In The New York Times on Friday, I follow up my story in Thursday’s paper on mortgage giants Fannie Mae and Freddie Mac paralyzing PACE programs that allow homeowners to install solar arrays and make energy efficiency upgrades through an annual assessment on their property taxes:
In an article in The Times on Thursday, I explained how Fannie Mae and Freddie Mac, the government-chartered mortgage giants, have derailed an innovate financing program that lets homeowners pay for expensive solar panels and energy efficiency upgrades over time through an annual surcharge on their property tax bills.
The program is called Property Assessed Clean Energy, or PACE, and it has been authorized by 22 states since 2008. The energy improvement assessments are secured by a lien on the home, but the agencies, which hold more than half of mortgages in the United States, recently sent letters to lenders warning them that such liens could not take priority over a mortgage. Fannie and Freddie worry that if a homeowner defaults, taxpayers will be left in the lurch, as property taxes generally are paid before mortgages are.
Putting aside whether such liens are any different from the property tax assessments commonly used to finance municipal improvements, how big a potential liability would Fannie and Freddie face?
Not very big, according to an analysis by the California attorney general’s office.
You can read the rest of the story here.