US lawmakers urge guidance for clean energy loans

WASHINGTON, July 2 (BestGrowthStock) – Two influential Democratic
lawmakers warned on Friday that Fannie Mae and Freddie Mac
could derail a $150 million clean-energy home-financing program
and urged the Obama administration to rectify the problem with
new regulatory guidance.

Rep. Barney Frank, chairman of the U.S. House of
Representatives Financial Services Committee, and Rep. Henry
Waxman, head of the House Energy and Commerce Committee, said
in a letter that the two government-controlled mortgage finance
providers have objected to tax liens on homes participating in
Property Assessed Clean Energy (PACE) programs.

The programs, part of the $787 billion economic stimulus
legislation last year, allow local governments to issue bonds
to make loans to homeowners to cover the hefty upfront costs of
installing solar panels and making other energy-saving
improvements.

The homeowner repays the loan over 20 years through a
special property tax assessment, which stays as a lien on the
home even if it is sold. The aim is that the tax obligation can
be paid off from energy cost savings.

But Fannie (FNM.N: ) and Freddie (FRE.N: ), which buy mortgages
and guarantee those that they securitize, have objected to the
municipal liens associated with PACE, saying they constitute a
new loan on the property that has senior status to the mortgage
— a direct violation of their securitization terms.

Under this logic, if property goes into foreclosure, then
the municipal lien would have to be paid off first, before
mortgage investors.

“As a result, PACE programs, including many that were
funded by the American Recovery and Reinvestment Act, have a
questionable status,” Frank and Waxman said in the letter to
U.S. Treasury Secretary Timothy Geithner, Energy Secretary
Steven Chu and Edward DeMarco, the acting director of the
Federal Housing Finance Agency, which oversees Fannie and
Freddie.

“We urge you to work together to quickly resolve the
uncertainty surrounding PACE programs. It is our hope that your
offices can quickly identify, agree on and publish guidelines
that would allow PACE financing programs to continue while
ensuring that both taxpayer and private mortgage investments
are protected.

The lawmakers also asked Geithner, Chu and DeMarco to
immediately assure that homeowners who have already installed
improvements financed under the programs that they are not in
violation of their mortgage agreements.

They requested that the agencies by July 12 provide a
timeline and process for resolving the issues.
(Reporting by David Lawder; Editing by Gary Hill)

US lawmakers urge guidance for clean energy loans