ALTA Says PACE Programs Need Safeguards to Protect Consumers

March 5, 2019

The Consumer Financial Protection Bureau (CFPB) on March 4 issued an Advance Notice of Proposed Rulemaking (ANPR) to get feedback on residential Property Assessed Clean Energy (PACE) financing.

Comments are due 60 days after the ANPR is published in the Federal Register.

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 said that when buying a home, Americans need to know if they are going to be responsible for someone else's debts.

“PACE programs allow local governments to help individual homeowners finance energy efficiency upgrades through loans repaid via property taxes,” said Cynthia Durham Blair NTP, president of ALTA. “Unfortunately, many homebuyers are surprised when they get their tax bill because these super liens are not recorded in local property records and sellers don’t disclose them. ALTA looks forward to providing comments to CFPB. PACE programs need effective safeguards that will promote energy efficiency property upgrades, while also protecting consumers.”

S. 2155, the regulatory reform law enacted in 2018, requires the CFPB to apply the Truth in Lending Act’s ability-to-repay requirements and civil liability provisions to PACE loans. The CFPB requested examples of PACE loan documentation, current origination standards and practices, to which parties to a PACE loan TILA’s civil liability provisions should apply, unique features of PACE loans and potential implications of regulating PACE loans under TILA.

Contact ALTA at 202-296-3671 or