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FHA Announces No Insurance for New Mortgages on Properties with PACE Assessments
Monday, December 11, 2017 6:50 AM

On Thursday, the Federal Housing Administration announced it would 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. 

Credit Union National Association has been engaged with the U.S. 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 Senate Regulatory Relief bill, S.2155, that passed through Committee earlier this week, would subject PACE loans to similar consumer disclosures as home mortgages.

CUNA recently became aware that a pro-PACE resolution will be considered at the Council of State Government's meeting in Las Vegas this week. The resolution includes both consumer protections and the repayment of PACE loans via property tax bills. While appreciative of the consumer protections, CUNA strongly opposes repayment via property taxes and will likely join other national financial trades on a letter of opposition to the resolution.