The Mortgage Bankers Association (MBA) detailed its reasons this week for opposing a bill recently signed into law by Florida Governor Ron DeSantis that aims to “expand the number of projects eligible for Residential Property Assessed Clean Energy (PACE) financing.”
Florida Senate Bill SB-770 would authorize local and county agencies across the state to create loan programs for home and other real property improvements, including energy efficiency upgrades and renewable energy installations that are funded through appraisals not based on the property’s value.
However, the bill as signed gives PACE liens a first lien over any existing mortgages that may exist on the property, which the MBA says creates new risks for lenders and consumers and prevents borrowers from refinancing through Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) programs or taking advantage of loans sold to government-sponsored enterprises (GSEs).
“The enacted legislation would significantly expand the number and types of projects eligible for financing under Florida's PACE loan program, without making residential PACE liens subordinate to existing mortgages or providing any substantial consumer protections,” the MBA said.
The MBA explained that there are also consumer protection arguments.
“MBA has long opposed the Housing PACE program because it poses risks to lenders and consumers because PACE mortgages are granted priority over previously recorded first mortgages,” the association said. “And because they are not yet subject to MBA-backed federal consumer protection regulations currently being developed by the Consumer Financial Protection Bureau (CFPB), consumers would be exposed to additional risks.”
After the bill was passed by the Florida Legislature and sent to Governor DeSantis' office, the MBA sent out a call to action to Florida MBA members through its advocacy network, “working with the Florida MBA to spark a second wave of industry opposition and concern,” the association said.
Supporters of the bill said it would act as a bulwark against skyrocketing property tax rates, Florida Politics reported. The Florida PACE Fund Association (FPFA) also praised the bill's signing.
“The Florida Legislature and Governor DeSantis have reaffirmed their commitment to Florida's PACE program, passing a new bill to expand the program with bipartisan support in the Senate, 34-2,” FPFA said in a statement.
“The Florida PACE Program will continue to help Florida homes and businesses harden their assets against hurricanes, now that the Florida Legislature has expanded the program to include financing for septic system connections.”
However, the MBA argues that “homebuyers with PACE mortgages cannot obtain federally insured loans unless they first repay the PACE mortgage in full,” disrupting the homebuying and financing process in Florida for properties that participate in the PACE program.
Regarding future efforts on this issue, the MBA said, “MBA continues to support MBAF's efforts to resolve the issue of priority of PACE liens in order to protect consumers and preserve financing options within Florida.”