[Congressional Record Volume 156, Number 109 (Thursday, July 22, 2010)]
[Senate]
[Page S6206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. BOXER (for herself, Mr. Merkley, Mrs. Gillibrand, and Mr. 
        Begich):
  S. 3642. A bill to ensure that the underwriting standards of Fannie 
Mae and Freddie Mac facilitate the use of property assessed clean 
energy programs to finance the installation of renewable energy and 
energy efficiency improvements; to the Committee on Banking, Housing, 
and Urban Affairs.
  Mrs. BOXER. Mr. President, I rise today to introduce the PACE 
Assessment Protection Act of 2010. I am pleased to be joined in this 
effort by my colleagues, Senators Merkley, Gillibrand, and Begich.
  Property Assessed Clean Energy or PACE programs allow homeowners and 
building owners to finance an energy efficiency upgrade to their 
property through a tax assessment on that property. In this way, 
property owners are able to spread the cost of the upgrades over 
several years, lower their energy costs, contribute to a cleaner 
environment, and create jobs.
  In California, nearly half of the State's 58 counties, as well as 
individual cities, have developed PACE programs or plan to start one, 
and 23 states as well as the District of Columbia have enacted PACE 
legislation. The program has the strong support of the White House and 
the Department of Energy, and many States and cities dedicated Recovery 
Act funding for their PACE programs.
  Despite the promise of this program, the Federal Housing Finance 
Agency recently ordered Fannie Mae and Freddie Mac to take actions that 
limit the use of PACE programs in conjunction with their home 
mortgages, effectively killing the program. FHFA objected that PACE 
assessments carry a priority lien, ahead of the lenders, on 
participating properties.
  The right of States and localities to secure property tax assessments 
with a senior position is well established, and in the past, Fannie and 
Freddie have always respected this right--such as with assessments to 
finance sidewalks, bridges, or parks and other projects that provide a 
public benefit--without raising any concerns over the impact of such 
priority liens. In addition, the Department of Energy issued guidance 
for municipalities intending to use Recovery Act funding for PACE 
programs that calls for strong underwriting standards. These guidelines 
require that the savings a property owner would see as a result of any 
upgrade must be greater than the cost of the assessment, leaving 
homeowners in a more financially secure position.
  To allow PACE programs to continue, as well as protect homeowners and 
taxpayers, we must take immediate action to address the overreach by 
the FHFA. My legislation would require Fannie Mae and Freddie Mac to: 
adopt sound underwriting standards for financing clean-energy upgrades, 
consistent with Department of Energy guidelines; treat a PACE 
assessment as any other property tax assessment and respect States' 
authority to secure such assessments with a first lien; allow 
homeowners to finance, refinance, or sell their home without having to 
repay any PACE assessment first; prohibit discrimination against 
communities implementing or participating in a PACE program.
  The legislation also limits the assessment amount subject to 
foreclosure to only the unpaid delinquent amount, along with applicable 
penalties, interest and costs, and not the entire amount.
  The current uncertainty surrounding PACE programs is jeopardizing 
$110 million in Federal investments for California communities, and 
millions more in other States, which is simply unacceptable. We must 
take action to protect these initiatives because they create jobs, save 
homeowners money on their energy bills and help our environment. I urge 
my colleagues to join me and to support this legislation.
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