California Sues Fannie and Freddie to Save PACE
photo via flickr
Last month, I wrote about how Representatives Henry Waxman, chairman of the House Committee on Energy and Commerce, and Representative Barney Frank, chairman of the House Committee on Financial Services, sent a letter to the Obama Administration trying to save PACE, the Property Assessed Clean Energy (PACE) program, which allows homeowners to finance their own solar panels or energy-savings retrofits by an addition to their property tax bill. Now California Attorney General Jerry Brown is suing Fannie Mae and Freddie Mac, which have have shut down the program.The Federal stimulus package, passed soon after Obama took office to the tune of about $750 billion, set aside about $150 million for the PACE program. Twenty-states have passed laws supporting PACE, but without Fannie and Freddie, the program appears to be doomed. The rational from Fannie and Freddie seems to be that they don't want taxpayers to be on the hook for the retrofits if the mortgage holders default. Property taxes take precedent over mortgages. Fannie and Freddie hold just over half of the mortgages in the country.
In June, Waxman and Frank wrote:
"It is our hope that your offices can quickly identify, agree on and publish guidelines that would allow PACE financing programs to continue while ensuring that both taxpayer and private mortgage investments are protected. In the meantime, we ask that homeowners participating in the pioneering PACE programs already in operation be immediately assured that they are not in violation of their loans."
The California AG's suit alleges that the Federal Housing Finance Agency, which runs PACE, did not conduct a proper review of the potential environmental impact of restricting PACE programs, as is required under federal law. It also says that Fannie and Freddie's actions put all PACE programs in the state under great risk:
"F.H.F.A. has effectively precluded PACE programs in California and deprived California and its citizens of the associated residential energy and water efficiency and renewable energy benefits, thereby significantly impacting the human environment, without completing the required environmental review under the National Environmental Policy Act."
More on PACE:
Obama Administration Tries To Keep Up The PACE