Lenders, realtors, and appraisers are stepping up the fight against a particular way of financing the retrofitting of homes to make them more energy efficient.
Last month, the Federal Housing Administration, part of the Department of Housing and Urban Development, said it would insure mortgages on homes encumbered by Property Assessed Clean Energy liens, which are funded by local governments and repaid via annual assessments on owners’ property tax bills. The Department of Veterans Affairs followed suit.
This upset mortgage lenders, who have claim on the same collateral – a borrower’s home – and don’t want to see their recoveries reduced in the event of a foreclosure. The Mortgage Banking Association has advised members to evaluate other ways of financing efficiency improvements, rather than make loans on homes with PACE liens.
On Wednesday, the MBA, along with 10 other trade groups representing realtors, appraisers, and title companies, sent a letter to HUD Secretary Julián Castro letter asking him to reconsider the agency’s position.
“We urge you to suspend the applicability of the proposed FHA and VA PACE guidelines and issue the proposal for notice and comment so that lenders, borrowers, home improvement providers, and others may be given the opportunity to comment and assist the Departments in establishing policies that better protect consumers, lenders, and taxpayers,” the letter states.
It is signed by the American Bankers Association, American Land Title Association, Appraisal Institute, Credit Union National Association, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of REALTORS, Real Estate Services Providers Council, and The Realty Alliance.