NAR Comments on FHFA PACE Proposal
April 2, 2012
NAR recently commented on an Advanced Notice of Proposed Rulemaking (ANPR) issued by the Federal Housing Finance Agency (FHFA) on Property Assessed Clean Energy (PACE) programs. PACE programs allow local governments to provide homeowners with the financial resources to make energy improvements to their home. Homeowners then pay back the money through an assessment on their property tax bill.
NAR supports voluntary, incentive-based programs that encourage owners to make their homes more energy efficient. However, this must be balanced with the safety and soundness of the mortgage financing system and secondary mortgage markets. In the comments on the ANPR, NAR noted that most PACE loans are in the primary lien position, which means that in the event of a default, these loans get repaid first, even before the mortgage. NAR believes that this first lien position of PACE loans adds an unnecessary risk and may threaten mortgage markets during the current fragile recovery of real estate markets.