Another View: Don’t end the clean-energy home program

Federal housing officials are ending a promising clean energy initiative. But the Property Assessed Clean Energy program is worth fighting for. California has been among the most enthusiastic supporters of PACE, both to make homes more energy efficient and to create green jobs.

Homeowners could get low-interest loans for solar panels, new water heaters or making other improvements. Payments become liens on tax bills over an extended period. The interest rate is kept low because the loans, typically $30,000 or so, are repaid before existing mortgages.

The Federal Housing Finance Agency fears that the two federally backed home mortgage giants it oversees – Fannie Mae and Freddie Mac – would be left holding the bag if borrowers default on their home loans.

In a statement Tuesday, the agency said that the PACE programs “present significant safety and soundness concerns” to lenders and could “disrupt a fragile housing finance market.”

FHFA directed Fannie Mae and Freddie Mac to give their blessing to already-issued loans, but told the companies to impose stricter lending standards on future loans. That will effectively end the programs because if Fannie and Freddie won’t back the loans, banks won’t offer them.

This decision amounts to an expensive irony. Fannie and Freddie were big players in the housing meltdown, scarfing up worthless subprime loans far worse than the loans now in question.

The companies are beneficiaries of the biggest U.S. government bailout ever. In their understandable caution, the new overseers of Fannie and Freddie are unfortunately killing an innovative idea before it can fully flower.

The Fresno Bee

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