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Just when it looks like homeowners are finally getting a break, two of the largest government-chartered organizations that buy and resell mortgages, Fannie Mae and Freddie Mac, are threatening to halt progress on local governments’ efforts to encourage energy-efficiency upgrades.
The Obama Administration set aside $150 million in stimulus funds for programs like Property Assisted Clean Energy (PACE) of Berkeley, California, that help homeowners install solar panels and other energy saving enhancements to homes, but Fannie Mae and Freddie Mac say that they may refuse loans that utilize the special funding. In fear that the added cost of mortgages may waste tax dollars if homeowners default on increased mortgages, Fannie Mae and Freddie Mac require that homeowners pay off the whole of energy lien before issuing new loans.
The agencies sent a letter to local officials stipulating the position. As Freddie Mac’s Patricia McClung told the New York Times:
“The purpose of this industry letter is to remind seller/servicers that an energy-related lien may not be senior to any mortgage delivered to Freddie Mac.”
Ken Alex, a senior assistant attorney general of California says:
“The letters have had a devastating impact on PACE programs in California, placing at risk hundreds of millions of dollars of federal stimulus funding, hundreds of millions of dollars of state, local and private funding, and impacting California’s efforts to promote green jobs and greenhouse gas emissions reductions.”
Government officials and members of Congress are working with the Federal Housing Finance Agency, who oversees Fannie Mae and Freddie Mac, to get clarification on the agency’s take on the matter.
From regulations to spending, the federal government can be a huge thorn in the sides of state and local governments. Written by Ryan Holeywell, GOVERNING FedWatch monitors all the money spent and all the mandates required by the federal government that effect states and localities.