California Takes on|Fannie Mae & Freddie Mac

SAN FRANCISCO (CN) – Attorney General Jerry Brown claims Fannie Mae and Freddie Mac, the quasi-federal mortgage companies, violated California law by obstructing local efforts to help homeowners with green retrofits.

     Brown claims in Federal Court that homeowners who participate in the Property Assessed Clean Energy (PACE) program – which assists in financing solar panels, tank-less water heaters and attic insulation – are being given an unfair shake by the Federal Housing Finance Agency, which calls them risky candidates for refinancing.
     The homeowners must repay the funding they get for the retrofits, which are attached as liens if they are not paid off. Brown claims these “assessments” are not loans, as the FHFA classifies them.
     FHFA-regulated Fannie Mae and Freddie Mac issued advice letters to lending institutions on May 5, stating that mortgages connected to homeowners with unpaid PACE “loans” did not meet their requirements for refinancing.
     Brown says that “because Fannie Mae and Freddie Mac control the mortgage resale market, lenders do not issue mortgages that do not meet Fannie Mae’s and Freddie Mac’s requirements.”
     By misrepresenting the state’s efforts as a loan program, Fannie Mae and Freddie Mac “are severely hampering California’s efforts to assist thousands of California homeowners to reduce their energy and water use, help drive the state’s green economy, and create significant numbers of skilled, stable and well paying jobs,” Brown claims. He adds that disapproval from Fannie and Freddie could kill the PACE program statewide.
     “Before Fannie Mae’s and Freddie Mac’s Lender Letters, 22 participants in Sonoma County’s PACE program were able to refinance without difficulty,” the complaint states. They now face uncertainty, and San Francisco has had to shut down the program altogether, Brown says.
     The state demands an injunction preventing Fannie Mae and Freddie Mac from taking any adverse action against homeowners participating in PACE. It alleges violations of the National Environmental Policy Act, and unfair business practices.

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