Comment A couple of months ago, I told you about the PACE program (Property Assessed Clean Energy).
This is the program that allows you to finance your solar system (or energy efficiency upgrades) through a municipal loan that's paid back through your property tax bills.
Well last week, the Federal Housing Finance Agency (FHFA) announced that PACE programs “present significant safety and soundness concerns that must be addressed by Fannie Mae and Freddie Mac, and the Federal Home Loan Banks.”
What the hell does Fannie and Freddie know about safety and soundness?
These guys are sitting on unlimited credit lines from the U.S. Treasury, and are now expected to cost taxpayers anywhere from $160 billion to $1 trillion. Yeah, that sounds real safe and sound...
The FHFA also went on to say:
First liens established by PACE loans are unlike routine tax assessments and pose unusual and difficult risk management challenges for lenders, servicers and mortgage securities investors. The size and duration of PACE loans exceed typical local tax programs and do not have the traditional community benefits associated with taxing initiatives.
Jonathan Hiskes from Grist.org put it best when he responded:
The agency is arguing that reducing greenhouse-gas emissions, saving homeowners money on utility bills, and creating local jobs working on homes are not "traditional community benefits." It's making another argument too: That it should get to decide what projects have local-community benefits.
Also worth noting is the recent Pike Research study, “The U.S. Energy Service Company Market,” which indicated that in a scenario in which more PACE financing becomes available, the market could soar to $37.6 billion by 2020.
That may not seem like a lot to Fannie and Freddie — which have already drawn $145 billion from that unlimited credit line — but to fiscally responsible Americans, this is a big deal.
Don't lend to deadbeats
Admittedly, there are always legitimate concerns when talking about a situation where borrowers could potentially default. Especially these days. But there's a real simple solution to this: Don't lend to people who you know are a risk!
It's not rocket science.
Dishonest and irresponsible lenders, borrowers, and policy makers enabled an unsustainable housing market by ignoring the threat of making bad loans.
Just pass 'em on to the next guy, right?
But who got screwed in the end? Fiscally responsible taxpayers.
Today, we have an opportunity to allow responsible homeowners to pay for the cost of energy improvements through an additional charge on their property tax.
But a bunch of bureaucrats have decided that this isn't a good idea. The same bureaucrats that took part in the worst housing disaster in U.S. history.
And once again, it's the fiscally responsible taxpayer — the guy who just wants to put some solar up on his roof, and pay for it through this unique program — that gets screwed.
Brilliant!
Jeff
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