SONOMA COUNTY -- The Sonoma County Energy Independence Program, SCEIP, reeling from a near-death blow from the Federal Housing Finance Authority and mortgage insurers Fannie Mae and Freddie Mac, could be saved if enough support can be rallied from politicians.
But partisan wrangling and angst over the upcoming election are getting in the way, said Sonoma County Treasurer and Tax Collector Rodney Dole.
Still, the movement to soften the FHFA’s tough stance on denying mortgages to buyers or owners of property with property-assessed liens is slowly gathering bipartisan support.
“Mike Thompson’s bill HR 5766 now has nearly fifty co-sponsors in the House, including two Republicans,” said Mr. Dole.
“The contentious mood in Washington is preventing a lot of potential supporters from coming out against Fannie Mae and Freddie Mac right now, but if we can keep our momentum going until after Nov. 2, the bill will have a chance to be attached to a major piece of legislation.”
The important thing is that Fannie Mae and Freddie Mac are getting the message from pending legislation and potentially damaging lawsuits, he said.
Recently Babylon, New York, and Leon County in Florida filed suits against the federal agencies that buy more than 70 percent of new home loans from lenders, in addition to those filed by Sonoma County, the California State Attorney’s office and Placer County.
The federal move to shut down property assessed clean energy, or PACE, loan programs began in May, when the FHFA issued a warning guidance to banks stating that Fannie Mae and Freddie Mac would not purchase mortgages with a PACE lien.
PACE districts are created for the purpose of advancing 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.
SCEIP was the first county-wide PACE district to be formed nationally.
In July the FHFA reiterated in a letter to Congressman Ed Perlmutter of Colorado that the creation of a lien superior to an existing mortgage poses a threat to the safe and sound operations of its regulated entities.
As a result PACE districts nationwide were suspended with the exception of Sonoma County, where supervisors voted to defy the guidance.
Applications fell off precipitously from $45 million in June to $2 million last month.
“They’re picking up again,” said Mr. Dole. “We had $1.5 million in applications in September, and we’ve approved $359,000 in disbursements.”
SCEIP has disbursed nearly $35 million in all.
“It’s scary, though. We assume applicants are not in the market for a Fannie Mae or Freddie Mac mortgage or refinance. But we do have a seller whose buyer has been turned down by Freddie Mac because of a SCEIP lien.”
Freddie Mac has offered to take over the lien at lower rates than the loaning bank can offer: a solution for the buyer, but a nail in SCEIP's coffin.
“We don’t understand why they’re so eager to shut down the program. It provides jobs and clean energy use. So we’ll keep fighting,” said Mr. Dole.