Consumer Financial Protection Bureau Issues ANPR for PACE Financing

In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) amended the Truth in Lending Act to require the Consumer Financial Protection Bureau (CFPB) to prescribe ability to repay related regulations, and associated penalties for violations, with respect to “Property Assessed Clean Energy” (PACE) financing.  The regulations are required to account for the unique nature of such financing.  The CFPB, on March 5, 2019, issued an Advance Notice of Proposed Rulemaking for this rulemaking.  The deadline for comments is 60 days from publication in the Federal Register.

The statute defined “Property Assessed Clean Energy financing” relatively broadly as financing to cover the costs of home improvements that result in a tax assessment on the real property of the consumer.  The 2018 provisions authorized the CFPB to collect information and data deemed necessary, and required consultation with state and local governments and bond-issuing authorities. 

In its ANPR, the CFPB requested information regarding the following:

·       written materials associated with PACE financing transactions;

·       descriptions of current standards and practices in the PACE financing origination process;

·       information relating to civil liability under TILA for violations of the ATR requirements in connection with PACE financing, as well as rescission and borrower delinquency and default;

·       information about what features of PACE financing make it unique and how the Bureau should address those unique features; and

·       views concerning the potential implications of regulating PACE financing under TILA.

In issuing the request, CFPB Director Kathleen Kraninger indicated in the Press Release that the agency will use the information to develop a later Notice of Proposed Rulemaking, and that the:

information solicited will enable the Bureau to better understand the market and unique nature of PACE financing . . . [and] help the Bureau formulate proposed regulations that not only would achieve statutory objectives but also would reflect a careful consideration of costs and benefits. 

The statutory text can be found here:  https://www.congress.gov/bill/115th-congress/senate-bill/2155/text#toc-id2fc6127e157d4dc19f368a6143299839.

A copy of the CFPB’s ANPR can be found here:  https://files.consumerfinance.gov/f/documents/cfpb_anpr_residential-property-assessed-clean-energy-financing.pdf

The related press release can be found here:  https://www.consumerfinance.gov/about-us/newsroom/bureau-issues-advance-notice-proposed-rulemaking-property-assessed-clean-energy-financing/.

Please let us know if you would like assistance with drafting a comment letter, or would like to discuss any issues related to PACE financing.