{"id":224,"date":"2010-07-15T12:00:00","date_gmt":"2010-07-15T12:00:00","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=224"},"modified":"2020-11-28T13:11:42","modified_gmt":"2020-11-28T18:11:42","slug":"mortgage-oversight-agency-fhfa-could-stall-county-greening-efforts","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2010\/07\/15\/mortgage-oversight-agency-fhfa-could-stall-county-greening-efforts\/","title":{"rendered":"Mortgage oversight agency (FHFA) could stall county greening efforts"},"content":{"rendered":"

by Dan Krell \u00a9 2010<\/p>\n

Last week, a federal oversight agency raised concerns about a green retrofitting loan program in an effort to protect consumers and the integrity of lending practices. Normally, this would not seem unusual; however on June 6th the Federal Housing Finance Agency (FHFA) issued a statement that affects many Property Assessed Clean Energy (PACE) programs across the country, and may affect Montgomery County\u2019s Home Energy Loan Program (HELP) even before it officially kicks off later this year.
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\nAs part of a national initiative to reduce energy consumptions and curb greenhouse gases, PACE (pacenow.org) programs are intended to make green retrofitting affordable for home owners. The program generates funds for the retrofitting through \u201ctax lien oriented financing\u201d by selling \u201cPACE bonds,\u201d and is repaid by the home owner through annual tax assessments.<\/p>\n

Enacted through Council Bill 6-09 (April 2009), HELP is Montgomery County\u2019s local green retrofitting loan program, which is part of a first wave of PACE programs implemented throughout the country. Although HELP is awaiting a green light from the County Council to get underway, the county\u2019s Department of Environmental Protection is preparing to manage the program. HELP\u2019s financing arrangement is anticipated to allow a home owner to repay the \u201cloan\u201d over fifteen years through their property tax bill.<\/p>\n

As the oversight agency for Fannie Mae, Freddie Mac and the Federal Home Loan Banks, FHFA\u2019s (fhfa.gov) statement cited concerns about \u201ccertain energy retrofit lending programs,\u201d specifically referring to local tax assessment loan programs by PACE. \u201cSafety and soundness\u201d concerns were cited because the PACE tax liens could interfere and disrupt a \u201cfragile housing finance market\u201d due to the \u201cabsence of robust underwriting standards to protect homeowners and the lack of energy retrofit standards to assist homeowners, appraisers, inspectors and lenders [to] determine the value of retrofit products\u2026\u201d<\/p>\n

\"\"<\/a>Although FHFA has collaborated with government agencies, state and local officials to work through their concerns, the issue appears to be unresolved. FHFA\u2019s statement asserts that the tax assessment created through a PACE loan is unlike the typical tax assessment; such that the term and amount of a PACE related tax assessment exceeds a typical local assessment and do not have the usual community benefit that is associated with local tax initiatives. Additionally, the concern over such modifications would \u201cpresent significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for successful programs to spur energy conservation.\u201d<\/p>\n

Notwithstanding some critics concerns over the obsolescence of a green retrofit before such a loan is repaid, additional concerns raised by FHFA include: the shift of traditional lending priorities (PACE investors have minimal risk due to the first lien position); PACE program\u2019s collateral based underwriting does not take into account the home owner\u2019s ability to pay; the lack of lending disclosures (such as required by the Truth-in-Lending Act and other consumer protections); \u201cand uncertainty as to whether the home improvements actually produce meaningful reductions in energy consumption.\u201d<\/p>\n

It remains to be seen whether HELP will be affected by FHFA\u2019s new guidelines to Fannie Mae and Freddie Mac to deal with PACE loans. However, FHFA stated that the concerns were not raised to undermine programs meant to reduce consumer energy consumption, but rather to encourage the implementation of retrofitting loan programs with \u201cappropriate underwriting guidelines and consumer protection standards.\u201d<\/p>\n

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright \u00a9 2010 Dan Krell.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Dan Krell \u00a9 2010 Last week, a federal oversight agency raised concerns about a green retrofitting loan program in an effort to protect consumers and the integrity of lending practices. Normally, this would not seem unusual; however on June 6th the Federal Housing Finance Agency (FHFA) issued a statement that affects many Property Assessed … <\/p>\n

Continue reading “Mortgage oversight agency (FHFA) could stall county greening efforts”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[101,166,102,110,371],"tags":[],"class_list":["post-224","post","type-post","status-publish","format-standard","hentry","category-fannie-mae","category-fhfa","category-freddie-mac","category-green-energy","category-pace"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-3C","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=224"}],"version-history":[{"count":4,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/224\/revisions"}],"predecessor-version":[{"id":6084,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/224\/revisions\/6084"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}