Property Assessed Clean Energy (PACE) is a program which allow local government entities to offer sustainable energy project loans to eligible property owners. Through a voluntary assessment on their property tax bills; homeowners had the option to offset the upfront costs of energy-efficient and renewable energy installation. As a part of a clean energy stimulus which is fostered by the Obama administration; it is a powerful catalyst not only for home energy efficiency but for the economy as well. However, the PACE Program has fit a snafu with the The Federal Housing Finance Agency (FHFA) which manages two of the largest home loan lenders, Fannie Mae and Freddie Mac. In a statement by the FHFA,
“After careful review and over a year of working with federal and state government agencies, the Federal Housing Finance Agency (FHFA) has determined that certain energy retrofit lending programs present significant safety and soundness concerns that must be addressed.”
This decision by FHFA is a major stumbling block which “puts which all but puts a halt on PACE programs” according to Clean Techies. In May, Fannie Mae and Freddie Mac changed their policy on the treatment of property tax assessments made pursuant to Property Assessed Clean Energy (PACE) programs. Clean Techie writer, Walter Wang further summarizes, “Originally, Fannie Mae and Freddie Mac had decided to treat these assessments like any other assessment, but in May, decided to treat them as loans which may be placed in a position senior to the mortgage and thus violate the terms of the mortgage”.