Innovative homeowner alternative energy financing mechanisms approved by voters last November in Pitkin, Eagle and Gunnison counties have been put on hold due to changes at the newly risk-adverse federal mortgage giants Fannie Mae and Freddie Mac.
According to the Pitkin County news website Real Aspen, county energy program manager Dylan Hoffman Tuesday issued a statement announcing “that the local Smart Energy Program has been put on ‘an indefinite hold’ due to federal decisions having an ‘immediate and detrimental impact on Property-Assessed Clean Energy (PACE) programs.’”
Real Aspen Tuesday reported:
Voters in Pitkin, Gunnison and Eagle counties approved referendums last November authorizing their governments to assume debts of $7 million, $3 million and $10 million, respectively, to lend to homeowners for energy-efficient upgrades [such as home solar projects] that would be repaid through property tax assessments. Property liens would secure the assessments by following the property if it were to be resold.
But that became a problem for Fannie Mae and Freddie Mac. The federally backed mortgage giants told lenders in May they would deny loans associated with PACE programs out of concern the property liens would be senior to Fannie and Freddie’s positions. If a property went into foreclosure, the PACE lien could be paid off before the mortgage, which would ultimately leave taxpayers holding the bill. Last month, the Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, issued a statement warning that lenders and taxpayers faced “significant” financial risk from PACE programs.
Real Aspen went on to point out that it’s not just Colorado ski towns being impacted by the federal policy changes. The state of California and the Sierra Club have filed lawsuits challenging the new policies.
“Fannie Mae and Freddie Mac received enormous federal bailouts, but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy,” California Attorney General Jerry Brown said.