SF3245 Summary

• Establishes comprehensive state regulation of residential PACE loan programs, requiring residential PACE administrators to obtain licenses from the Minnesota Department of Commerce with a $100,000 surety bond and annual $500 renewal fees.

• Implements extensive consumer protections for residential PACE loans including mandatory 5-day disclosure periods, 3-day rescission rights, underwriting requirements (debt-to-income ratio not exceeding 43%), and prohibition on financing for vulnerable adults without additional safeguards.

• Creates new definitions and framework for residential vs. commercial PACE programs, establishing loan term limits (maximum 20 years), principal amount caps (10-20% of property market value depending on improvement type), and subordinate PACE lien positioning requirements.

• Requires oral confirmation of key loan terms by recorded telephone call, mandatory contractor licensing, performance verification of installations, and forbearance/modification mechanisms for homeowners facing economic hardship.

• Expands Minnesota Housing Finance Agency authority to make energy conservation loans for solar systems and energy storage installations, and authorizes municipalities and counties to collect special assessments for energy improvement financing repayment.