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News & Press: Industry News

FHA to Cease Insuring Mortgages with PACE Assessments

Tuesday, December 19, 2017  
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The Department of Housing and Urban Development (HUD) announced on December 7th that that it was reversing guidance issued last year and that the Federal Housing Administration would stop insuring mortgages on properties that include Property Assessed Clean Energy (PACE) assessments. The new policy is effective 30 days after the announcement. CLTA has been a leading voice in sharing concerns over the priority of PACE loans and the lack of strong consumer protections.

"FHA can no longer tolerate putting taxpayers at risk by allowing obligations like these to be placed ahead of the mortgage itself in the event of a default," said HUD Secretary Ben Carson. "Assessments such as these are potentially dangerous for our Mutual Mortgage Insurance Fund and may have serious consequences on a consumer's ability to repay, or when they attempt to refinance their mortgage or sell their home."

The new guidance states that FHA is concerned about potential term violations due to the priority lien status given to PACE assessments and the lack of consumer protections associated with the PACE program. The FHA said it would continue to monitor this risk to determine whether further action is warranted.

California Land Title Association

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