Solar panels are often sold by door-to-door salesmen who tend to mislead consumers
of ConsumerAffairsThe Consumer Financial Protection Bureau (CFPB) has finalized a rule to provide stronger protections for homeowners who take out Property Assessed Clean Energy (PACE) loans.
These loans, used for clean energy upgrades and disaster preparedness, are paid back through property tax bills. Due to concerns about homeowners being misled or taking on unaffordable loans, Congress required the CFPB to improve protections.
The new rule ensures that PACE borrowers receive the same standard mortgage disclosures as those applying for traditional mortgages. This will help homeowners compare PACE loans to other financing options and prevent them from being pushed into loans they cannot afford.
Todays rule stops unscrupulous companies and salespeople from luring homeowners into unaffordable loans based on false promises of energy savings, said CFPB Director Rohit Chopra. Homeowners deserve to know just how much they are paying when they put their home and financial future on the line.
Most PACE loans are sold through door-to-door sales and often promise energy savings or disaster preparedness benefits. However, research shows PACE loans can lead to higher property taxes, higher interest rates, and an increased risk of falling behind on other mortgage payments. PACE loans tend to be more expensive than regular mortgages, with rates about five percentage points higher.
The CFPB has been closely monitoring the market and recently issued warnings about predatory solar loans. The new rule, effective March 1, 2026, aims to protect consumers from deceptive practices and ensure they have the information they need to make informed decisions.
Read CFPB's tips about PACE loans.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-12-17 20:09:13
