Fannie Mae says will comply with ban on green loans

WASHINGTON, Aug 31 (BestGrowthStock) – Fannie Mae (FNMA.OB: ) on
Tuesday said it will no longer purchase mortgage loans on
certain properties where the borrower has participated in a
government loan program to make homes more energy efficient.

Fannie’s move was in compliance with an order from its
regulator, which also allows the mortgage finance company to
waive the ban for loans made prior to the July 6 mandate.

The Property Assessed Clean Energy (PACE) program, part of
the $814 billion economic stimulus legislation approved last
year, allows local governments to make loans to homeowners to
cover the hefty upfront costs of installing solar panels and
other energy-saving improvements.

The loans are generally repaid through the homeowner’s real
estate tax bill.

Fannie Mae and Freddie Mac (FMCC.OB: ) oppose the loans
because the municipalities making them would be repaid first if
a property goes into foreclosure, before investors in mortgages
securitized by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, which regulates Fannie
Mae and Freddie Mac, said the loan priority poses “safety and
soundness risk to mortgage investors.”

“We will not purchase mortgage loans secured by properties
with an outstanding PACE obligation unless the terms of the
PACE program do not permit priority over first mortgage liens,”
Fannie Mae said in its announcement.
(Reporting by Corbett B. Daly; Editing by Andrea Ricci)

Fannie Mae says will comply with ban on green loans