PACE programs let home and business owners pay for rooftop solar arrays, high-efficiency furnaces, insulation, and other improvements through a surcharge on their property tax bills, removing high up-front costs. Fannie and Freddie dislike that those tax assessments have senior lien standing to mortgages, even though analyses and pilot programs have found that energy efficiency and PACE programs can make borrowers more financially secure.
The bill would ban lenders from imposing penalties or stricter criteria on municipalities that use PACE; Fannie and Freddie recently told lenders to do just that. The bill would also prevent lenders from requiring homeowners to pay off assessments before refinancing their mortgages or selling their property.
The finance tool certainly has a lot of friends. It's been backed by $150 million in Department of Energy stimulus funding, the vice president's Middle Class Task Force, 23 state legislatures, governors such as Arnold Schwarzenegger [PDF], and mayors such as Michael Bloomberg [PDF]. California Attorney General Jerry Brown sued Fannie and Freddie yesterday to defend the PACE programs, the largest of which are in California.