MBA Seeks Reconsideration Of PACE Program

rtgage Bankers Association (MBA) sent a letter to officials at the Department of Housing and Urban Development (HUD) and the Department of Energy (DOE), urging them to consider changes to the Property Assessed Clean Energy (PACE) program. Last week, the Federal Housing Finance Agency publicly expressed concern about PACE loans and directed Fannie Mae, Freddie Mac and the Federal Home Loan Banks to take action to protect the safety and soundness of their operations. MBA has [link=]warned[/link] that PACE loans could limit a consumer's financial choices, stating that the current structure of the PACE program presents ‘a number of obstacles to responsible mortgage lending.’ ‘The absence of proper underwriting and approval processes associated with PACE loans may cause homeowners to take on too much debt and impede their ability to meet their existing debt obligations, refinance into a new loan or obtain a mortgage modification, if necessary, because of the additional debt,’ MBA said. ‘The PACE debt could also increase the borrower's risk of defaulting on their mortgage and put them at risk of foreclosure. Also, selling a property with an outstanding PACE loan balance on the tax assessment may be less appealing to some homebuyers, thus precluding resale opportunities.’ Among its recommendations to HUD and DOE, MBA proposed the establishment of minimum standards for contractors to meet in performing home energy improvements in association with the PACE programs, and it suggested that the program's quality should be ensured by random or regular reviews or audits of the municipalities making PACE loans. MBA added that other products, including energy-efficient mortgages and home improvement loans, already exist to help borrowers seeking to make energy-saving improvements. SOURCE: Mortgage Bankers Asso


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