Page 12 - JanuaryBuilderBrief
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FHA to Halt Insuring New Mortgages


                                         with PACE Obligations
               FHA




              On  Dec.  7,  the  Federal  Housing  Administration   have adopted specific legislation allowing local
            (FHA) issued Mortgagee Letter 2017-18 announcing      governments to fund home energy improvements
            the agency will no longer insure new mortgages        and structure repayment by assessments collected
            on properties that include Property Assessed          through homeowners’ property tax bills.
            Clean Energy (PACE) assessments. This reverses          The liens generally travel with the property when
            policy announced by the agency in July 2016. The      the home is sold and subsequent home owners
            directive applies only to new mortgages and is        continue to pay for the improvements in their tax
            effective 30 days after the date of announcement.     assessments.
              However, in a press release announcing the            NAHB policy supports using PACE programs to
            decision, HUD noted concerns with PACE obligations    finance energy retrofits as long as the programs do
            on outstanding FHA-insured mortgages. “FHA            not impair the housing finance system. However,
            intends to monitor this carefully to determine        NAHB has expressed concerns about the potential
            whether further action is warranted,” the press       negative impact of properties with first-lien PACE
            release stated.                                       financing that could impair the mortgage lender’s
              PACE programs provide home owners financing         ability to recover the outstanding loan obligation
            to make energy-efficient improvements to their        in the event of a default.
            homes. PACE programs are available in states that                                          NAHB DEC 2017



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       12                             JANUARY 2018  |  GREATER SAN ANTONIO BUILDERS ASSOCIATION
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