ALTA Supports CFPB’s Proposed PACE Rule

July 27, 2023

ALTA sent a letter to the Federal Housing Finance Agency expressing support for the Consumer Financial Protection Bureau’s (CFPB) proposed rule for Property Assessed Clean Energy loans (PACE).

In May, the bureau issued a proposed rule that would require lenders to assess a borrower’s ability to repay a PACE loan and would provide a framework on how these loans will be treated under the Truth in Lending Act.

PACE loans are a controversial type of financing that allows homeowners to pay for energy-efficient retrofitting through their property tax assessments. These loans often take lien priority over the first mortgage lien. ALTA has said that when buying a home, Americans need to know if they are going to be responsible for someone else's debts. ALTA has supported proposed federal legislation that would modify consumer protection requirements for PACE loans.

“ALTA members recognize the value in lowering energy costs for consumers, creating jobs for the economy and reducing buildings’ carbon footprint for the environment,” ALTA General Counsel Steve Gottheim said in the letter. “However, we believe PACE loans should be subject to all the same consumer protections under TILA as any other mortgage loans. For this reason, we support the proposed rulemaking to require that PACE lenders conduct an ability to repay analysis and provide disclosures to consumers on PACE loan costs.”

In November, the Federal Trade Commission (FTC) and the California Attorney General took action against home improvement financing provider Ygrene Energy Fund Inc. for deceiving consumers about the potential financial impact of its financing, and for unfairly recording liens on consumers’ homes without their consent.

Contact ALTA at 202-296-3671 or [email protected].