ABA, Trades Support Bills Targeting PACE Loans

In a joint letter with more than two dozen financial and housing trade associations, ABA expressed support for legislation to require more consumer disclosures for Property Assessed Clean Energy loans, a controversial financial product that allows homeowners to pay for energy-efficient retrofitting – such as solar panels and high-efficiency air conditioners – through their property tax assessments.

More than 30 states currently allow PACE loans, which may take first-lien position over the primary mortgage on a residence but are not currently subject to federal consumer protection requirements. The bills – S. 838 and H.R. 1958 – would subject PACE loan originators and sales personnel to Truth in Lending Act requirements, enhancing pre-origination disclosures of total loan amounts and loan terms and bringing the loans explicitly under the oversight of the CFPB.

The trades said:

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.

Read the letter.