WASHINGTON (WFLA) – Three U.S. lawmakers, including Senator Marco Rubio (R-FL) are introducing a bill that would protect homeowners from predatory home loans.
The Protecting Americans from Credit Exploitation (PACE) Act, put forth by Rubio, Tom Cotton (R-AR) and John Boozman (R-AR) goes after those who peddle PACE loans that target low-income and elderly individuals. PACE financing helps owners pay for upgrades or renewable energy installations like solar panels through a lien paid back through property taxes. These loans do not require underwriting or credit approval and often come with high fees and rates of 12 percent for 20 years, all for housing improvements, which may not be needed in the future. These lenders receive first priority of repayment over mortgage brokers and there is no disclosure required for these loans.
The PACE act would require disclosure for such loans through the Truth in Lending ACT (TILA), a federal law created to inform use of consumer credit by requiring disclosures about its terms and costs.
“Residential PACE loans should have to play by the same rules as other forms of home financing,” said Rubio. “Americans deserve clear, straightforward policies from their government, not hidden political favors. Our legislation would address this and help provide the transparency necessary to create real consumer choice.”
“Residential PACE loans are a scam,” said Cotton. “Predatory green-energy lenders are changing state and local laws to trick seniors into taking out high-interest rate loans for 20 years, along with liens on their homes, for technology that could be obsolete in a few years. Today, these loans are exempt from the same disclosure forms required for other home loans. Our bill will fix this. Requiring disclosure will reduce the advantage that PACE loan sharks have over hard-working Americans. It’s just the accountability we need.”
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