On July 31, 2013 the Federal Housing Finance Agency (FHFA) withdrew its proposed rule that would have expanded Fannie Mae and Freddie Mac’s ability to participate in the Property Assessed Clean Energy (PACE) programs. PACE funds energy efficiency retrofits of existing buildings, including apartments.
In 2010, FHFA prohibited the government-sponsored enterprises (GSEs) from purchasing mortgages with PACE loans because the PACE programs make PACE loans a first-lien obligation over the existing mortgage.
A number of states sued FHFA in response, and a California district court determined that FHFA was required to undertake a formal rulemaking to implement the changes; however, the order was reversed on appeal. As a result, FHFA’s original 2010 ruling limiting the use of PACE loans remains in effect. Click here for the withdrawal notice.