Property Assessed Clean Energy (PACE) loans will now fall under Truth in Lending Act (TILA) requirements. The CFPB issued the final rule Tuesday, a move that applies regulatory requirements and oversight to loans where borrowers can finance energy efficiency improvements through additional assessments on their property taxes.  

America’s Credit Unions’ legacy organizations supported the rule when proposed, noting the TILA/Regulation Z requirements would safeguard homeowners from financial harm and predatory practices. The final rule aligns with several credit union-supported recommendations. Specifically, it:

• Clarifies that voluntary tax assessments and tax liens, such as PACE financing, are not excluded under TILA and Regulation Z;
• Recognizes PACE financing as meeting the definition of credit under TILA and Regulation Z;
• Prescribes ability-to-repay requirements for residential PACE financing; and
• Makes other amendments and exemptions to make clear how other rules in Regulation Z apply to PACE financing.

The final rule, executive summary, and other resources are available here.