Representatives Convey and Kaptur Call on Geithner, Fannie, FHFA to Stop Efforts to Pursue Strategic Defaulters

As we’ve noted on this blog, the Administration efforts to punish so-called strategic defaulters seem hopelessly misguided. First, it’s well nigh impossible to tell with simple screens who really could afford their house longer term (ie people who default suddenly, as opposed to wobble in and out of being current on their mortgage before folding, are likely to be anticipatory defaulters, who see their financial train wreck coming and decide to take action). Second, as a corollary, there’s a good reason banks just about never pursue defaulting borrowers on recourse mortgages for deficiency judgments: it’s a costly exercise and you can’t get blood from a turnip. Third, many borrowers have found it difficult if not impossible to reach servicers and get consistent responses as to whether they can work out a mod. Finally, true strategic defaulters have in all likelihood organized their affairs (most important, getting financial reserves out of banks and securities firms) so as to make the efforts to punish them ineffective.

John Conyers and Marcy Captur are circulating the letter below among colleagues in Congress seeking support. I particularly like the list of questions they would like to have answered, which includes, “· How much investor input was considered when creating this policy?”

Please call or write your Congressman and ask him to join this effort.

Text below or visit Conyer’s site

Ask Secretary Geithner and the FHFA to Stop Fannie Mae from Suing Homeowners With Taxpayer Dollars

August 2010

Dear Colleague:

We hope you will join us in sending the below letter to Treasury Secretary Geithner and the Acting Director of the Federal Housing Financing Agency expressing serious concerns about a new policy in which Fannie Mae will sue homeowners who have “strategically defaulted” on their mortgages. This opaque, flawed proposed policy would be a poor use of taxpayer dollars, does nothing to help keep individuals in their homes, and will likely result in the targeting of individuals who default on their mortgages through no fault of their own. The letter asks the Secretary of the Treasury and the Acting Director of Fannie’s conservator to indefinitely suspend the implementation of this new policy until the Administration and the Congress have reviewed the implications of this new policy, including cost, transparency, utility, and oversight, and determined if it is in the best interest of the American people to have Fannie Mae pursue such a policy. Please contact Michael Darner ( in Rep. Conyers’ office or Deborah Koolbeck ( in Rep. Kaptur’s office if you would like to sign the letter.


August XX, 2010

The Honorable Timothy Geithner
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

The Honorable Edward Demarco
Acting Director
Federal Housing Finance Agency
1700 G Street, NW
4th Floor
Washington, DC 20552

Dear Secretary Geithner and Acting Director Demarco:

We are writing today to express our strong reservations about the policy announced by Fannie Mae to encourage its servicers to pursue deficiency judgments against “strategic defaulters.” We believe that this opaque, overbroad, and punitive policy, as conceived by Fannie Mae, is a poor use of taxpayer dollars and will unnecessarily include individuals who are not choosing to default on their mortgage. Furthermore, this policy is one of many which seems to run counter to the national need to stem the tide of foreclosures which are devastating communities across our nation. Mr. Secretary, as owner of 80 percent of Fannie Mae, we respectfully request that you work with Acting Director DeMarco of the Federal Housing Finance Agency (FHFA), Fannie Mae’s conservator, to use FHFA’s authority to require Fannie Mae to suspend indefinitely this new policy until the Administration and the Congress have reviewed the implications, including cost, transparency, utility, and oversight, of this new policy and determined if it is in the best interest of the American people to have Fannie Mae pursue such a policy.

At a time of record deficits and a nation crying for the government to get its finances in order, it is also unclear why Fannie Mae is proposing to use taxpayer dollars to pursue legal judgments against individuals who will lose or have lost their homes, have wrecked their credit rating, and likely have little or no remaining monetary assets. Treasury has already invested $86 billion into Fannie Mae and considering Fannie Mae’s dependence on federal dollars to exist and operate, we think pursuing expensive litigation against a vulnerable population when there appears to be little to no economic incentive is questionable at best.

The vagueness of this policy is also problematic. Under the proposed Fannie Mae policy, borrowers who are determined to have strategically defaulted on their mortgages will be subject to having deficiency judgments pursued against them in a court of law. However, it is unclear what transparent, objective criteria Fannie Mae is using to determine who is a strategic defaulter and who is not. Fannie Mae has also stated that an individual who pursues a mortgage modification in good faith will not be subjected to litigation. The problem with this aspect of the policy is that Fannie Mae has stated it will rely on the reports of its servicers to determine borrower intent. We have great concern with putting such faith in the servicers based on constituent feedback on the performance and objectivity of servicers based on their experiences, along with servicers’ evaluations by the Government Accountability Office (GAO), the Special Inspector General for the TARP (SIGTARP), and the Congressional Oversight Panel (COP).

