Feds sued by state for cutting loan program

July 21, 2010 at 3:38 pm

K Kaufmann • The Desert Sun • July 15, 2010

 California Attorney General Jerry Brown filed a federal lawsuit on Wednesday aimed at saving programs such as Palm Desert’s that allow governmental agencies to loan residents money to make their homes more energy efficient.

 Palm Desert last week suspended its program following opposition from the Federal Housing Finance Agency.

 The suit, filed in the U.S. District Court in Oakland, names the agency and Fannie Mae and Freddie Mac — major mortgage lenders — as defendants. Brown argued that the banks’ opposition to the energy- financing programs will strangle energy conservation efforts and green job creation in counties across the state.

 Over the past two years, Palm Desert’s program has pumped more than $5 million worth of solar installations and energy-efficient home improvements into the local economy while delivering big savings on residents’ energy bills.

 Applications totaling about $1.2 million were pending when the city suspended the program on July 8.

 The Federal Housing Finance Agency and mortgage banks object to the programs because repayments for energy financing take precedence over traditional mortgage payments.

 Last week, the agency issued a statement saying banks should not give mortgages to any homeowner using the financing program to install solar panels or other energy-efficient equipment on their homes.

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

 Palm Desert’s financing program was the first of its kind in the nation, and Brown said almost half the counties in the state have passed or are planning similar programs.

 Many of these programs are also now on hold.

 Mayor Pro Tem Jim Ferguson said he wants Palm Desert to join the state suit, if possible.

 “The (federal agency) has upset 100 years of the way the federal government has treated local assessments with no good reason,” Ferguson said. “Jerry Brown is calling them on it, and I’m glad of it.”

 In a statement released Wednesday, agency Acting Director Edward J. DeMarco said, “In keeping with our safety and soundness obligations, the Federal Housing Finance Agency will defend vigorously its actions that aim to protect taxpayers, lenders, Fannie Mae and Freddie Mac.”

 Freddie Mac spokesman Brad German and Fannie Mae spokeswoman Janice Smith declined to comment.

 A necessity

 David Mourhess, local market development manager for Suntrek Solar, an Irvine-based company, said he’s got two projects under way that were financed through Palm Desert’s program.

 His firm does not depend on the program, but he said, “We have captured some meaningful business from it.

 “It’s an innovative leadership program, a necessary program.”

 Palm Desert helped write and pass Assembly Bill 811, the California law that allows cities and counties to establish energy-financing programs — or Property Assessed Clean Energy (PACE) programs as they are now commonly called.

 The programs provide residents with affordable financing for solar panels or other energy-efficient home improvements, with long-term payback linked to their property taxes.

 More than 20 states have passed similar laws that are set up like public works assessment districts used to finance streets, sewers and other civic projects.

 Such assessments have historically taken priority over traditional mortgages in the event of a default, which is what sparked opposition from the federal agencies and mortgage lenders.

 They argue PACE financing is a loan, not an assessment, and should not take priority over mortgages.

Brown’s lawsuit says that’s a misrepresentation.

 “Fannie Mae’s and Freddie Mac’s longstanding business practices in California recognize that assessments can attain priority over mortgages,” the suit states.

Advertisements

Entry filed under: Uncategorized.

Back of utility bill offers emergency information Riverside Selected As Finalist for International LivCom Award Riverside, CA


Categories


%d bloggers like this: