August 08, 2019
The Latest on How the CFPB Plans to Regulate
In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) was signed into law, in an effort by Congress and the President to ease regulations imposed by Dodd-Frank following the 2007-2008 financial crisis. It did so by eliminating the Volcker Rule for banks holding assets worth less than $10 billion and by raising the former $50 billion “too big to fail” threshold to $250 billion. Naturally, the Consumer Financial Protection Bureau needed to respond by making changes in how it will regulate certain sectors.
So in early March, the Bureau released an Advance Notice of Proposed Rulemaking on Residential Property Assessed Clean Energy Financing. An Advance Notice of Proposed Rulemaking is sent out as an effort to do information gathering prior to creating rules that will affect a sector of the economy. In this case, it was Property Assessed Clean Energy Financing (also known as PACE) that would be affected—since the EGRRCPA amended the Truth in Lending Act to require that the Bureau submit regulations that would further the Truth in Lending Act’s “Ability-to-Repay” requirements as related to the singular and unique elements inherent to PACE financing.
PACE financing is defined in the EGRRCPA as “financing to cover the costs of home improvements that result in a tax assessment on the real property of the consumer.” The law requires that the Bureau’s regulation must satisfy two PACE objectives:
- It must enact the purpose of the Truth in Lending Act’s Ability-to-Repay requirements, even where PACE financing is concerned. Creditors are not permitted to create a residential loan absent their having made a “reasonable and good faith determination”that the consumer will be able to repay it, based on verified documented information. The overall goal of this is to prevent the initiation of loans on unfair, deceptive, or abusive bases—ensuring that consumers are only offered loans that they can actually repay.
- It must apply the civil liability provision for violations of these regulations on the Ability-to-Repay requirements , particularly as they apply to PACE financing.
It’s important that consumers only purchase homes they can actually afford. It’s also important that they receive clear title to the property. Topouzis & Associates, P.C. is the home buyer’s bulwark against problems of the past. We do title searches and ensure you are gaining clear title to your property—and we back our services with offerings of title insurance (click here), in case someone along the line of ownership did something that will weaken your title at some point in the future.