Consumer Protection Bill Could Undercut U.S. PACE Financing
While consumer protection is rarely a bad thing, the U.S. Senate should be careful about a new measure that could severely undermine Property Assessed Clean Energy (PACE) as a tool for boosting home energy performance, Rocky Mountain Institute Managing Director Iain Campbell argues in a recent blog post.
While the amendment to the U.S. Truth in Lending Act, intended to attach strong consumer protection standards to PACE lending, “is commendable,” Campbell writes, “treating a limited assessment created through a legislatively-enabled public-private partnership as a mortgage product is—at best—ill-informed.”
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Campbell warns that the bill, introduced by Sens. Tom Cotton (R-AR), Marco Rubio (R-FL), and John Boozman (R-AR), could “jeopardize the fundamental and unique attributes” that make PACE an up-and-coming tool for funding home energy retrofits and safety improvements, by attaching the cost of the work to the mortgage—an approach that “effectively aligns the payment obligations with the benefit realization.”
He cautions that the bill would inhibit the home improvements PACE is designed to accelerate, “prevent significant local economic development and job creation for home improvements that PACE enables,” and undermine consumer protection standards already in place in California.
The solution, Campbell says, would be to introduce valid consumer protections that align with “the true nature and definition of the PACE mechanism,” reflecting the reality that PACE is a property assessment, not a mortgage. “Meanwhile, there is an equally significant need to appropriately represent the value of home energy performance during the mortgage underwriting process to bring greater transparency, awareness, and value to homeowners,” he writes.