Calif. sues federal government over green retrofit program

California Attorney General Jerry Brown (D) sued the federal government yesterday over interference by two publicly regulated mortgage companies into a state program that allows homeowners to pay for energy retrofits through property taxes.

Last week, the Federal Housing Finance Agency effectively ended the Property Assessed Clean Energy (PACE) program because the retrofit funds are attached to properties as liens if they are not paid off, which trump banks for the proceeds if a home is foreclosed. FHFA said the program thus presents a risk to lenders and mortgage investors and can contravene lending guidelines. The agency oversees Fannie Mae and Freddie Mac, the nation's largest mortgage buyers.

Brown's lawsuit claims that the mortgage companies have mischaracterized the programs as risky loans and failed to follow environmental law.

The FHFA decision was widely opposed by officials from California to New York City. "Achieving energy independence has always been a top priority in my administration, and it would be preposterous to do away with a program that will create jobs, provide energy savings and benefit our environment," said Gov. Arnold Schwarzenegger (R). "That is why I urge quick resolution to this lawsuit to allow the continuation of PACE programs in California."

Yesterday, California Public Utilities Commission President Michael Peevey asked the state's congressional representatives to intervene on the decision (E&ENews PM, July 14). Brown, who is running for governor, also vowed action yesterday.


FHFA responded to the lawsuit by saying it would "defend vigorously its actions that aim to protect taxpayers, lenders, Fannie Mae and Freddie Mac" (Robert Selna, San Francisco Chronicle, July 15). -- JP

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