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This week NAR submitted comments on Federal Housing Administration's (FHA) changes to the treatment of Property Assessed Clean Energy (PACE) loans. This new guidance, which goes into effect immediately, states that PACE loans will remain in a subordinated position on most FHA mortgages, in line with long-standing guidance from the Federal Housing Finance Agency. However, the guidance also notes that PACE loans will retain a first-lien position for delinquent PACE obligations or foreclosed properties.
NAR signed on to a joint letter, along with the Mortgage Bankers Association, the Financial Services Roundtable and several other financial services and real estate groups, that raised several concerns about PACE loans, especially the provision that places any PACE loans in a first lien position ahead of the primary mortgage. NAR also commented on a Dept. of Energy document "Best Practice Guideline for Residential PACE Financing Programs" that provides information to states and localities on how to establish a PACE program.
NAR believes in the need to maintain and strengthen mortgage markets while supporting energy efficiency and lower utility costs, and we urge FHA and VA to reconsider their policy and work with industry partners to address these concerns with PACE programs.
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