Solar Action Alert-Solar Financing PACE Funds

7.11.2010

Solar Action Alert-Solar Financing PACE Funds


	Best Idea Yet for Financing Solar on your Roof ...and the Feds want to shut it down!

Now that some 22 states have embraced PACE - the municipal financing mechanism under which homeowners can install renewable energy or energy efficiency assets with few upfront costs, and with repayment based on property tax assessments - you'd have thought its obvious popularity would have spread joy to all quarters.

It hasn't, and perhaps you can help.

One quarter the joy hasn't reached is the Federal Housing Finance Agency (FHFA), the regulator of government mortgage corporations Fannie Mae and Freddie Mac. According to a statement it issued on July 6, the agency 'has determined that (PACE programs) present significant safety and soundness concerns that must be addressed.' In urging state and local governments to reconsider these programs, FHFA has effectively brought the whole PACE movement to a halt.

Jonathan Hiskes has written in depth on this subject in Grist. The debate in the posts that follow his article show just how tense the whole issue is.

Which Way to Lien?

The basis of FHFA's objections is that most PACE programs establish a priority lien over existing mortgages, which could cause the original lender to take an unexpectedly large loss in case of default. There are arguments for and against this position, as you can see from the Grist article linked above. But what is most disturbing is that the mortgage corporations only seem interested in stopping the movement, not finding a way forward. The FHFA statement ends with the lukewarm comment:

"FHFA will... continue to encourage the establishment of energy efficiency standards to support such (energy retrofit lending) programs."

The statement contains not a scrap of detail about how FHFA would do this, yet in the same document, the agency acknowledges that "certain states have chosen not to adopt such priority positions for their loans."

Wouldn't you think, if it recognizes a potential solution, that an enlightened agency would work with states to iron out legal issues, instead of bringing a burgeoning program to an abrupt halt? You would, if you thought the agency were acting in good faith. But - and here's the really telling point - despite the fact that property tax assessments with priority lien status are very common in the USA (37000 special tax districts at the last count), FHFA insists on categorizing PACE arrangements as loans. This allows the agency to tell Fannie Mae and Freddie Mac to forbid its customers to enter into PACE agreements.

Clearly, FHFA has no interest in resolving this issue to the benefit of renewable energy. Not its job, we suppose. But the Director of FHFA, Edward DeMarco, should certainly be left in no doubt that there are plenty of people very unhappy with what his agency has done to the most promising plan for residential solar we've ever seen.

Can you send him a message now, to let him know what you think?

Enter your ZIP code and press Go! to TAKE ACTION NOW.

with thanks, from Solar Nation