Gov. Jerry Brown signed into law two measures that took effect on Monday, Jan. 1, 2018 and fundamentally reshape and improve PACE financing in its biggest market.
Renovate America strongly supported the new laws, which create a landmark consumer-protection and regulatory framework for PACE by enhancing disclosures, strengthening contractor oversight, and conditioning PACE on a homeowner’s ability to repay the annual assessment.
In December the Federal Housing Administration announced that beginning in January 2018 it will no longer back new mortgages on properties with existing PACE assessments, signaling a reversal of a policy that had been in place since September 2016. The impact of this policy change is to remove a transferability option for buyers, sellers, and those refinancing that has been used by just under 3,000 homeowners with Renovate America PACE assessments, or less than 2.7 percent of our pool.
To read the FHA mortgagee letter dated Dec. 7, 2017, click here.
If you are currently in a real estate transaction involving a PACE assessment and the borrower is using an FHA-backed mortgage product, here is what you need to know about the status of the assessment:
If the FHA case number was assigned on or prior to Jan. 6, 2018, the current FHA guidance is applicable. This means the PACE assessment can remain and transfer.
If the FHA case number is assigned after Jan. 6, 2018, the new guidance will apply. This means any PACE assessments will have to be paid in full prior to closing.
If you have questions, contact HERO Property Advisors at 855-225-4376 Monday to Friday 8 a.m. to 5 p.m.