California Attorney General Sues Mortgage Entities Over PACE


California Attorney General Edmund G. Brown Jr. has filed a lawsuit against government-sponsored enterprises Fannie Mae and Freddie Mac for their actions taken against property-assessed clean energy finance (PACE) programs in the U.S.

‘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 grassroots program that is spreading across the country,’ says Brown.

PACE is designed to stimulate the economy and promote energy independence by assisting homeowners and small businesses in securing funding to install solar arrays or make their properties more energy-efficient. Property owners repay the costs of energy improvements through assessments spread out over a decade or more. Under California law, these costs are classified as tax assessments.

According to Brown, Fannie Mae and Freddie Mac have ignored California law and effectively shut down the program by wrongly characterizing PACE assessments as loans that must be subordinate to their own mortgages. The Federal Housing Finance Agency affirmed Fannie and Freddie's decision on July 6 – over the objections of Brown and congressional leaders.

In his lawsuit, Brown asks the court to apply California law, require Fannie Mae and Freddie Mac to recognize PACE assessments for what they are, and allow PACE to continue in California. Almost half the counties in California have developed PACE programs or plan to start one, Brown's office notes.

To read Brown's letter, as well as a letter to President Obama, click here.

SOURCE: Office Of California Attorney General Edmund G. Brown Jr.

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