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Energy Loan Programs

July 15, 2010, Alexandria, Va. – NCUA Chairman Debbie Matz today issued the following
statement in an effort to protect the safety and soundness of credit unions and consumers:
“The Federal Housing Finance Agency (FHFA) recently issued a statement raising safety and
soundness concerns over certain energy retrofit lending programs, commonly known as Property
Assessed Clean Energy (PACE) loans, which are available in many states. FHFA found that in
the absence of a sound control structure, PACE loans could adversely affect a lender’s security
interest in collateral securing residential and commercial mortgages. Certain PACE loan
programs could usurp a lender’s senior lien position on a mortgage, undermine the underwriting
decisions made by the lender at the time of mortgage origination, and bypass consumer
protections required prior to the extension of credit.
“I encourage all credit union lenders to understand the implications of the PACE loan programs
available in their service areas and to review FHFA’s statement (available at
http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf). If the PACE loans available in their
service areas present potential safety and soundness concerns, management should make
appropriate adjustments to the credit union’s underwriting criteria and collateral monitoring
“NCUA applauds efforts to promote energy efficiency. Our agency continues to support green
initiatives fostering the responsible use of resources. However, our foremost concern is to
protect the safety and soundness of credit unions and their members. I have directed NCUA staff
to continue monitoring developments with PACE loan programs. NCUA will issue additional
guidance as necessary.”
The National Credit Union Administration is the independent federal agency that regulates, charters and supervises
federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and
manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 90 million account
holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit
unions, not tax dollars.

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