This post is part of our ongoing focus on energy, water, waste and transportation issues relevant to California at large.
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photo credit: free foto.com
Property Assessed Clean Energy (PACE) programs are being quickly halted due to a recent announcement by the Federal Housing Finance Agency (FHFA) that declared the investments potentially unsafe for lenders. The new and upcoming PACE programs being piloted and planned by cities and counties around the country would offer homeowners bond-backed loans for solar and other energy efficiency upgrades to homes.
Under most terms, the PACE loan (which is attached to the house itself, like an assessment) would have first priority for repayment ahead of the mortgage. This repayment structure provoked a warning pronouncement from Fannie Mae and Freddie Mac last month. Now the FHFA has dealt another blow by also warning lenders that the programs could prove risky- effectively halting operations for the time being.
Read more coverage on the FHFA’s PACE announcement in:
The Bond Buyer, The Huffington Post, and Greentech Media.
An article in the New York Times today highlights problems that may arise for Property Assessed Clean Energy programs (initiated here in Berkeley in 2008). Fannie Mae and Freddie Mac have warned lenders that “an energy efficiency lien may not be senior to any mortgage delivered” to the loan giants.
For at least one home in California, the lenders refused to approve a loan for the purchase of a home with heating and cooling systems financed through a program in Sonoma County. The property tax assessment that was to cover the cost of the systems had to paid off before the lenders would issue a loan for the property.
The full New York Times article, with more information about PACE programs and implications for them and other property tax assessment programs, is here.
More information about PACE programs can be found here.