Residential

FHA Prohibits PACE Loans

On Dec. 7, 2017, the Department of Housing and Urban Development (HUD) announced that HUD will no longer insure mortgages encumbered with a Property Assessed Clean Energy (PACE) assessment. This reversal of HUD policy is a victory for the National Association of REALTORS® whose members sounded concern that PACE liens would take a first-lien position over FHA in instances of default or foreclosure, undermining the government’s collateral position and disrupting the secured lending process.

The new prohibition on PACE liens goes into effect for FHA case numbers issued 30 days from the announcement. Mortgages with PACE liens previously insured by FHA will not be adversely affected.

Read Article at NAR.Realtor

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