Fannie, Freddie Complicating Effort to Encourage Coloradans to Make Homes More Energy Efficient
Washington, DC – With the likes of Fannie Mae and Freddie Mac complicating efforts to encourage Coloradans to make their homes more energy efficient, Michael Bennet, U.S. Senator for Colorado, is leading a push to keep the highly-successful PACE program on track to create jobs, lower homeowner utility bills and reduce carbon pollution.
The Property Assessed Clean Energy, or PACE, financing concept was established by local communities to help homeowners overcome the high upfront costs of energy efficiency upgrades by allowing property owners to borrow funds from participating local and state governments. Those funds are then repaid over a 15 to 20 year period through an assessment attached to their property tax payments.
In Colorado, PACE financing has helped hundreds of Colorado homeowners improve energy efficiency and could potentially help hundreds more across the state. However, recent actions taken by Fannie Mae and Freddie Mac, which currently back the vast majority of mortgages, have created a degree of uncertainty that has led many counties and municipalities to suspend PACE lending to homeowners.
Recognizing the Program’s ability to create jobs, lower homeowner utility bills and reduce carbon pollution, Bennet, Senator Jeanne Shaheen (D-NH) and a number of their colleagues are urging Senate Banking Committee Chairman Chris Dodd to provide greater clarity for participating counties, lenders and homeowners by pressuring Fannie and Freddie to clarify the terms and guidelines of the PACE financing program.
“PACE has helped make our homes more energy efficient, created jobs and lowered utility costs for Coloradans – it’s a win-win-win,” said Bennet. “But Fannie and Freddie are complicating the effort by introducing a degree of uncertainty that has all but brought the program to a halt. We need to develop a path forward that allows Colorado communities and homeowners participate in PACE in the future and moves Colorado’s clean energy economy forward.”
The full text of a letter Bennet is circulating to his colleagues and will send to Chairman Dodd is included below:
Dear Chairman Dodd:
We are writing to bring to your attention an urgent issue regarding Property Assessed Clean Energy (PACE) financing programs over which the Senate Banking, Housing and Urban Affairs Committee has jurisdiction.
On May 5, 2010, Fannie Mae and Freddie Mac issued Lender Letters regarding PACE financing programs. These letters appear to issue guidance in direct opposition to key Congressional and Administration initiatives and risk curtailing local government authority to levy taxes for public purposes.
PACE programs create jobs, lower homeowner utility bills, reduce carbon emissions and help our country become more energy independent. PACE is a national policy priority with strong support from Congress, the Vice President, Governors, and others. PACE is authorized in 22 states and hundreds of local governments are developing programs, supported by over $100 million in federal funds.
Fannie Mae and Freddie Mac must immediately clarify the intent of the May 5 Lender Letters. Fannie and Freddie need to state that PACE programs that are active, and/or have received DOE American Recovery and Reinvestment Act funding, and are in conformity with the Department of Energy’s May 7, 2010 Guidelines for PACE programs, are not in violation of the terms of Fannie Mae and Freddie Mac mortgages or otherwise subject to adverse action.
We ask that you intervene to help secure a clarification letter and achieve a long-term solution in this matter. Time is of the essence; PACE programs around the country have come to a standstill. Your intervention with Freddie and Fannie to secure a clarification letter is a critical first step to developing a path forward that will allow all parties to work together and let other municipalities and states launch PACE programs in the future.
Should Fannie and Freddie fail to help resolve this issue, we would encourage you to proceed expeditiously with oversight hearings in the Senate Committee on Banking, Housing and Urban Affairs.