For example, the GAO states, “The most common complaints involved the difficulty in reaching the servicers or not hearing back from them in a timely manner.” Furthermore, since the Treasury has yet to determine and implement metrics for assessing the servicers in terms of communicating with borrowers under the Making Homes Affordable Program, also know as HAMP, it is unclear that Fannie Mae would be able to rely on the servicers’ performance either. The SIGTARP has also found that “…this lack of consistent standards [among servicers] could mean that servicers are inconsistently applying criteria…” The GAO continues, “However, a lack of specific guidelines has also led to significant variations in servicers’ quality assurance programs.”

Given the fact that Fannie Mae is the administrator of HAMP, and the above are just a small set of criticisms of HAMP, it is unclear that Fannie Mae could properly implement this new policy consistently against “strategic defaulters.”

We request that the following questions be thoroughly and clearly answered by Fannie Mae and FHFA, and then the answers considered by the Administration and the Congress before Fannie Mae considers moving ahead with this questionable policy. These questions include:

· How much is this policy expected to cost Fannie Mae and the oversight agency to implement?
· Is this an appropriate use of taxpayer dollars, and if so, why?
· What effect will this policy have on the future of our nation’s housing market?
· Is this policy consistent with the Obama Administration’s foreclosure mitigation efforts?
· How much of the money returned to Fannie Mae from said lawsuits will be paid to the Treasury, and how much will go to the investors, and how were these percentages determined?
· How many lawsuits and in what states does Fannie Mae expect to pursue deficiency judgments?
· What are the clear, objective criteria for determining who is a strategic defaulter and who is not? Who worked to determine these criteria (names, position, corporation or agency for which each person works)?
· What agency will conduct the oversight of this policy, especially in regard to the servicers?
· How often will Fannie Mae and the agency conducting oversight assess the process and implementation of this policy by the servicers and what are the criteria of this assessment?
· What concrete, recordable attempts will be made to engage the borrower prior to a delinquency judgment being filed to resolve the situation prior to litigation?
· How much investor input was considered when creating this policy? Please include related documents and detailed summaries of meetings and conversations in which the investors gave input, as well as copies of emails.
· What evaluations and tests did FHFA use to determine the effectiveness and efficiency of this policy? Who completed these evaluations and tests? Please include the raw data from the evaluations and tests, as well as the models and processes used to analyze the data, as well as the conclusions of the analysis.
· What process was implemented at FHFA for approval of this policy? Who at FHFA was involved in the approval process?

Given the challenges, concerns, and questions raised by this policy, we believe that you should act with all deliberate speed to suspend the implementation of this program, initiate a comprehensive review its procedures and aims, and ensure that Fannie Mae answers thoroughly and clearly the above questions so that both the Administration and the Congress can review and work with the Treasury and FHFA to ensure that taxpayers’ dollars are spent wisely.


cc: The Honorable Shaun Donovan, Secretary of Housing and Urban Development
cc: The Honorable Neil Barofsky, Special Inspector General for the TARP:

We hope you will join us in sending the below letter to Treasury Secretary Geithner and the Acting Director of the Federal Housing Financing Agency expressing serious concerns about a new policy in which Fannie Mae will sue homeowners who have “strategically defaulted” on their mortgages. This opaque, flawed proposed policy would be a poor use of taxpayer dollars, does nothing to help keep individuals in their homes, and will likely result in the targeting of individuals who default on their mortgages through no fault of their own. The letter asks the Secretary of the Treasury and the Acting Director of Fannie’s conservator to indefinitely suspend the implementation of this new policy until the Administration and the Congress have reviewed the implications of this new policy, including cost, transparency, utility, and oversight, and determined if it is in the best interest of the American people to have Fannie Mae pursue such a policy. Please contact XYZ in Rep. Conyers’ office or XYZ in Rep. Kaptur’s office if you would like to sign the letter.


/s /s
Member of Congress Member of Congress

/s /s
Member of Congress Member of Congress

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  1. attempter

    I’m glad to see this inside-the-elites protest vs. the absurd demonization of those the elites choose to call by the meaningless epithet “strategic defaulters”.

    (There’s of course no such thing as a strategic default. No one who’s not rich can feel confident enough to say, “I can keep paying indefinitely.”)

