July 20, 2010

Breaking: Fate of PACE clean-energy programs about to become clearer (Grist)
The Federal Housing Finance Agency will say Wednesday whether it will allow a 30-month pilot project for Property Assessed Clean Energy (PACE), Congressman Steve Israel (D-N.Y.) said after a meeting today with FHFA reps.

PACE Background

Freddie, Fannie and the FHFA erroneously view PACE financing as a loan, and stated that they will not fund mortgages on properties that participate in PACE programs. But PACE is not a loan, it is a government program that allows property owners to finance efficiency upgrades through a local government program using low interest bonds. The building owner pays an annual assessment on their property taxes. Recent DOE guidelines for PACE outline uniform underwriting standards for PACE that were designed to provide an extra layer of protection to both building owners who participate in PACE programs and to lenders who hold mortgages with PACE liens.

Despite DOE’s work to create uniform underwriting standards, calls from the Administration to protect PACE, letters from Congress, and signs of support from local and state governments, FHFA issued a letter on July 6, re-stating Fanny/Freddie's position, throwing PACE programs across the nation into uncertainty. This action resulted in a groundswell of support for PACE. A detailed response to the FHFA’s concerns has already been properly addressed -- see the PACE Now response to FHFA. Despite the fact that FHFA’s concerns were met by a team of experts who provided uniform underwriting standards while minimizing lender risk to negligible; FHFA opted to react by further deepening its opposition to PACE forcing PACE advocates to look towards a legislative fix.

In the Courts

California Attorney General Jerry Brown has brought suit against Fannie Mae and Freddie Mac in federal court on Wednesday, July 14, arguing that PACE programs are valid under California law and compatible with Fannie and Freddie’s mortgage standards, and that FHFA must perform an environmental review under NEPA before taking an action that would affect PACE.

A Legislative Fix

Congressman Mike Thompson, along with 29 other Representatives, introduced legislation on Thursday, July 15 to protect PACE programs while meeting the concerns of FHFA to protect lenders. The bill would make Fannie and Freddie adopt uniform underwriting standards based on the DOE guidelines mentioned above, would bar them from discriminating against PACE communities, and protect the integrity of PACE assessments by preventing acceleration for homeowners looking to finance, refinance or transfer their property.  The Senate is working to craft a legislative solution to save PACE as well.

What You Can Do

• Join ICLEI's PACE Update Webinar
  ICLEI is hosting a webinar on July 21 with an expert panel to discuss the basics on PACE, what has happened at the federal level, and what you can do to take action to save PACE. Register now.
  
• Act Now to Save PACE!
  Stay tuned for more updates from ICLEI as we track provide critical information to our local government members engaged on this important issue – in the meantime learn how your local government can take action to save PACE.

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Source: ICLEI-Local Governments for Sustainability USA, Local Action Blog