Efficiency First

Ongoing uncertainty about the status of PACE financing programs in the face of warnings from Fannie Mae and Freddie Mac about property-assessed energy improvements is the subject of an article in today’s New York Times, which describes a “ripple effect” on home and business owners in areas where PACE lending has been approved.

The controversy began in early May, when the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) sent vaguely worded letters to mortgage lenders around the country implying that the two government-sponsored entities would not purchase mortgages if there is a PACE lien attached to the property. (See our previous posts on this topic here and here.) Because Fannie and Freddie guarantee more than half of all home mortgages in the United States, the negative impact on local PACE financing programs around the country has been devastating.

The Times reports that some homeowners have already been turned down for mortgages, including Deke DeKay of Healdsburg, Calif., who financed $11,000 in energy improvements under the pioneering Sonoma County Energy Independence Program. “We thought this would be an interesting way of upgrading the home’s energy efficiency without adding to the purchase price,” Mr. DeKay told the Times. But right before the close of escrow, DeKay said, the bank refused to approve the loan without the PACE assessment being paid off in full.

The article also quotes Efficiency First policy chair Matt Golden of San Francisco-based Recurve, Inc., who said that his company has lost almost a quarter of a million dollars of business and has been forced to temporarily lay off workers since San Francisco suspended its new PACE program.

Read the full article at
www.nytimes.com/2010/07/01/business/energy-environment/01solar.html?_r=1&dbk=&pagewanted=all