MBANow: MBA Expresses Concerns on PACE Loans

The Mortgage Bankers Association released a new MBANow video on YouTube featuring MBA Senior Vice President for Residential Policy and Member Engagement Pete Mills, who outlined MBA’s concerns with the PACE loan program.  

The video can be viewed at  

MillsPeteProperty Assessed Clean Energy (PACE) is a means of financing energy efficiency upgrades or renewable energy installations for residential, commercial and industrial property owners. Described as a home improvement loan, PACE loans becomes a tax assessment. Promoted heavily by the U.S. Department of Energy, last year HUD announced that FHA would being insuring mortgages with PACE loans.  

The video comes in response to recent media reports about problems with the program. A Jan. 10 Wall Street Journal article ( noted lenders offering energy-conscious loans care little about borrowers’ creditworthiness and contractors with little training and oversight function as loan brokers. The article described the PACE program, the fastest-growing loan category in the U.S., as having “eerie echoes of the subprime crisis.”  

Mills outlines the difference between PACE loans and traditional home improvement loans; how the property tax secured PACE loans currently dodge important consumer protections; and how MBA is working to close the PACE loan loophole and protect consumers and the housing market.  

“Because of this dodge–that it’s not a consumer contract but rather a tax assessment–all of the consumer protections that are normally applied to the mortgage contract are effectively worked around,” Mills said. “Those who make PACE loans are usually contractors who are not regulated by the SAFE Act. So there is a significant void of consumer protections in the PACE program; we’ve been advocating with HUD and the Department of Energy to step up and either create those protections. We’d like to see this program significantly changed.”  

Mills said MBA has been in contact with the Trump transition team to fix the PACE program. “It does not require a formal rulemaking,” he said.  

This and other videos in the MBANow series can be viewed at the MBA YouTube channel, The videos are also available on the MBA Insights landing page,