FHA will now Insure PACE Loans

Last Tuesday, the U.S. Department of Housing and Urban Development (HUD) announced that the Federal Housing Administration (FHA) will now insure mortgages on certain properties with Property Assessed Clean Energy (PACE) loans.

According to HUD’s website, “FHA will now approve purchase and refinance mortgage applications in states that treat PACE obligations as special assessments similar to property taxes. FHA’s action is part of a larger Administration effort to expand access to clean energy technologies to every American family with the option to transition to solar energy and make improvements to their homes to cut their energy bills.”

The National Association of Realtors (NAR) is disappointed with the decision primarily because “by putting PACE loans in a primary lien position, fewer homeowners will be able to take advantage of the benefits of this program, and may also make it more difficult for distressed homeowners to refinance their mortgage outside of the FHA or VA.”

While many nuances of this debate between the FHA and NAR exist, the larger issue at stake is the federal government attempting to subsidize home energy efficiency improvements with taxpayer dollars. If private companies wish to provide loans to homeowners to make environmentally friendly improvements, that is all well and good. But this is not the proper role of the federal government or fair to the taxpayer.

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