The Federal Housing Finance Agency thinks California Attorney General Jerry Brown is all wet when it comes to the Property Assessed Clean Energy program and how government assisted energy upgrades made by consumers should be treated in the pecking order of lien priority.
FHFA said in a statement that "Homeowners should not be placed at risk by programs that alter lien priorities and fail to operate with sound underwriting guidelines and consumer protections." The regulator was responding to a lawsuit filed by AG Brown who notes in a new letter to President Obama that the GSEs are choking energy upgrades because they declared that "PACE financing is not a property tax assessment entitled to lien priority over a mortgage."
Fannie and Freddie, of course, guarantee or hold $5.2 trillion of mostly first liens and want their lien priority protected. In a statement about its lawsuit, California says the GSEs have "effectively shut down the program by wrongly characterizing PACE assessments as loans that must be subordinate to their own mortgages."
The PACE program helps homeowners and business make their homes and workplaces more energy efficient by securing funding. Property owners must repay the cost of improvements through assessments which can be spread out over 10 years. "Under California law, these costs are classified as tax assessments," the AG said.
