PACE Liens Now Considered a Mandatory Obligation

Effective for case numbers assigned on or after January 6, 2018, properties encumbered by a PACE obligation can be paid off using HECM proceeds.

“Clarification is provided to identify PACE obligations as Mandatory Obligations that must be paid off at closing, and may be paid off using HECM proceeds,” according to Mortgagee Letter 2017-18.

In cases where the PACE obligation cannot be fully paid off with reverse mortgage proceeds, the property will remain ineligible for a HECM.  The Property Assessed Clean Energy, or PACE program, allows homeowners to obtain financing to make improvements to their homes to increase the home’s energy efficiency.