In The New York Times on Wednesday, I wrote that California Attorney General Jerry Brown has filed a lawsuit against Fannie Mae and Freddie Mac over the mortgage giants’ quashing of the PACE solar loan program:
The California attorney general’s office on Wednesday sued Fannie Mae and Freddie Mac over actions by the mortgage finance companies that have derailed a popular financing program that allows homeowners to pay for energy efficiency improvements through a surcharge on their property taxes.
This month, the Federal Housing Finance Agency, which oversees Fannie and Freddie, issued guidelines to lenders that restricted the ability of homeowners to participate in the financing programs, called Property Assessed Clean Energy, or PACE. Twenty-two states have authorized the programs, which have drawn $150 million in stimulus funding support from the Obama administration.
When a city or state pays for energy efficiency upgrades through the program, a lien is placed on the home. The liens, like other property tax assessments, take priority over the mortgage if the homeowner defaults. The housing agency instructed lenders that they could not accept such PACE liens.
In recent months, some banks have declined to refinance mortgages for homes that carry the liens.
In the lawsuit, filed in United States District Court in Oakland, Calif., Jerry Brown, the California attorney general and Democratic candidate for governor, asked that the court declare that participation in PACE programs does not violate the standards of Fannie and Freddie, which are government chartered. The suit also asks that an injunction be issued to prevent them from taking action against homeowners whose properties have PACE liens.
The Federal Housing Finance Agency was also named as a defendant.
The suit alleges that the housing agency’s actions violated California law, which authorizes PACE programs, and are “severely hampering California’s efforts to assist thousands of California homeowners to reduce their energy and water use, help drive the state’s green economy, and create significant numbers of skilled, stable and well-paying jobs.”
“The actions of these government-sponsored, shareholder-owned private corporations have placed California’s PACE programs – and the hundreds of millions of dollars in federal stimulus money supporting them – at immediate risk while benefiting their own pecuniary interests,” the suit states.
You can read the rest of the story here.