In Sunday’s New York Times, I have an update on the controversy surrounding Fannie Mae and Freddie Mac’s blocking of the PACE solar loan program:
Two government-chartered mortgage finance companies are unlikely to accept loans on homes that are part of a special program that lets homeowners repay the cost of energy improvements through a surcharge on their property tax bills, according to Energy Department officials.
The Obama administration has allocated $150 million in stimulus money to support the financing technique, called Property Assessed Clean Energy, or PACE, and 22 states have authorized such programs. In a separate stimulus effort, President Obama on Saturday announced nearly $2 billion in loan guarantees for solar energy production.
Through the PACE program, loans to install solar panels and make other energy improvements would be repaid through 20-year special assessments on property tax bills and secured through a lien.
On May 5, Fannie Mae and Freddie Mac, which buy and resell most home mortgages, notified lenders that such liens could not take priority over a mortgage but did not offer guidance on how to handle such loans. The uncertainty has frozen many PACE programs and led some energy companies to furlough workers.
On Friday, Cathy Zoi, an assistant secretary at the Energy Department, called officials in Boulder County, Colo., to inform them that the administration had been unable to persuade the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to accept mortgages with PACE liens.
The liens, like other property tax assessments, would be paid first if a homeowner defaults.
“She said in light of the circumstances we should look at other ways of financing energy efficiency with the stimulus money,” said Ben Pearlman, a commissioner in Boulder County.
“We’re very concerned,” Mr. Pearlman said. “It’s a powerful program and a powerful idea. We need to find an easy way for people to make those investments.”
Those homeowners who already carry energy liens on their property may find it difficult to refinance their mortgages. In Sonoma County, Calif., some lenders have declined to issue new loans for homes with such liens unless the assessment is paid off.
Ms. Zoi also called Cisco DeVries, president of Renewable Funding, a company in Oakland, Calif., that devises and administers PACE programs for local governments. “She indicated that the agencies had decided not to accept the liens and the administration needed to begin contingency planning on what to do with stimulus funding allocated for PACE,” Mr. DeVries said.
Dan Leistikow, the Energy Department’s director for public affairs, confirmed the calls. “We expect to get more written guidance from the regulators this week,” he said on Saturday.
You can read the rest of the story here.