    This stupid policy-istic type thing (it seems way too incoherent to call it a policy at all) is another sign of the kleptocrats’ losing confidence. They wanted to get along with the baseline perception that defaulting is morally “bad”, but not otherwise publicize it, since the spread of the idea is one of the factors which can increase the incidence (seeing others doing it leads to contagion).

    So it’s only going to be counterproductive. It can’t be enforced except through openly arbitrary lawlessness, and is only going to encourage the spread of precisely what it wants to stanch.

  2. aet

    A default is a default is a default.
    The added adjective is merely a pejorative.
    Legally meaningless, IMHO.

    If I were lending money upon a mortgage, I would not lend the money without a covenant from the borrower to repay an any deficiency remaining after foreclosure and sale.

    Are such mortgages disallowed by Law in the USA?
    If not, then what is wrong with the lenders?

    1. aet

      And if my borrower defaulted, and was not judgment-proof, damn right I’d go after her.
      The circumstances of the parties ought not to determine the cause. The wealthy have rights, too.

      1. Pixie Dust

        Go after her for what?!
        In default the collateral (the house) goes to the bank.
        Not a bad pay-off for lending something created out of thin air.

  3. NOTaREALmerican

    Oh most powerful Fed, we mere mortal Congressmen – Representatives of the dumbasses of most powerful fiat Democracy in the universe – beseech thee to stop persecuting the strategic defaulters; but only if it does not displease thee, oh great and powerful Fed, in any way – as we are merely the Lawmakers of the most powerful fiat Democracy in the universe ,and do not wish to anger you.

    (Grovel grovel grovel )

  4. koshem Bos

    For those above who implicitly define having money as being morally right, there is some reality check. Fannie is in no position to ask for return of monies after they got heavy millions from the taxpayer through the largess of the government with Geithner as the major pusher. Furthermore, most lenders got trillions from the taxpayer and now turn around and want to want to the arbitrators of morality.
    Spare us your crocodile tears.

    1. Hu Flung Pu

      Fannie and Freddie should use all legal means at their disposal – minding the cost of doing so, of course – in order to get every dime they can from those in default, “strategic” or otherwise. All of the (Fannie/Freddie) mortgages in question are, in effect, now owned by the US Taxpayers. So, all of the costs of default on these mortgages will be borne by the US Taxpayers. Consequently, Fannie and Freddie are in the PERFECT position “to ask for return of monies” on behalf of taxpayers. As a taxpayer, I want every dime back that Fannie and Freddie can legally collect.

      1. alex

        “As a taxpayer, I want every dime back that Fannie and Freddie can legally collect.”

        As a taxpayer you should worry a lot more about the fact that Fannie and Freddie are being used for back door bank bailouts. Why go after minnows when there are whales about?

        1. Hu Flung Pu

          I agree, but… the subject of the article is the minnows, as you say. So, while we may or may not be able to address the whales (realistically unlikely), we should address the minnows since they are capable of being addressed. It’s a start.

      2. skippy

        I thought taxes were an illusion, used to either slow or stoke the economy. Any way the US guberment can print all it likes whilst the reserve currency…right (plenty of time to loot before that might change).

        Skippy…fewer and fewer players in this little game called RISK.

    2. Piero

      There’s no particular white hat in the enterprise, lender or borrower. But the contract clearly allows for borrowers of average means to walk away just like a Trump or Zuckerman would. I’m completely with you, there.

      But, there’s some irony in the situation in that Conyers and Kaptur were among those who, circa 2004, blocked anything from being done despite Fannie Mae employees testifying before congress that there were big problems brewing. That Conyers and Kaptur should be pretending to be penurious budget minders is laughable.

  5. Piero

    So, all of a sudden Conyers and Kaptur are worried about Fannie and Freddie’s budgets and costs to the taxpayers, huh? Where was this concern 6 years ago when it could have mattered?

  6. skippy

    Ummm…whats the builders warranties now days…cascades of 6 mo, 1 yr, 6yr, ending in 10yr in the states now, over lapped with separate composite warranties A/C etc.

    200K-500k homes with 10 yr construction warranties bawahahahaha, and they call it an investment rofl..

    money pit see:

    Its been a leveraged scam from day one of suburban sprawl, RE is a grifters dream come true and now its the norm. A country intent, on feeding on its self, and calling it making a buck.

    Skippy…pathological wealth accumulation…how could it go wrong?

    PS. death to trees and jobs for all!

  7. Tom Crowl

    Nice letter and good intentions but unlikely to do the job…

    And good points in comments above about the hypocrisy of the “Establishment Left” and our impotent legislature!

