Property Assessed Clean Energy (PACE) Lending

PACE loans upend traditional lien priority, exposing investors and guarantors to increased loss severities. MBA supports the continued ban on PACE loans in housing programs offered through the GSEs, FHA, and VA. Federal consumer protection regulations are needed because all PACE loans are not subject to appropriate, standardized consumer protections. The enactment of S.2155 in 2018 authorized CFPB to issue rules to shield consumers from the well-documented dangers posed by PACE loans. Those proposed rules were released on May 1, 2023. Without such federal standards, more states will continue to act independently and create unequal consumer protections. Fortunately, two states have now subordinated PACE loans to mortgages, but more work is needed.