• Lisa Simpson
• Jul 23,2010
• In: Foreclosure

Energy Saving Plans being Thwarted by Fannie and Freddie

The Federal Government wants implementation of an energy saving incentive plan that is coming up against opposition government agencies – Fannie Mae and Freddie Mac. The plans were to advance loans to house owners through local governments with money coming from the stimulus funds to enable the owners to retrofit their houses with latest energy saving gadgets. The money would be paid back over a period of 20 years through tax assessments.

But since tax liens take precedence of all other claims on foreclosed houses Fannie and Freddie are reluctant to guarantee loans on houses that have been fitted with gadgets from loans taken on this account. This has led to a stalemate with the programme, vital for generation of jobs as well as reduction of energy consumption.

The state and local administration together with the Governor of California Schwarzenegger and Mayor Bloomberg of New York as well as some legislators have teamed up to press Federal Housing Finance Agency in charge of overseeing Fannie Mae and Freddie Mac to clarify its stand on the energy saving financing scheme.

Ken Alex Assistant General of California in a letter penned to this housing agency wrote, “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”.

An Assistant Secretary of the Department of Energy Cathy Zoi expressed her anxiety in a letter to this agency last May stating that this change in policy would greatly hamper the renewable energy schemes of Washington.

Fannie Mae and Freddie Mac did not reply to any requests asking for comments. But Alfred Pollard, general counsel said, that they were very much aware of the worries voiced regarding the PACE plans and were “working expeditiously to respond to the communications” that they had received.

Officials at the state and local levels explain that energy liens are not in way different from other kinds of special taxes imposed on properties like those imposed for sidewalks and underground facilities. None of these have raised the hackles of Fannie and Freddie till now – so why now?

Commissioner Ben Pearlman of Boulder County in Colorado said that he was concerned that energy liens were being treated as loans. It could be held up as a precedent that would erode the ability of local governments to pay for improvements made to the municipality via tax assessments.

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