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News & Press: Sacramento Report

PACE Obligations Gets Attention from FHA and California Legislature

Tuesday, August 16, 2016  
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FHA announced that it will insure mortgages for properties that include PACE (Property Assessed Clean Energy) assessments, subject to certain state law requirements. The PACE obligation must be secured in the same manner as a special assessment and it cannot limit the transfer of the property.  Furthermore, the PACE obligation cannot accelerate in the event of delinquency after endorsement of the FHA-insured mortgage. The property may be subject to an enforceable claim or lien that is superior to the FHA-insured mortgage, but only for the delinquent portion of the PACE obligation.

In the meantime, the California Legislature is considering AB 2693 to tighten financing and provide significant disclosures to consumers who may want to use PACE funds for energy improvements. Among other provisions, AB 2693 would require delivery of a “Financing Estimate and Disclosure” document, intended to be consistent with the updated Truth in Lending disclosure, to property owners. The bill would also prohibit property owners from participating in the PACE program unless the owner’s property complies with the regulatory requirements established by the PACE Loss Reserve program managed by the State Treasurer’s office.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
Email:  |  Phone: 916-444-2647  |   Fax: 916-444-2851