Trump Moves to Stop Insuring Mortgages With PACE Loans

On December 7, the Trump administration announced the reversal of the Obama era rule allowing the Federal Housing Administration to insure mortgages with additional liens from the Property Assessed Clean Energy program (PACE). Several major housing industry groups, including the Mortgage Bankers Association and National Association of Realtors, have voiced support for the policy change.

According to HousingWire, “Under programs like PACE, single-family energy retrofit financing programs can be structured to make loans through the homeowner’s property tax assessment and require that borrowers repay their loans as part of their property tax bill, but in some states the PACE liens are given super priority status above the home’s mortgage.”

In a mortgagee letter from the U.S. Department of Housing and Urban Development, Dana Wade addresses coming changes for insuring mortgages “encumbered” by PACE loans as applicable to FHA Title II mortgage programs and the Home Equity Conversion Mortgage program (HECM).

Supporters have applauded the move to protect the Mutual Mortgage Interest Fund. Echoing sentiments from the MBA, the National Association of Realtors commented that they “[support] voluntary, incentive-based programs that encourage homeowners to make their property more energy efficient, but not at the expense of FHA or the strength of its portfolio.”

Federal regulations have undergone many recent changes, and are not likely to stay static for long. Check the Janus blog frequently for the most recent industry updates.

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