Sunday, August 22, 2010


The old joke about the left hand not knowing what the right hand is doing seems to be in play when it comes to the Obama administration's pursuit of energy issues. On one hand, the president has made the expansion of renewable energy and the so-called green jobs sector a top domestic issue. On the other hand, the administration appears to be doing everything possible to discourage energy efficiency in real estate finance.

Last month, the Federal Housing Finance Agency (FHFA) threw a monkey wrench into the nation's energy retrofit loan programs, specifically those denominated as Property Assessed Clean Energy (PACE). The FHFA claimed that these programs posed safety and soundness concerns for Fannie Mae, Freddie Mac and the Federal Home Loan Banks, because the first liens established by PACE loans generated significant risk management challenges for lenders, servicers and securities investors. Rather than offer a solution to the problem, the FHFA simply decided to remove the PACE loans from the equation. PACE programs have been in place in 22 states and the District of Columbia.