminal conviction when making a hiring determination. CCUL’s proposed amendment was accepted to exempt employer actions taken pursuant to state, federal or local law that requires criminal background check for employment purposes or restricts employment based on criminal history.