Today, the Federal Housing Finance Agency (aka FHFA) released their ruling on the future of Residential Property Assessed Clean Energy... or PACE Financing. PACE offered great promise to provide a vehicle for communities to leverage property tax districts to finance energy efficiency and renewable energy projects to create local jobs and save our environment. Today's ruling, it would seem, puts another nail in the coffin of this well meaning and widely supported community and State lead effort.
While it starts by laying out many arguments, primarily for PACE, from a wide community of respondents, in the end FHFA rules strongly against PACE and direct enterprises (banks) to secure their rights on any existing properties encumbered by a PACE lien, and to consent to any future PACE liens or purchase any mortgages that include a PACE lien. Don't get tricked by their three options for mitigation at the end... from what I understand, this is a pretty resounding NO.
View the complete ruling at: http://www.fhfa.gov/webfiles/24014/77_FR_36086_6-15-12.pdf
Here is the meat of the document to save you some time:
A. The Proposed Rule
The Proposed Rule would provide for the following:
1. The Enterprises shall immediately take such actions as are necessary to
secure and/or preserve their right to make immediately due the full amount
of any obligation secured by a mortgage that becomes, without the consent of the
mortgage holder, subject to a first-lien PACE obligation. Such actions may
include, to the extent necessary, interpreting or amending the
Enterprises’ Uniform Security Instruments.
2. The Enterprises shall not purchase any mortgage that is subject to a first-
lien PACE obligation.
3. The Enterprises shall not consent to the imposition of a first-lien PACE
obligation on any mortgage. In light of the comments received in
response to the ANPR and FHFA’s responses to those comments, FHFA
believes that the Proposed Rule is reasonable and necessary to limit, in the
interest of safety and soundness, the financial risks that first-lien PACE
programs would otherwise cause the Enterprises to bear.
While it starts by laying out many arguments, primarily for PACE, from a wide community of respondents, in the end FHFA rules strongly against PACE and direct enterprises (banks) to secure their rights on any existing properties encumbered by a PACE lien, and to consent to any future PACE liens or purchase any mortgages that include a PACE lien. Don't get tricked by their three options for mitigation at the end... from what I understand, this is a pretty resounding NO.
View the complete ruling at: http://www.fhfa.gov/webfiles/24014/77_FR_36086_6-15-12.pdf
Here is the meat of the document to save you some time:
A. The Proposed Rule
The Proposed Rule would provide for the following:
1. The Enterprises shall immediately take such actions as are necessary to
secure and/or preserve their right to make immediately due the full amount
of any obligation secured by a mortgage that becomes, without the consent of the
mortgage holder, subject to a first-lien PACE obligation. Such actions may
include, to the extent necessary, interpreting or amending the
Enterprises’ Uniform Security Instruments.
2. The Enterprises shall not purchase any mortgage that is subject to a first-
lien PACE obligation.
3. The Enterprises shall not consent to the imposition of a first-lien PACE
obligation on any mortgage. In light of the comments received in
response to the ANPR and FHFA’s responses to those comments, FHFA
believes that the Proposed Rule is reasonable and necessary to limit, in the
interest of safety and soundness, the financial risks that first-lien PACE
programs would otherwise cause the Enterprises to bear.
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