Federal Housing Finance Agency Rulemaking on PACE

Federal Housing Finance Agency Comment Period Ends

Now that the comment period is over, we await the Federal Housing Finance Agency final rule on Residential PACE. Thousands of people submitted their letters in support of Residential PACE! Thank you for taking action and submitting your comments to the FHFA!

NRDC alone generated over 8,000 comments. PACENow’s letter was used by over 140 people.

Additionally, 62 organizations joined PACENow in a joint comment in support of residential PACE. They include: the National League of Cities, the U.S. Conference of Mayors, the National Association of Counties, the International Council for Local Environmental Initiatives (ICLEI), American Council for an Energy Efficient Economy, the Alliance to Save Energy, Environmental Defense Fund, and Long Island Green Homes.

National press covered the issue by including commentaries of the Sierra Club’s ED Michael Brune and ConservAmerica’s Policy Director, Jim DiPeso.

During the previous commenting period, 30,000 public comments were sent in response to the FHFA’s Advance Notice of Proposed Rulemaking (ANPR), the overwhelming majority in support of PACE. The FHFA’s Notice of Proposed Rule (NPR):

  • Allows Fannie Mae and Freddie Mac to bring default proceedings against homeowners with PACE assessments that are not paid off on demand,
  • Prohibits Fannie Mae and Freddie Mac from consenting to a PACE assessment, and
  • Directs Fannie Mae and Freddie Mac not to underwrite mortgages with PACE assessments.

PACENow believes strongly that the FHFA’s proposed rule was unnecessary and can not be justified, based on the evidence and record established with comments filed in response to the ANPR. Courts will decide whether the FHFA has acted arbitrarily or capriciously, in the light of that record.

Review Submitted Comments

Review all comments  submitted by September 13, 2012 on the FHFA Rulemaking website.

Background of the Rulemaking

In 2010, the Federal housing Finance Agency put residential PACE on hold. The FHFA says PACE assessments are not valid and should be treated like “loans” that can not be senior to mortgages. FHFA argues that PACE assessments are also “unlike routine tax assessments” because they are voluntary and are “typically longer in duration.” Regulatory agencies like the FHFA are obliged to conduct rulemaking process before announcing a new regulation. It is a process designed to allow public comment and open access to the proposed rulemaking records. In the case of PACE, in July 2010, the FHFA released a Statement on Certain Energy Retrofit Loan Programs, which stalled residential PACE programs by advising Fannie Mae and Freddie Mac to avoid buying mortgages with PACE assessments. Consequently, in August 2011, the United States District Court for the Northern District of California provided that the agency must undertake a formal rulemaking process. There are four steps to a rulemaking process: (1) advanced notice of proposed rulemaking, (2) proposed rule, (3) public comment, (4) final rule. Click here to view history of communication with the FHFA.

The FHFA issued a proposed rule on June 15, 2012 and we have had an opportunity to comment and voice our support for PACE until September 13, 2012. The FHFA was going to issue a final rule and publish its official response to issues raised during the commenting process this spring. However, on February 27, 2013 the Agency filed a motion to extend the deadline for issuance of its final rule until September 16, 2013.