March 05, 2019

CFPB gathers feedback on PACE financing

CFPBThe CFPB on Monday issued an advanced notice of proposed rulemaking (ANPR) to gather feedback on residential Property Assessed Clean Energy (PACE) financing. The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) includes a provision requiring the bureau to establish certain regulations for PACE financing.

See NAFCU's S. 2155 summary guide here, which details credit-union related provisions within the law, including their effective dates and other specifics. The association anticipated this ANPR as the bureau completed its assessment of the 2013 rules for assessing consumers' ability to repay mortgage loans earlier this year.

S. 2155 amends the Truth in Lending Act (TILA) to require creditors to verify a borrower's ability to repay home improvement loans that are financed through PACE programs. It also grants the bureau the authority to collect information and data that the bureau determines is necessary to implement the regulations.

In its ANPR, the bureau asks for "information to better understand the PACE financing market and the unique nature of PACE financing" in order to draft proposed rules that satisfy the statutory requirements of S. 2155 while being aware of the costs and benefits of the regulations.

NAFCU has previously supported legislation to increase PACE loans' consumer protections, such as requiring federal TILA-rooted requirements and considerations for PACE loans – including the CFPB's ability-to-repay and qualified mortgage rules, among other standards.