FHA Should Reconsider Its About-Face—About PACE

The Rocky Mountain Institute (RMI) criticizes the Federal Housing Administration's (FHA) decision to cease insuring mortgages on homes with property assessed clean energy (PACE) loans. RMI argues that the FHA's concerns regarding consumer protection and default risk are misguided, as data suggests energy-efficient homes have lower default rates than inefficient ones. The document asserts that PACE provides a critical financing mechanism for energy and water efficiency retrofits that traditional loans do not fulfill, and that removing it may push homeowners toward riskier high-interest credit options.

• The FHA's decision to stop insuring mortgages on homes with PACE loans contradicts its own 2016 guidance and is based on concerns that consumer protections for PACE are "far less comprehensive than that of traditional mortgage financing products."
• Data indicates that energy inefficiency poses a greater default risk than PACE financing; specifically, non-efficient homes have a 47 percent greater default risk on average compared to efficient homes, while PACE customers have default rates that are "far lower than for typical customers."
• Residential PACE (R-PACE) has financed $4.2 billion in home energy improvements and created over 36,000 jobs in enabled states, with more than 158,000 retrofits completed in three states since 2008.
• PACE financing is often used for urgent needs, with 37 percent of financing used for emergency repairs or replacements and 23 percent for items likely to fail soon, providing an alternative to high-interest credit cards or limited savings.
• Industry-standard consumer protection guidelines for PACE have been developed by PACENation and the Department of Energy, and have been adopted by entities such as the California Statewide Communities Development Authority and the Western Riverside Council of Governments.

APA

RMI (2017). FHA Should Reconsider Its About-Face—About PACE. https://rmi.org/resources/fha-reconsider-face-pace/

Chicago

RMI. FHA Should Reconsider Its About-Face—About PACE. 2017. https://rmi.org/resources/fha-reconsider-face-pace/.

Wikipedia

{{cite press release |author=RMI |title=FHA Should Reconsider Its About-Face—About PACE |date=14 December 2017 |url=https://rmi.org/resources/fha-reconsider-face-pace/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{rmi2017fha, author = {{RMI}}, title = {{FHA Should Reconsider Its About-Face—About PACE}}, publisher = {RMI}, year = {2017}, month = dec, url = {https://rmi.org/resources/fha-reconsider-face-pace/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }