Ask The Experts: Question of the Week
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VA & FHA – Solar Liens & Refinances
Question:
Our client wants to do a cash-out but has a Florida PACE lien that is collected through their taxes. Can this lien be placed as an exception on the title, since the lien remains with the property when the borrower sells the home, or do we need to pay off the PACE lien if it cannot be subordinated?
Answer:
Unfortunately, no. VA Circular 26-16-18, issued in 2016, permitted PACE liens to remain on VA loans under specific conditions. This circular was automatically rescinded in July 2018, and the VA chose not to extend this policy, making properties with PACE liens no longer eligible for VA financing. It was around this same time that FHA reversed its policy as well and announced that properties with PACE liens were no longer eligible for FHA financing.