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FHA to stop backing green loans often called ‘predatory’

from Market Watch

The Federal Housing Administration on Thursday said it would no longer insure mortgages on properties with certain loans criticized by consumer advocates for being predatory.

The loans, known as Property Assessed Clean Energy assessments, came with high interest rates, could be used for dubious uses, and were often marketed to homeowners who didn’t understand what they were getting into.

But most critically, the loans took priority over the mortgage on a home. That’s what Housing and Urban Development Sec. Ben Carson cited in explaining the FHA’s move.

“FHA can no longer tolerate putting taxpayers at risk by allowing obligations like these to be placed ahead of the mortgage itself in the event of a default,” Carson said in a statement. more

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