ICBA told the Federal Housing Finance Agency that its Property Assessed Clean Energy financing program poses potential risks to mortgage loans after they're released into the secondary market.
PACE loans allow homeowners to fund energy-efficiency upgrades through an assessment on their property tax bill, which by law gives them the same priority over a first-lien mortgage as tax payments. They therefore create retroactive risks that supersede the first-lien mortgage.
ICBA said the FHFA should instead work directly with localities that are contemplating or implementing a PACE program to alert stakeholders when PACE loans take effect on mortgages they originate or service.
Read ICBA letter