FHFA Steps Up Its PACE

The Federal Housing Finance Agency is continuing to consider how Fannie Mae, Freddie Mac, and the Federal Home Loan Banks should address Property Assessed Clean Energy (“PACE”) programs. PACE programs are established by state and local governments to allow homeowners to finance energy-efficient projects through special property tax assessments. The obligation to repay results, in many jurisdictions, in a tax lien that takes priority over existing and future liens on the property.

In 2010, the FHFA directed Fannie Mae and Freddie Mac not to purchase or refinance mortgages with PACE liens and urged caution by the Federal Home Loan Banks in accepting collateral for advances that may have PACE liens attached. In its recent Request for Input (“RFI”), the FHFA seeks feedback on honing those PACE policies, including whether it should impose ceilings on loan-to-value ratios or higher Loan Level Price Adjustments in connection with all loans Fannie Mae or Freddie Mac purchase in jurisdictions with PACE programs.

Comments on the RFI are due by March 16, 2020.

Read more in Mayer Brown’s Legal Update.