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What Does A P.a.c.e. Obligation Look Like?

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S is for spittman

Senior Member
Joined
Oct 24, 2005
Professional Status
Certified Residential Appraiser
State
Texas
It has just come to my attention that FHA requires panel appraisers to analyze the terms of an existing PACE obligation and comment on any impact on value.

My question(s) are ... Does the lender/client provide this information or must we research if there is a PACE obligation on every FHA appraisal we do now and where do we look and what does it look like on paper?

On existing home purchase contracts, there is no section or addendum that would indicate PACE financing unless they put it in the Special Provisions blank space I suppose, but I don't know since I've never come across this issue before last week. Same thing with new home contracts.

On FHA refinance, pre-foreclosure and REOs, I suppose I could just ask the owner, but again, where would we look to verify terms. I've never seen anything in tax assessments, county deed and records, or MLS field searches that would indicate PACE obligation.

Anyone care to post a sample screenshot of what it looks like in a contract or in a deed, lien, tax assessment, etc.???
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Mortgagee Letter 2016-11 - HUD

Property Assessed Clean Energy (PACE). This Mortgagee Letter (ML) transmits revised policies for insuring mortgages secured by Single Family 1- 4 unit properties encumbered with.

Check the deed for encumbered PACE mortgage.
 

A Brit in California

Senior Member
Joined
May 6, 2006
Professional Status
Certified Residential Appraiser
State
California
I stopped doing FHA a couple years ago but.......in California I would request a copy of the preliminary title report and see if the property is encumbered with a PACE lien. A PACE assessment is a debt of property, meaning the debt is tied to the property as opposed to the property owner or owners, so repayment of the obligation may transfer with property ownership, if the buyer agrees to assume the PACE obligation and the new first mortgage holder allows the PACE obligation to remain on the property.
 
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