FHFA Issues Notice of Proposed Rulemaking – Public Comment Sought
Federal housing regulators are seeking the public’s opinion as they initiate a rule-making with regard to PACE (Property Assessed Clean Energy) programs. If you don’t know much about PACE programs they are programs that permit municipalities to provide financing to property owners for purchase of energy-related home improvements (examples of these are solar panels and energy efficient windows). Homeowners repay the amount borrowed, with interest, through assessments added to their property tax bill.
These programs have proven popular with about two dozen states already approving the laws to set up various types of these PACE programs but the FHFA is warning that these programs present significant safety and soundness concerns and directed Freddie Mac and Fannie Mae not to purchase mortgage loans on properties with outstanding first-lien PACE obligations.
Since the 2008 financial crisis, these two government backed entities are responsible for nearly all residential mortgages, so this directive effectively froze the PACE programs. Subsequent lawsuits challenged the FHFA directive and as a result to one of those lawsuits, a federal district court in California ordered FHFA to proceed with a notice and ‘comment process’ to adopt guidance for the mortgages that are or could be impacted by the PACE program.
San Diego cities were all set to initial the program when the directive was issued and are anxiously awaiting a favorable ruling! For a list of specific issues for which the FHFA is seeking comment, see the Federal Register Notice. (The January 19, 2012 Mintz Levin/ML Strategies article "PACE-ing in Purgatory: Outlook for Property Assessed Clean Energy Financing" by Jordan Collins contains additional background on the PACE concept.)
Please make your desires know….. comment as asked by FHFA!!!