The law directs the
PACE industry officials lauded the new law when it was introduced as legislation back in November, saying it was modeled after a package of reforms, including an ability-to-pay law, passed last year by the
But after the
PACE officials say they're working with
The unintended consequence of the
The new law requires applicants to produce income verification for the past 30 days, which could mean locating two to five pay stubs, or for self-employed applicants, bank statements dating back 60 days, said
As a result, an approval process that used to take 20 to 30 minutes now takes days, and would-be customers are instead turning to traditional consumer loans where they can apply online and get an answer in minutes, he said. "If you lay out enough requirements, you can disqualify even the most qualified applicant," Lemyre said.
Whether those declines are playing a role in a recent decision by Ygrene and Renovate America to pursue a merger has not been revealed by the companies. A statement sent separately to the
"It is too early to comment on the probability that this potential business combination will come to fruition. Any potential business combination is subject to substantial due diligence, government approvals and the specifics of a definitive agreement," the statement said.
Similar ability-to-pay requirements have not been enacted, nor are they currently proposed, by
Thousands of dollars for improvements remain available to consumers who need only prove they have equity in their homes, a good history of making their mortgage payments, and enough income to make payments on the debt. Customers repay the loans through a property tax assessment that's recorded as a lien.
Since PACE financing was introduced in
Most of Ygrene's
Renew Financial has completed 665 projects in
The new federal law requiring ability-to-pay requirements to be drafted for PACE programs nationwide was enacted as part of a broader set of reforms to the Dodd-Frank Wall Street Reform and Consumer Protection Act -- a massive set of bank regulations enacted in the wake of the 2008 financial crisis.
Federal regulation won't take place immediately. There's no deadline for the
The PACE reforms followed calls from two interest groups. One is the
The other group calling for the federal reforms is the
Spokesmen for the two interest groups called the reforms a good first step but want to see more stringent protections.
Asked whether Ygrene is concerned that a federal ability-to-pay requirement could have a similar effect to PACE programs nationwide as it has in
Officials of Ygrene and the other major PACE providers say they are working with
PACE providers and advocates say they are optimistic their input will also lead to sensible federal rules that will protect consumers and the ability to access PACE financing.
"We are supportive of ability-to-pay [reforms]," said Renovate America's Frost. "What's important is that it be implemented in a way that enables PACE to thrive as a point-of-sale product -- and keeps in mind that the average monthly PACE payment is the size of a family cellphone bill and not a mortgage."
With residential PACE programs currently available in just three states --
A larger share of
Neal also noted that PACE providers have added numerous consumer protection and awareness measures over the past few years to ensure consumers don't take on too much debt, and that they understand how much money they are agreeing to repay.
All three major PACE providers said they have voluntarily added practices required in
While PACE is still in its infancy in
He said he hopes the federal government doesn't create rules that do more harm than good.
"There's always going to be a contractor who does what he's not supposed to do," he said. "But you can put the number of foreclosures [in
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