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The department has the power to bring administrative and civil actions, issue subpoenas, promulgate regulations, hold hearings, issue publications, conduct investigations, and implement outreach and education programs against person who engage in unfair, deceptive, or abusive practices with respect to consumer nancial products or services.
Assembly Bill 1864 is codied as Financial Code Sections 300, 320, 321, 326, 351 and Division 24 (commencing with Section 90000), and Government Code Section 11041.
Eective January 1, 2021.
Consumer Protection: PACE Liens
C.A.R. sponsored law mandating a paper copy of the PACE disclosure, prohibits prepayment penalties, and prohibits PACE assessments when a reverse mortgage is in place.
This law mandates a paper copy of the PACE disclosure be given to potential customers. Also, prohibits prepayment penalties for those who wish to pay o their assessment (commonly done at the time of the transaction) and prohibits PACE assessments when a reverse mortgage is in place.
BACKGROUND:
PACE programs enable home owners to nance energy and water ecient home upgrades such as solar panels, landscaping, new windows, new HVAC systems, new roofs and energy ecient appliances. It also allows for home improvements that "harden" a home against wildre danger. The nancing requires no money up front and is repaid through an additional assessment on the property owner's property tax bill. The loan is secured to the property through a super-priority lien that takes rst in line status over all other claims to the property. Despite the low risk for the lender of such nancing, PACE nancing typically carries rates of 6.5 to 8.5 percent, higher than the average for a home equity loan. Some PACE administrator companies also have pre- payment penalties associated with their products. Although PACE nancing must be sanctioned through a local government entity, the nancing is conducted entirely through private enterprise. "Homeowners are sometimes told they are not responsible for the assessment if they sell the property and that it will carry over to the new homeowner. While technically accurate, Fannie Mae and Freddie Mac will not purchase a mortgage with a lien that has higher priority than theirs. Thus, in practice the assessment
6 The Greater San Diego Association of REALTORS®