FHA Stops Insuring Mortgages With PACE Assessments

Dec 07, 2017

The Federal Housing Administration (FHA) has announced that it will cease insuring new mortgages on properties that include Property Assessed Clean Energy (PACE) assessments.

The PACE policy was announced in July of 2016 and was terminated effective immediate. The FHA announcement stated that this decision was “part of a larger effort to protect the health of its Single Family Mutual Mortgage Insurance Fund (MMIF) and the borrowers who rely upon it.” The FHA also expressed concern about PACE obligations that were placed on FHA-insured mortgages that are already outstanding, and also argued this created undue risk and potential term violations of FHA-insured mortgages.

"FHA can no longer tolerate putting taxpayers at risk by allowing obligations like these to be placed ahead of the mortgage itself in the event of a default," said U.S. Department of Housing & Urban Development (HUD) Secretary Dr. Ben Carson. "Assessments such as these are potentially dangerous for our Mutual Mortgage Insurance Fund and may have serious consequences on a consumer's ability to repay, or when they attempt to refinance their mortgage or sell their home."

David H. Stevens, President and Chief Executive Officer of the Mortgage Bankers Association (MBA) and FHA Commissioner during the first part of the Obama Administration, welcomed the announcement on his Twitter feed.

Stevens tweeted: “Yes! Good news! This is a rip off program that can screw consumers promoted by the last Administration. Great move @SecretaryCarson and HUD. The Obama team got this one way wrong.”

Elizabeth Mendenhall, President of the National Association of Realtors (NAR), commented, “FHA’s PACE announcement is a smart step that will protect taxpayers and strengthen the overall program for homebuyers. NAR supports 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. NAR pushed hard for this change and we applaud FHA’s attention to the issue.”

About the author

Phil Hall

Link copied

Published

Dec 07, 2017

Analysis and Data

Inventory Recovery Fails To Revive Purchase Market

Existing-home supply reached its highest level since 2019, but elevated payments and economic uncertainty pushed sales to a 14-month low

More homes are available, properties are taking longer to sell, and fewer investors are competing for them. None of that has been enough to revive the purchase market.Existing-home sales fell 2% from July and 1.2% from a year earlier in August to a seasonally adjusted annual...

Tech

Radian Adds MI Quotes To Lender Price’s Pricing Platform

The integration puts risk-based and traditional mortgage insurance pricing inside a platform reporting more than 400 customers and $300 billion in locked-loan volume

Radian has integrated its mortgage insurance quoting capabilities with Lender Price, giving mortgage originators and lenders access to Radian pricing without leaving the product and pricing engine.The integration puts mortgage insurance costs closer to the point at which ori...

Nov

Pasadena, CA

More from

Regulation and Compliance

FHFA Studies Credit-Report Changes To Cut Mortgage Costs

Pulte’s comments could signal either fewer bureau reports or a portable report borrowers could share among lenders, but FHFA has not clarified which approach it is studying

Regulation and Compliance

Sep 10, 2026

AI Errors Leave Mortgage Trustee Without Brief In Foreclosure Appeal

Outside counsel’s fabricated citations expose a third-party oversight risk for mortgage servicers, trustees, and investors

Courts

Sep 10, 2026

CHLA Wants Ginnie Mae Liquidity Backstop Ready Before Next Crisis

Proposed G-TALF facility could help prevent a servicing cash crunch from constraining FHA, VA, and USDA lending

Regulation and Compliance

Sep 09, 2026

FHFA Opens VantageScore To All GSE Lenders, Eyes Credit Report Overhaul

Pulte removes 50-lender cap while considering bi-merge and single-bureau reports as additional ways to reduce mortgage costs

Regulation and Compliance

Sep 08, 2026

Closing Costs: What HUD’s Proposed Rule Will Really Do To The Market

HUD’s proposed rollback of housing protections could deepen barriers for underserved borrowers, shrink the pool of prospective homebuyers, and ultimately cost loan originators business

Opinion

Aug 27, 2026

MISMO Gives Lenders A New Test For Mortgage AI Vendors

Two certifications move the industry’s FRAME initiative from governance guidance toward product-level validation and implementation

Tech

Aug 27, 2026

Popular