Earlier this week, a group of senators and representatives introduced bills in both houses of Congress that would change the rules for loans created by the Property Assessed Clean Energy program to make sure that homeowners are fully aware of the nature of the program before agreeing to the loan.
The bill, titled the Protecting Americans from Credit Exploitation Act (or PACE Act), would amend the Truth in Lending Act to require a full TILA disclosure of the PACE loan details and terms, as is currently required with mortgage loans.
When introducing the bill, some of the bill’s sponsors (the Republican ones) said the PACE program, which allows homeowners to obtain financing to make improvements to their homes to increase the home’s energy efficiency, is a “scam” and the industry is bereft with “predatory” lenders that “trick” unwitting homeowners into signing up for the loans.
The PACE industry unsurprisingly disagrees with those allegations, which came from Sen. Tom Cotton, R-Ark., one of the bill’s main sponsors.
Two of the nation’s largest PACE lenders, Renovate America and Renew Financial, issued statements in response to the introduction of the PACE Act and the rhetoric surrounding it, stating that the bill is actually a Trojan horse designed to destroy the PACE industry.
“Renovate America is committed to strong consumer protections and disclosures for PACE financing. However, legislation introduced in Congress this week is not intended to protect consumers but to kill residential PACE,” Renovate America CEO J.P. McNeill said.
“This legislation would destroy jobs and small businesses, result in higher utility bills for families, and prevent Americans from investing in their homes,” McNeill said.
“There is a better way forward: Congress can and should come up with legislation that codifies robust national consumer protections while recognizing the innovation in financing that PACE represents,” McNeill added. “With such a new federal framework, homeowners will have both strong protections and more options to afford home improvements than traditional financing now offers, and state and local governments can continue to leverage PACE to meet important public policy objectives and boost local employment at no cost to public budgets.”
Renew Financial CEO Cisco DeVries shared similar sentiments.
“Property Assessed Clean Energy creates enormous benefits for American families and workers – without spending a dime of taxpayer money. More than 40,000 Americans have steady and well-paying work because of the increased demand for home upgrades made possible by PACE financing,” DeVries said in a statement.
“These jobs can never be outsourced overseas. Because of PACE, 140,000 homeowners and business owners save money on their utility bills, reduce energy and water waste and live more comfortably in their homes,” DeVries continued.
“Legislative efforts recently introduced in Congress to damage this job-creating industry are extremely misguided and if passed as written would lead to job losses and reduced economic activity,” DeVries added.
“The real story of PACE is its positive impact on job creation and small businesses in cities and states across the country, energy independence and waste reduction,” DeVries concluded. “Renew Financial is dedicated to working with policy makers to strengthen consumer protections and PACE industry standards. But efforts to eliminate this industry would have severely negative consequences in communities across the United States.”
In a separate statement, PACENation, which advocates on behalf of the PACE industry, said that the PACE Act and the messaging that accompanies it are grossly misleading.
“PACE supporters are deeply concerned by the incendiary attacks leveled against this innovative and successful policy today from some on Capitol Hill,” PACENation Executive Director David Gabrielson said.
“Observers should look beyond the inflammatory rhetoric and focus on common sense and basic facts. The PACE industry has long been committed to putting the homeowner’s best interests first and is supportive of additional strong consumer protections at the federal level to safeguard homeowners making energy-efficiency, renewable energy, water conservation, or hurricane protection improvements to their homes. But these protections must not dismantle the innovative model at the heart of PACE financing,” Gabrielson continued.
“Unfortunately, rather than accomplishing this in a constructive way, legislation being introduced in Congress is a thinly disguised effort to kill PACE by subjecting it to extraneous federal regulations,” Gabrielson said.
“We are hopeful we can work with the sponsor on the House side to improve the bill. The average PACE assessment is less than $25,000 – and as such, should come with clear disclosures and a three-day right to rescission – as required by law in California where most PACE assessments exist,” he concluded. “More work can and should be done to ensure the best outcome for homeowners. But supporters of clean energy, job creation, and state and local authority to solve public policy challenges should reject a legislative process being driven by banking interests that only see PACE as competition for market share.”
