February 20, 2012
On Thursday, January 26, the Federal Housing Finance Agency (FHFA) published in the Federal Register an "Advanced Notice of Proposed Rulemaking" (ANPR) requesting information and comments on Property Assessed Clean Energy (PACE) programs. This ANPR is in response to a court order issued by the U.S. District Court for the Northern District of California.
PACE programs permit local governments to provide financing to property owners for pre-approved energy efficient home improvement projects. Homeowners repay the amount borrowed, with interest, through their property tax bill over a period of years.
In a statement issued on July 6, 2010, the FHFA expressed concerns about PACE programs and "...determined that these programs present significant safety and soundness concerns." FHFA's primary concern is the fact that the liens on homes that result from involvement in PACE programs are required to be paid first in the case of the home going into foreclosure, ahead of mortgages including first mortgages. This statement of concern from the FHFA effectively curtailed the operation of most PACE programs in the country.
NAR will comment on the ANPR and offer its own perspectives and concerns regarding PACE programs.