FOR IMMEDIATE RELEASE: Dec. 17, 2024

CONTACT: Carter Dougherty, carter@ourfinancialsecurity.org 

CFPB Finalizes rPACE Rule to Protect Green Lending Consumers 

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CPFB) issued an important final rule on residential Property Assessed Clean Energy (rPACE), a form of green lending used to cover the cost of home improvements which is most commonly used for energy efficiency improvements and solar panel installations. 

The rPACE program was originally intended to make solar energy and energy efficiency measures more accessible and available for homeowners and residents, but unfortunately the rPACE loan products often have been pushed onto people by unscrupulous contractors and door-to-door sales people through predatory and fraudulent sales practices, binding them to unsustainable loans that they cannot repay. rPACE loans create super-priority liens with priority over other existing mortgages on a property. 

Problematic lending and sales practices in addition to the loan structure have resulted in some people losing their homes to foreclosure as a result of using rPACE loan products. The CFPB’s final rPACE loan rule will help prevent these types of harms by increasing transparency and ability to repay requirements.

“The CFPB’s rPACE rule sends a valuable signal to lenders: green loan products, including loans to promote residential solar or energy efficiency, must include strong consumer protections like all other financial products.” said Jessica Garcia, senior policy analyst for climate finance at Americans for Financial Reform Education Fund. “In the coming years, millions more consumers will seek financing for green projects, such as retrofitting homes to be more energy efficient and resilient and to buy green products, like electric vehicles. Government programs, nonprofit organizations, lenders, and utilities offering that financing must do so in an affordable and transparent way in order to safely and equitably expand access to green lending.”

“The rPACE rule’s protections are critical to helping homeowners maintain and grow their household wealth in Black and Latine neighborhoods, where the CFPB found rPACE borrowers are more likely to reside,” said Christine Chen Zinner, senior policy counsel for consumer financial justice at Americans for Financial Reform Education Fund. “Making loan terms more clear to homeowners will help protect against home loss, a key protection for everyone, but especially those in underserved communities.” 

This final rule extends the CFPB’s commitment to serving people and their families and supplements its earlier work to protect consumers from unfair, deceptive, and abusive practices in solar panel financing transactions. The CFPB must continue to coordinate with other agencies on consumer protection standards for solar and other green lending products. The agency should also continue to investigate consumer complaints and bring enforcement cases against repeat offenders to dually protect consumers and help support a fair, transparent, and competitive consumer green loan market. 

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