Orlando Foreclosure Defense

You might be asking yourself what is PACE? I know I did. It stands for Property Assessed Clean Energy, and its a federal initiative aimed at reducing the high upfront costs that home owners encounter when they are trying to make energy saving retro fits to their homes. Under the program the homeowner borrows money from their local government to pay for the retro fits and will then have to repay the local governments over a 15 to 20 year period through a special assessment that is added to their property taxes. The local governments fund the program by selling municipal bonds to local developers.

So far it sounds like a pretty rock solid plan. Homeowners get to modernize their home, electrical consumption goes down, more trees are saved, and local investors make a little money. The only problem is that Fannie Mae and Freddie Mac have concerns.

Their concerns stem from the fact that under this program PACE liens become senior to existing mortgage debt. Fannie and Freddie have gotten so concerned that they have sent letters out to banks that reminded them that they cant purchase loans that have senior liens on them.

Additionally, these letters are suggesting that Fannie and Freddie wont allow borrowers with PACE liens to refinance their homes or sell their homes until the lien is paid off.

Many supporters of PACE are concerned that if Fannie and Freddie still hold this view that the program will effectively be killed. They believe that because Fannie and Freddie control about two thirds of all the mortgage lending, and practically control what goes on with the market. Critics have their concerns as they believe that the program does little to ensure that borrowers can repay their loan.

What will happen with PACE? It looks like the writing is on the wall, if Fannie and Freddie don’t like it, then its as good as dead. I think PACE is a victim to bad timing, had it come out six years ago I’m sure it would have been a reasonably successful program that would have helped with our mounting energy problem.

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This entry was posted on Friday, May 21st, 2010 at 4:23 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.