Published: January 2020

Advocates urge CFPB to create strong protections for PACE borrowers

Property Assessed Clean Energy (PACE) programs offer loans for energy efficient home improvements, such as solar panels, HVAC systems, and energy efficient windows, along with more questionable items such as “cool coat paint.” PACE loans, offered through home improvement contractors, often in door-to-door sales, and secured by a property tax lien, are collected through a property tax assessment that takes priority over any existing mortgage. PACE programs must be authorized by state and local governments, but are privately run with little or no government oversight. Advocates encouraged the Consumer Financial Protection Bureau (CFPB) to use its authority to issue a rule that applies all of the Truth in Lending Act to the industry and to continue to research the PACE market in order to develop strong protections that curb widespread program abuse.

Property Assessed Clean Energy (PACE) lenders evade mortgage laws, enable contractor fraud, promote elder financial abuse, and cause problems for homeowners looking to refinance or sell their homes, all while providing insufficient and at times minimal energy savings. The CFPB’s plan to enact PACE regulations under the Truth in Lending Act, as mandated by Congress, is important to reform the PACE loan program and adopt sorely needed consumer protections. Advocates urged the CFPB to continue to research the abuses found in the PACE industry and to apply the existing Truth in Lending Act residential mortgage ability-to-repay standards to PACE loans in order to curb widespread abuses.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Americans for Financial Reform Education Fund | Bet Tzedek | California Low-Income Consumer Coalition | California Reinvestment Coalition | Center for NYC Neighborhoods | Center for Responsible Lending | Community Legal Services, Inc., of Philadelphia | Connecticut Fair Housing Center | Consumer Action | Consumer Federation of America | East Bay Community Law Center | Elder Law and Advocacy | Empire Justice Center | Florida Alliance for Consumer Protection | Housing and Economic Rights Advocates | Jacksonville Area Legal Aid, Inc. | Legal Aid Society of Southwest Ohio | Mountain State Justice | National Association of Consumer Advocates | National Community Stabilization Trust | National Consumer Law Center (on behalf of its low-income clients) | National Fair Housing Alliance | National Housing Law Project | New Jersey Citizen Action | Ohio Poverty Law Center | Public Counsel | Public Law Center | Public Utility Law Project of New York | UC Irvine School of Law Consumer Law Clinic

More Information

For more information, please visit NCLC's website.

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Advocates urge CFPB to create strong protections for PACE borrowers   (PACElettertoCFPB.finalJan72020_.pdf)