December 7, 2017-Ben Lane-
Last year, the Department of Housing and Urban Development announced, with much fanfare and controversy, that the Federal Housing Administration would begin insuring mortgages that also carry liens created by the Property Assessed Clean Energy program, also called PACE.
But that was last year. Things are much different now.
On Thursday, HUD announced that the Trump administration is reversing the Obama administration’s decision to insure FHA mortgages with PACE liens.
In 30 days, the FHA will stop insuring mortgages on homes that also carry PACE liens.
Through the PACE program, homeowners can obtain financing to make improvements to their homes to increase the home’s energy efficiency.
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.
But the FHA is concerned about the impact of the PACE liens.
“FHA is concerned about the potential for increased losses to the Mutual Mortgage Insurance Fund due to the priority lien status given to such assessments in the case of default,” FHA said in its letter to mortgagees.