Bill Overview
Title: Mortgage Borrower Protection Act of 2022
Description: This bill requires an entity extending a Property Assessed Clean Energy (PACE) financing agreement to receive written consent from each owner of any residential mortgage loan or other recorded lien on the property before extending such financing to the dwelling owner. (PACE financing is used to cover the costs of home improvements such as energy-efficient improvements. The subsequent lien is tied to the specific property in the form of a tax assessment.) Consent is not required if the PACE financing does not have priority over the mortgage loan or lien.
Sponsors: Rep. Sherman, Brad [D-CA-30]
Target Audience
Population: Property owners using mortgage financing for home improvements
Estimated Size: 25000000
- PACE financing is used globally, but primarily in the United States, where it originated.
- Many countries other than the US may have or be considering similar environmental and energy efficiency financing programs.
- The program's focus is on property owners, especially those engaged in or contemplating energy efficiency improvements.
- Consent from mortgage holders is a procedural, financial regulation impacting primarily property owners in the regions where PACE financing is available.
- This includes any regions worldwide with entities currently or potentially implementing PACE-style programs, but the structure and regulations may differ.
- Given that the bill addresses a US-based financing system primarily, the majority of impact would be on residents of the US.
Reasoning
- The policy targets property owners considering PACE financing for energy-efficient home improvements. This is a fairly niche segment of the population but includes those potentially at financial risk due to secondary liens placed on their properties without their full understanding.
- While this impacts a subset of the population (those needing PACE financing for energy efficiency improvements), it is important to balance the inclusion of those directly affected (medium to high impact) with those who may not be impacted (low to none) to capture a broad spectrum of perspectives.
- The $10,000,000 USD/year budget suggests a relatively focused intervention, making it crucial to prioritize property owners in regions with active PACE programs and significant home improvement aspirations.
- The American home ownership with mortgage segment is large, but the policy most directly addresses those affected by lien priorities and financial ramifications from PACE financing complications.
- Given the utility and environmental benefits of PACE, property owners may remain interested even with added consent complexity, but the policy could increase perceived financial security for homeowners.
Simulated Interviews
Real Estate Agent (California)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- I think the policy is necessary to protect property owners like myself who might not fully understand the implications of an additional lien from PACE financing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Engineer (Texas)
Age: 53 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- I'm glad the policy requires transparency, but since I own my home outright, it doesn't affect me much directly. Still, it’s reassuring for overall consumer protection.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Tech Startup Founder (New York)
Age: 30 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- I see the value in protecting homeowners, but getting lender consent might complicate things logistically and deter some from taking up PACE.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Retired (Florida)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- This will safeguard my investment by ensuring no unexpected financial hurdles, which is a relief as I live on retirement savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Nurse (Illinois)
Age: 28 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- The process might slow things down, but knowing I won't jeopardize my new home-ownership stability is worth it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Contractor (Oregon)
Age: 39 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- As someone who deals with both ends, property owner and contractors, this rule makes it clear and reduces disputes, although it might add steps to the process.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
Public School Teacher (Nevada)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- This regulation gives me added confidence to proceed with such investments without the fear of unexpected financial burdens.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Auto Mechanic (Ohio)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- The contradictions between loans and PACE could have me second-guessing improvements, but this policy would provide needed clarity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Software Developer (Arizona)
Age: 34 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- As someone who values eco-friendly initiatives, I appreciate measures that protect me from financial surprises while pursuing them.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Stay-at-Home Parent (Colorado)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- Having multiple financial responsibilities, this policy ensures I make informed decisions and manage risks wisely.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Cost Estimates
Year 1: $10000000 (Low: $8000000, High: $15000000)
Year 2: $5000000 (Low: $4000000, High: $7000000)
Year 3: $5000000 (Low: $4000000, High: $7000000)
Year 5: $5000000 (Low: $4000000, High: $7000000)
Year 10: $5000000 (Low: $4000000, High: $7000000)
Year 100: $5000000 (Low: $4000000, High: $7000000)
Key Considerations
- The bill could limit the adoption of PACE financing if processes become cumbersome, impacting the home improvement market.
- Ensuring seamless integration of consent processes within financial institutions is crucial.
- Potential unintended consequences on the growth and development of financial innovation in PACE markets.