SONOMA COUNTY -- The Sonoma County Energy Independence Program is temporarily suspending the processing of all applications and will not be accepting new applications or signing new contracts until it receives further guidance from the board of supervisors on July 13.
The Federal Home Finance Agency (FHFA) issued a statement to lenders on July 6 that includes new restrictions that could affect lending standards applied to residents if the SCEIP program continues. The statement offered protection to participants with assessments established before July 6.
"They're hitting the hold button," said SCEIP program manager Liz Yager.
In May, Fannie Mae and Freddie Mac, the federal agencies that buy more than 70 percent of new home loans from lenders, issued a guidance stating they won’t accept property loans with an energy independence assessment because it holds senior lien status over the mortgage, presenting "a significant risk to lenders and secondary market entities..."
Property Assessed Clean Energy (PACE) programs advance funds for the installation of energy-saving upgrades to homes and businesses, allowing property owners to pay off the upgrade costs gradually through assessments to their property tax.
The FHFA statement issued this week contains a veiled threat to all Sonoma County home buyers, sellers and lenders regardless of whether they are involved in SCEIP, said Ms. Yager. She referred to a directive to Fannie Mae, Freddie Mac and Federal Home Loan Bank to tighten "borrower debt-to-income ratios to account for additional obligations associated with possible future PACE loans."
"That statement, plus the title, which refers to 'certain' energy-retrofit loan programs speaks directly to Sonoma County, we believe. We'll be putting all residents at risk for reprisals if we don't suspend the program," she said.
The Sonoma County Board of Supervisors will address the issue at its regularly scheduled meeting Tuesday morning, July 13.