Regulation and Compliance

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 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
Get the NMP Daily
People On The Move
Christensen, Andrus Added At CE Class Leader

Maximum Acceleration hires mortgage exec. as education director, adds banking manager

Brandon Christensen, a longtime mortgage broker and trainer, has been named Director of Education and National Instructor for Maximum Acceleration LLC, a leading NMLS-approved course provider for mortgage pre-license and continuing education. "Having Brandon join our amaz...

Continue reading
Analysis and Data
Mortgage Rates Surpass 7% For First Time This Year

Freddie Mac reported the 30-year fixed-rate mortgage averaged 7.10%.

Freddie Mac today released its Primary Mortgage Market Survey, revealing the 30-year fixed-rate mortgage (FRM) averaged 7.10%, breaching the 7% threshold for the first time this year. “The 30-year fixed-rate mortgage surpassed 7% for the first time this year, jumping from...

Continue reading
Renew your NMLS License — for free.

Enjoy access to a free NMLS renewal class when you attend an in-person event.

Find an event
More from
Regulation and Compliance
In Wake Of NAR Settlement, Dual Licensing Carries RESPA, Steering Risks

With the NAR settlement pending approval, lenders hot to hire buyers' agents ought to closely consider all the risks.

Regulation and Compliance
Apr 11, 2024
A California CRA Law Undercuts Itself

Who pays when compliance costs increase? Borrowers.

Regulation and Compliance
Apr 11, 2024
CFPB Weighs Title Insurance Changes

The agency considers a proposal that would prevent home lenders from passing on title insurance costs to home buyers.

Regulation and Compliance
Apr 10, 2024
Fannie Mae Weeds Out "Prohibited or Subjective" Appraisal Language

The overall occurrence rate for these violations has gone down, Fannie Mae reports.

Regulation and Compliance
Apr 10, 2024
Arizona Bans NTRAPS, Following Other States

ALTA on a war path to ban the "predatory practice of filing unfair real estate fee agreements in property records."

Regulation and Compliance
Apr 04, 2024
Kentucky Legislature Passes Bill Banning NTRAPS

The new law prohibits the recording of NTRAPS in property records, creates penalties if NTRAPS are recorded, and provides for the removal of NTRAPS currently in place.

Regulation and Compliance
Apr 03, 2024