    The sooner people realize there’s NO viable representation for any view other than a monolithic corporatist view that advances unsustainable, anti-human, anti-LIFE paradigms that are driving everything from industrial agriculture to ponzi-scheme finance… the better-off we’ll all be.

    The constant bread-and-circuses and distraction of the political ‘sports’ coverage that passes for news ‘analysis’ however seems to keep most in a stupor.

  8. Cassandra

    If a homeowner defaults, it’s immoral. If a real estate developer (Tishman Speyer)and his private equity buddies (BlackRock)walk away from a $3 billion loss in an attempt to plunder middle class housing (Stuyvesant Town and Peter Cooper Village) in NYC by throwing all the tenants out, where is the outrage?

    It’s only immoral if the little guy does it.

    HAMP is a joke. By designing a voluntary program where servicers collect $1,000 for every mortgage they “modify”, the Administration guaranteed failure. There’s no leverage. There’s absolutely no incentive for a servicer to compromise on a mortgage. No bankruptcy judges for homeowners, no reduction of principal, no legal pressure to settle.

    1. KFritz

      Aside fr/ the tendency of ‘people who still have something, however little, to lose’ to identify w/ oppressive elites in times of stress, there’s something else going on w/ the vitriol these posters embody–many more think and believe as they do. In times of stress, people w/ a tendency to be punitive feel justified and empowered to ‘let this dog off the leash,’ as it were, fueled by opportunity, self-justification and sub-rosa fear.

      I think it’s time for a new game show: LET’S BE PUNITIVE! It would get good ratings and there would be no shortage of contestants.

      Footnote/theory: the tendency to identify w/ elites in times of stress is a variant of the Stockholm Syndrome, an unconscious survival/defense mechanism.

  9. Blurtman

    Jingle mail in Jersey from Hyatt Hotels …

    If you’re in Princeton, New Jersey, anytime soon, swing by the Hyatt Regency Princeton. With the Hyatt Hotels (H) quarterly report filed yesterday, it has become a symbol of the financial crisis — and of a some stark contrasts between business and personal debt in the U.S.

    Like households across the country, one of Hyatt’s subsidiaries “did not have sufficient cash flow to meet interest payment requirements under its mortgage loan” on the property, in this case a 347-room hotel with a restaurant, bar and comedy club, just a mile from the famous university. The scenario sounds familiar after years of news about the still-struggling housing market.

    At the same time, the Hyatt subsidiary was under-water on its mortgage, or, in the formal language of the 10-Q, “the appraised value of the hotel was less than the outstanding mortgage loan.”

    Now, Hyatt, the parent company, has felt the sting of the recession like other hospitality companies, but it’s not like it lacks resources. As of June 30, Hyatt had $1.17 billion in cash and cash-equivalents on its balance-sheet. It reported revenues of $889 million for the quarter, and net income of $25 million, or 14 cents a share.

    Just like plenty of American families, Hyatt has to decide where to put those resources. And it has decided it’s not worth throwing good money after bad at this particular property, presumably because it doesn’t expect the hotel to recover in value any time soon.

    “When hotel cash flow became insufficient to service the loan,” the company said in the filing, “HHC notified the lender that it would not provide assistance.” In other words, Hyatt decided to walk away — the equivalent of “jingle mail,” when homeowners pack up, move out, and mail their keys to their mortgage servicer, abandoning both the house and the loan with which they bought it.

    In Hyatt’s case, the company

    “and the lender agreed in principal to effect a deed in lieu of foreclosure transaction. We expect to complete transfer of ownership of the hotel to the lender within less than one year. As a result, we reclassified $45 million in long-term debt to current maturities.”

    It’s a business decision, and it’s not terribly remarkable, in one sense. Companies across the country are doing this constantly; it’s a more or less accepted part of commercial-mortgage default. Homeowners, by contrast, have historically been more reluctant to simply walk away — Americans by and large don’t abandon their debts lightly.

    That may be changing, of course. We’ve heard plenty of stories about homeowners walking away — thinking, and acting, more like American businesses. But here’s a difference: We doubt Hyatt will have trouble getting a loan after this.

    By contrast, the companies that make and manage their mortgages aren’t always willing to cut a deal like the one Hyatt got — especially if they think the homeowners could in fact pay up.

