Obama “Green”? Not According to Federal Housing Agencies

President Obama’s “green credentials” have taken a shellacking as a result of his seemingly indifferent attitude towards the Gulf oil spill,

and it certainly isn’t going to get any better once more people know about this little bit of news.

Two government-chartered mortgage finance companies, Fannie Mae and Freddie Mac, are unlikely to accept loans on homes

President Obama’s “green credentials” have taken a shellacking as a result of his seemingly indifferent attitude towards the Gulf oil spill,

and it certainly isn’t going to get any better once more people know about this little bit of news.

Two government-chartered mortgage finance companies, Fannie Mae and Freddie Mac, are unlikely to accept loans on homes

that are part of a special program that lets homeowners repay the cost of energy improvements through a surcharge on their property tax bills,

according to Energy Department officials.

The Obama administration has allocated $150 million in stimulus money to support the financing technique,

called Property Assessed Clean Energy, or PACE, and 22 states have authorized such programs.

In his continuing contradictory fashion, President Obama also announced nearly $2 billion in loan guarantees for solar energy production.

But if Fannie and Freddie won’t go along, it’s hard to see the point.

Through the PACE program, loans to install solar panels and make other energy improvements would be repaid

through 20-year special assessments on property tax bills and secured through a lien.

On May 5, Fannie Mae and Freddie Mac, which buy and resell most home mortgages,

notified lenders that such liens could not take priority over a mortgage

but did not offer guidance on how to handle such loans.

The uncertainty has frozen many PACE programs and led some energy companies to furlough workers.

On Friday, Cathy Zoi, an assistant secretary at the Energy Department, called officials in Boulder County, Colo., to inform them

that the administration had been unable to persuade the Federal Housing Finance Agency,

which oversees Fannie Mae and Freddie Mac, to accept mortgages with PACE liens.

The liens, like other property tax assessments, would be paid first if a homeowner defaults.

“She said in light of the circumstances we should look at other ways of financing energy efficiency with the stimulus money,”

said Ben Pearlman, a commissioner in Boulder County.

“We’re very concerned,” Mr. Pearlman said.

“It’s a powerful program and a powerful idea. We need to find an easy way for people to make those investments.”

Those homeowners who already carry energy liens on their property may find it difficult to refinance their mortgages.

In Sonoma County, Calif., some lenders have declined to issue new loans for homes with such liens unless the assessment is paid off.

Ms. Zoi also called Cisco DeVries, president of Renewable Funding, a company in Oakland, Calif., that devises and administers PACE programs for local governments.

“She indicated that the agencies had decided not to accept the liens,

and the administration needed to begin contingency planning on what to do with stimulus funding allocated for PACE,” Mr. DeVries said.

Dan Leistikow, the Energy Department’s director for public affairs, confirmed the calls.

A spokeswoman for the Federal Housing Finance Agency said it would address the issue soon, according to this article in the New York Times.

The Energy Department’s action, which was first reported by Grist, an online magazine,

comes as Congressional leaders and state officials have been pressing the mortgage agencies to allow PACE programs to proceed.

Representatives Henry A. Waxman and Barney Frank sent a letter to top administration officials urging them to act quickly on the issue.

“The response among the cities is something close to outrage,” Mr. DeVries said. “There may need to be a legislative solution, maybe litigation.”