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63 January 2025 J O U R N A L January 2025 » sive—around five percentage points higher—than first mortgages, even though PACE loans get paid at a foreclosure sale before first mortgages. Enhancing Consumer Protections The CFPB has been monitoring the fast-growing market for loans used for clean energy financing, including those not paid back through property taxes. In August 2024, CFPB issued a report and advisory warning consumers about predatory solar loans that found some residential solar lenders are mislead- ing homeowners about the terms and costs of their loans, their payment plan, misrepresenting the energy and tax savings, and cramming markup fees into borrowers' loan balances. The CFPB's latest rule is part of the Bureau's commitment to implementing regulations mandated by Congress and reviewing outdated regulations. Recently, the CFPB finalized a rule to implement a 2010 authority that provides new rights for consumers to control their financial data. Last year, the CFPB finalized a required rule to increase transparency in small business lending. In 2022, the CFPB finalized a required rule to help human trafficking survivors rebuild their financial lives. The CFPB has also looked at and reviewed regulations related to junk fees, including in the mortgage market. Industry Reaction The Mortgage Bankers Association (MBA) and National Consumer Law Center (NCLC), along with the Cali- fornia Mortgage Bankers Association, Housing Policy Council, Jacksonville Area Legal Aid, Mortgage Bankers As- sociation of Missouri, Mortgage Bank- ers Association of Florida, and Public Counsel of California have issued the following joint statement in response to today's CFPB final rule on PACE loans: "The CFPB's final rule is a signif- icant step to protect consumers and reduce mortgage delinquencies by ensuring that consumers are both informed of the obligations they are signing up for when they take out a PACE loan and that they have the ability to repay the loan," read the joint statement. "This is a welcome culmination of a process that started in 2018 when President Trump signed bipartisan legislation to regulate PACE loans, which are secured by the home- owner's property, in a similar fashion to other mortgages. A 2023 CFPB report found that PACE loans cause an increase in negative credit outcomes, particularly mortgage delinquencies when PACE loans are paid through borrower escrow accounts. We note, however, that the rule does not change the fact that PACE loans are provided as a 'super lien priority' through the tax assessment process, which is damaging to the housing market and to borrowers who may not be able to refinance or recoup their investment at the time of a sale due to the PACE obligation's pri- ority status. We will continue to work together to address such challenges as well as any that might arise during the implementation of the rule in states with PACE programs." FHFA RELEASES UPDATE ON NON- PERFORMING GSE LOANS T he Federal Housing Finance Agency (FHFA) has released a report on non-performing loans (NPLs) sold by Fannie Mae and Freddie Mac (the GSEs) through the first half of 2024. The Enterprise Non-Performing Loan Sales Report also provides information about how NPL sales through December 31, 2023, led to better outcomes for borrowers. Since the program's inception in 2014, the report shows, the GSEs have sold 171,333 NPLs with a total unpaid principal balance (UPB) of $31.4 billion through June 30, 2024. The loans included in these NPL sales had an average delinquency of 2.8 years and an average current mark- to-market loan-to-value (LTV) ratio of 82%. Foreclosure was avoided for bor- rowers in 40% of the 165,643 loans sold. The Non-Performing Loan Sales program reduces the number of deeply delinquent loans in the GSEs' portfolios and transfers credit risk to the private sector. FHFA and the GSEs impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure. On Decem- ber 31, 2023, the GSEs held 42,667 NPLs in their portfolio, of which 7% were sold and settled during the first half of 2024. The Enterprise Non-Performing Loan Sales Report shows that the GSEs sold 2,969 NPLs (defined as loans one year or more delinquent) during the first two quarters of 2024 ending June 30, representing an unpaid principal balance (UPB) of $500 million. As delinquencies have eased since the COVID-19 pandemic and the implementation of new loss mitigation programs, the volume of NPL sales has also declined and stabilized since 2021, when the GSEs sold 24,164 NPLs totaling an UPB of $4.1 billion. On June 30, loans one year or more delinquent in GSE portfolios totaled 36,700, an 82% decline from the 208,147 NPLs in the portfolio at the end of 2021. Highlights of NPL Sales • The average delinquency for pools sold has ranged from 1.1 years to 6.2 years. • Fannie Mae has sold 117,437 loans with an aggregate UPB of $21.1 billion, an average delinquency of 2.8 years, and an average LTV ratio of 79%. • Freddie Mac has sold 53,896 loans with an aggregate UPB of $10.3 billion, an average delinquency of 2.7 years, and an average LTV ratio of 88%. • NPLs in New Jersey, New York, and Florida represent 39.4% of the NPLs sold.