CFPB Seeks Public Comment on PACE Loans

The Consumer Financial Protection Bureau today requested public feedback on Property Assessed Clean Energy loans, a controversial type of financing that allows homeowners to pay for energy-efficient retrofitting — such as solar panels and high-efficiency air conditioners — through their property tax assessments, and which often take lien priority over the first mortgage lien.

S. 2155, the regulatory reform law enacted last year, requires the CFPB to apply the Truth in Lending Act’s ability-to-repay requirements and civil liability provisions to PACE loans. The American Bankers Association has long raised concerns about these loans over their lack of full consumer protections and supported efforts to enhance that protection.

The bureau specifically requested examples of PACE loan documentation, current origination standards and practices, to which parties to a PACE loan TILA’s civil liability provisions should apply, unique features of PACE loans and potential implications of regulating PACE loans under TILA. Comments are due 60 days after the advance notice of proposed rulemaking is published in the Federal Register. For more information, contact ABA’s Joseph Pigg.