Fannie Mae and Freddie Mac Threaten Solar Incentive Programs

A government program used to finance solar installations and other energy efficiency programs is being undermined by the loan giants Fannie Mae and Freddie Mac. The program, known as Property Assessed Clean Energy, or PACE, works to make energy improvements more affordable to consumers by providing loans that are paid back along with property taxes. The loan giants on May 5th wrote a letter to home lenders stating that energy efficiency liens would not take priority over a mortgage.

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The letter did not provide details on how lenders should deal with these liens. PACE program supporters fear that mortgage lenders may now demand that the entire lien be paid off before a new loan is issued. As it stands, PACE loans follow the property even if sold. Local and state government officials point out that energy liens are no different than long standing practices of financing public works such as utilities and sidewalks via special property taxes. Nonetheless, as a result of the letter, potential sales have been stopped dead in their tracks already.

According to the New York Times, Deke DeKay of Healdsburg, Calif. was right at the close of escrow as a seller when an energy lien was discovered by the loan giants, which then refused to approve the loan until the entire assessment of $11,000 lien is paid off.

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Mean while, the Obama administration is committing 150 million in stimulus funds to help home owners make energy improvements to their homes. Yet this statement from Freddie and Fannie seem quite counter to this goal. Other high ranking government officials, such as Gov. Arnold Schwarzenegger of California and Mayor Michael R. Bloomberg of New York, are asking the Federal Housing Finance Agency to clarify its position on energy efficiency financing programs.

At this time, many PACE programs have come to a complete halt. The directors of these programs do not want to be responsible for putting home owners in violation of their mortgages. Concerned citizens are encouraged to write their representatives and Fannie Mae and Freddie Mac to encourage this situation to be resolved in a manner that will clear the way for unhindered PACE programs to continue.



By Tad Coffin
of SolarCompanies.com