PACE programs are among the most promising ways that ordinary Americans can spur the economy, create jobs, save money and lessen the nation’s dependence on foreign oil…Challenging economic times like ours call for decisiveness and action, not the fear and disinterest exhibited by FHFA.” – Supervisors Dianne Jacob and Pam Slater-Price, in a letter to President Barack Obama
By Miriam Raftery
July 13, 2010 (San Diego’s East County) – Last week, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will not buy or sell mortgages for homes enrolled in municipal solar financing programs called PACE (Property Assessed Clean Energy). The programs allow homeowners to spread the cost of rooftop solar and other energy efficiency measures over 20 years, paid as part of their property tax bills.
The decision casts a pall over the County of San Diego, which planned to launch its PACE program this summer.
FHFA cited concerns that PACE mortgages “may disrupt a fragile housing finance market” as the reason for the decision, which has sparked frustration and outrage in the 22 states where PACE programs have been approved. The FFHA rejected an offer by the Obama administration of a two-year guarantee against any PACE-related mortgage losses that Fannie Mae or Freddie Mac might suffer. On July 6, the Treasurer Department issued a directive to the nation’s banks on how to enforce the FHFA rules, further compounding concerns.
“Public interest in PACE financing has been extraordinary,” Supervisors Dianne Jacob and Pam Slater-Price noted in a July 9 letter to President Barack Obama and members of San Diego County’s Congressional delegation urging that FHFA’s decision be reversed. “In San Diego County alone, homeowners in 13 cities and unincorporated communities will see PACE assessments shelved by FHFA’s ill-conceived position.”
The Supervisors argue that the rationale behind FHFA’s position on PACE financing is “erroneous and mired in bureaucratic inertia.” They note that cities, counties and private entities have invested hundreds of millions in developing PACE programs. “FHFA must recognizes that PACE assessment are not loans and should not be analyzed as such,” they state.
“Rather, they are property tax assessments that stay with a property in the event of a sale, just like existing assessments for fire districts, hospitals and underground utilities. These have never been an issue for FHFA.” IF a foreclosure were to occur, only delinquent payments would be due, the Supervisors point out, not the multi-yaer assessment in its entirely. “This reduces the risk to zero,” they conclude. “We are deeply troubled by FHFA;’s failure to work with PACE stakeholders to resolve this difference in opinion regarding PACE assessments….We believe rooftop solar and other energy efficiency measures have the very real potential to make the American economy robust again.”