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July 15, 2010

Fannie Mae and Freddy Mac sued for blocking PACE programs

California Attorney General Jerry Brown said Fannie Mae and Freddie Mac are threatening tens of thousands of jobs by not supporting PACE programs

California’s Attorney General, Jerry Brown, is suing mortgage giants Fannie Mae and Freddie Mac for blocking clean energy programs.

The lawsuit was filed yesterday, stating that the two federally-controlled mortgage firms had “effectively shut down” Californian renewable energy financing programs by refusing to take part.

Fannie Mae and Freddie Mac, along with their supervisors at the Federal Housing Finance Agency, denounced the schemes last week, claiming they are too risky for lenders (see this BrighterEnergy.org story).

The schemes called Property Assessed Clean Energy (PACE) programs allow homes and businesses to finance energy improvement projects through extra payments on top of their property taxes spread out over a decade or more.

Similar programs are being adopted by communities around America, but Mr Brown said almost half the counties in California have developed PACE programs, or plan to start one.

These have been stopped “dead in their tracks” by the lenders’ decision not to allow homeowners to take part. San Diego has already suspended its initiative, which was due to start this summer.

He said California’s system was designed to create tens of thousands of jobs as well as lowering utility bills for homeowners and promoting energy independence.

The state risked losing more than $100 million in federal stimulus money available to support such programs, Mr Brown added.

He said yesterday: “As the nation struggles through the worst recession in modern times, California is taking action in federal court to stop the regulatory strangulation of the state’s grass-roots program that is spreading across the country.” said Brown.

Loans or assessments

California’s AG accused Fannie Mae and Freddie Mac of “ignoring California law” by misrepresenting PACE program payouts as loans.

The lawsuit stated that the firms were “severely hampering” state clean energy efforts.

“Fannie Mae and Freddie Mac received enormous federal bailouts,” Mr Brown said, “but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy.”

Mr Brown’s lawsuit demands that the mortgage companies designate PACE program financing as “assessments”, rather than “loans”, and allow the program to move forward.

“I believe that the PACE program is critical to stimulating our local and statewide economy,” said San Diego Mayor Jerry Sanders. “I’m glad to see this lawsuit filed so that this novel program can continue.”