Efficiency First

Rosalind Jackson and Annie Carmichael of the nonprofit Vote Solar have written an insightful commentary for Greentech Media about the ongoing kerfuffle surrounding property assessed clean energy financing. The controversy surfaced last month after Fannie Mae and Freddie Mac sent cryptic letters to mortgage lenders around the country implying that the two government-backed mortgage companies would not accept loans on properties that have PACE liens attached to them (read our previous post on the subject here).

Jackson and Carmichael describe the “fast and furious” response to the letters as follows:

Letters of PACE support poured into the Federal Housing Finance Agency (FHFA), which oversees the two quasi-public lending entities. Governors including Schwarzenegger and Richardson, state attorneys general, mayors, officials from the Department of Energy, and representatives from across the PACE community all urged the FHFA to work with Fannie and Freddie to rescind or revise the lender guidance letters. Central to this effort was a call for a meaningful conversation with PACE stakeholders about specific criteria the financial regulatory community believes is necessary to enable PACE financing programs to proceed.

That decision is working its way through the halls of the FHFA and other regulators.  Senior officials at FHFA have indicated that clarifications are forthcoming and that they are engaged in a thorough review of underwriting standards. Given the high level of political and business leadership directly involved in the discussion, we are optimistic that the regulators will encourage new lender policies that better reflect PACE’s modest risks and significant returns.

In the meantime, the move from Fannie and Freddie has many asking why these financial institutions — themselves the subject of intense scrutiny for their role in the mortgage crisis and ongoing federal bailout requests — are standing in the way of real economic recovery?

The piece goes on to make a convincing case for supporting PACE lending programs, based on the fact that “The money that a homeowner would use to pay for PACE improvements is already being used to pay his or her utility bills each month. There is no new debt created … reduce the cost of a property’s monthly energy bills through PACE and you’re putting money back in the pockets of the property owner, funds that actually reduce the risk of default on the mortgage.”

Read the full text of the article at www.greentechmedia.com/articles/read/will-fanny-and-freddy-stop-pace.