In response to last year’s reg relief law, bureau proposes ‘PACE’ financing rules

A proposal to prescribe regulations on residential “Property Assessed Clean Energy (PACE)” financing was issued Monday by the federal consumer financial protection agency, as required under regulatory relief legislation enacted in May 2018.

The Consumer Financial Protection Bureau (CFPB) said it issued an advance notice of proposed rulemaking (ANPR) on the issue, which was mandated by the May 2018 Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA, S. 2155).

According to the filing with the Federal Register, the agency said the regulations must achieve two goals under the regulatory relief law: First, carry out the purposes of the Truth in Lending Act’s (TILA) ability-to-repay (ATR) requirements (now in place for residential mortgage loans) with respect to PACE financing. Second, apply TILA’s general civil liability provision for violations of the ATR requirements the bureau will prescribe for PACE financing.

“The regulations must ‘account for the unique nature’ of PACE financing,” the filing stated. “This ANPR solicits information to better understand the PACE financing market and the unique nature of PACE financing.”

EGRRCPA defines PACE financing as “financing to cover the costs of home improvements that results in a tax assessment on the real property of the consumer,” CFPB noted.

In pursuing the two objectives of EGRRCPA (and “accounts for the unique nature of PACE financing”), CFPB said it is seeking information in five categories:

  • written materials associated with PACE financing transactions;
  • descriptions of current standards and practices in the PACE financing origination process;
  • information relating to civil liability under TILA for violations of the ATR requirements in connection with PACE financing, as well as rescission and borrower delinquency and default;
  • information about what features of PACE financing make it unique and how the bureau should address those unique features; and
  • views concerning the potential implications of regulating PACE financing under TILA.

Comments will be due in 60 days, the bureau stated.

Consumer Financial Protection Bureau Issues Advance Notice of Proposed Rulemaking on Property Assessed Clean Energy Financing