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CUNA, Trades, Leagues Work to Curb Impact of PACE Loans
Monday, May 1, 2017 6:40 AM

CUNA joined with nearly 30 other trade organizations to write in support of House and Senate bills that would require Property Assessed Clean Energy (PACE) lenders to make consumer disclosures to potential borrowers about the impact these loans could have on the marketability of their homes.

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 without the homeowner knowing.

“PACE loans are—in substance—consumer loans secured by real property and should be subject to federal consumer protection requirements, not dependent on a patchwork of limited or non-existent state/municipal laws that do not adequately protect homeowners,” the CUNA's letter reads.

The Senate bill, the Protecting Americans from Credit Entanglements Act of 2017 (S. 838), was sponsored by Sens. Tom Cotton (R-Ark.), John Boozman (R-Ark.), and Marco Rubio (R-Fla.). The House version (HR 1958) was introduced by Reps. Brad Sherman (D-Calif.) and Ed Royce (R-Calif.).

Related to this, credit unions in the Cornerstone region just stopped unregulated PACE loan expansion in Arkansas and Oklahoma. In those cases, mortgage liens would have become secondary to so-called “Green-Energy PACE Home Loans,” which are placed on a homeowner’s tax bill as an assessment averaging about $25,000. In the event of a default, the PACE loans are given priority over a homeowner’s mortgage.

Just Thursday SB 291, an adverse PACE loan bill, died in the Oklahoma House of Representatives, thanks to the large volume of calls made by credit union advocates to lawmakers about its negative impacts.