MBA Issues Statement on PACE Loan Reforms

WASHINGTON, Dec. 7 -- The Mortgage Bankers Association issued the following statement by President and CEO David H. Stevens in response to the Department of Housing and Urban Development's revised policies for Federal Housing Administration insurance of Property Assessed Clean Energy obligations:

"MBA applauds HUD's announcement and fully supports these reforms.

"PACE liens pose a real danger to secured lenders and to the MMI fund because they erode the underlying collateral due to their priority lien position in the event of default.

"HUD's actions today will help protect taxpayers and the FHA insurance fund, and will align FHA policy with that of Fannie Mae and Freddie Mac. However, consumers should still be very wary of these dangerous loans, which are not yet subject to important federal consumer protection laws.

"In addition, consumers need to understand that PACE loans can significantly hinder their ability to later sell their house. That is why we continue to support S. 2155, The Economic Growth, Regulatory Relief, and Consumer Protection Act, and its requirement that PACE loans comply with the same ability to repay requirements as other mortgage products."