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Cotton, Rubio, Boozman Introduce Legislation to Protect Americans from Credit Exploitation

April 5, 2017

Contact: Caroline Rabbitt (202) 224-2353

Washington, D.C. - Senator Tom Cotton (R-Arkansas) along with Senators Marco Rubio (R-Florida) and John Boozman (R-Arkansas) will today introduce the Protecting Americans from Credit Exploitation (PACE) Act which requires disclosure for Property Assessed Clean Energy (PACE) loans that target low-income and elderly Americans with predatory home loans. Specifically, this bill would require Truth in Lending Act (TILA) disclosure for anyone attempting to peddle PACE loans.

"Residential PACE loans are a scam. 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," said Cotton.

"Residential PACE loans should have to play by the same rules as other forms of home financing. 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," said Rubio.

"We must provide homeowners with the information they need to protect themselves so they don't risk financial ruin because of their participation in the PACE loan program. I'm proud to support this legislation to prevent borrowers from being taken advantage of," Boozman said.

Background: PACE loans are a financing program that allows homeowners to pay for solar panels or other housing improvements through a lien paid back through property tax payments. The loans require no underwriting, have high fees, and rates of eight to twelve percent for 20 years for solar panels or other housing improvements that may be obsolete in a few years. PACE lender receives first priority of repayment, in conjunction with property taxes, before mortgage brokers. Currently, there is no standardized rate or fee disclosure required for PACE loans and the CFPB has never clarified whether these loans fall outside the Truth in Lending Act.