    And, as Bloomberg’s Lorraine Woellert notes in this June article, Fannie Mae — which with Freddie Mac backs a huge proportion of U.S. mortgages — is warning that homeowners who do the same thing “will be banned from obtaining new mortgages backed by Fannie Mae for seven years from the date of foreclosure…” Here’s the reasoning:

    “Walking away from a mortgage is bad for borrowers and bad for communities,” Terence Edwards, Fannie Mae’s executive vice president for credit portfolio management, said in the statement. “Our approach is meant to deter the disturbing trend toward strategic defaulting.”

    1. jumping

      The way I see it, the housing market needs to correct. It will do it by defaults, cramdowns, re-fis to lower rates, or some combo of the above. It is kind of insane to keep many borrowers out of the purchase game, it just slows down the market from recovering and reduces demand.

      I’d say honor the contract. Go after the worst offenders(those who pulled a bunch of money out, or have significant income and assets) then let everybody get back in the game instead of keeping them out for seven years. But this time, make a good loan where the house the asset is worth it, or there a down payment.

  10. Conscience of a Conservative

    Very much disagree Yves.
    We should go after strategic defaulters with one simple test. If they took out a recourse loan and have money in the bank, then THAT IS THE TEST.

    1. anonny

      You aren’t serious, are you?

      First, money in the bank relative to what? Student loans and childcare/alimony is senior to housing debt.

      Second, per Yves, strategic defaulters with brains make sure they don’t have cash in the bank.

      Third, litigation costs lots of money. There’s good reason banks don’t normally go after borrowers even when there is a shortfall after they take the house. The cost of litigation exceeds, by a considerable amount, what they might collect (even assuming they can collect).

      So you’d have Fannie throw away money to make a point about morality. Sorry, as a fellow taxpayer, I’m not keen to have more of my money wasted.

  11. Paul Tioxon

    It would be interesting to see what “policy” questions should be used against the equally insidious and even more widespread contagion of involuntary and unintended defaulters that seem to number in the 10’s of millions. Did these types try gaming the system by hoping beyond hope that the booming economy and low unemployment could possibly lead them to strategically find themselves without a job just in time to tactically deflate their home’s value as an asset, in order to avoid their lawful obligations? What were the unknown “unknowns” that they, introspect, seemed to have to have known, while others stayed safely employed and capable of paying their mortgage even as their home depreciated in value, even as we write here on this blog. None dare call it conspiracy!

  12. Matt

    Will someone knowledgable tell us whether the banks or Freddie are selling or going to sell the recourse debt to debt collectors making this all moot. I can imagine the servicers would at the drop of a hat.

  13. Paul Tioxon

    Look out for an October surprise, in time for mid term elections. Jubilee, debt forgiveness of principal mortgage amounts at mark to market pricing, an end run around Congress, by Exec Order. Sorry, debt collectors, but you don’t vote like an appreciative homeowner who just lost a lot of debt with no deficiency judgement or 1099 income imputed for tax purposes, if you know what I mean.

  14. GH

    I believe this policy would simply steer more folks into Bankruptcy court, further clogging the system. That said, it might be worth looking at a defaulters assets and going after those who truly did strategically default. This group cannot use bankruptcy anyway…

  15. Dave

    Does one really accept the concept of a “strategic” defaulter anyway? This is a made-up term. I cannot see how such an ostenisble moral dimension even genuinely factors into the analysis. A mortgage is a contract between borrower and lender. If the borrower chooses to default, that is simply one of the contractual outcomes that both sides must (or should) have considered at the time the contract was drawn up. Except to the extent that both parties are morally obligated to act in accordance with the law, no further moral dimension exists.

    For all those like “Conscience of a conservative” (surely an oxymoron!) who would argue otherwise, I would suggest that if the lenders had perhaps been a little more “strategic” in their lending quality, they would not find themselves in this situation today.

    1. kevin de bruxelles

      I’m confused. I agree with your first paragraph but then see nothing that “Conscience of a conservative” said that contradicts what you say, with the exception that we can throw away his qualifier “strategic” since it is a meanless label. Lenders by definition have a right to go after anyone who defaults on a recourse loan within the limits of that contract. Limiting these actions to people with money in the bank just seems like common sense.

  16. Blurtman

    Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

    “Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”

    “I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”

    From: Debts Rise, and Go Unpaid, as Bust Erodes Home Equity

  17. leslie

    Interesting commentary on Freddie and Frannie from:

    Andrew Korfhage: Fannie, Freddie vs. Mr. Green Jeans

    01:00 AM EDT on Thursday, August 12, 2010

    By Andrew Korfhage


    Imagine putting solar panels on your roof for no money down. You partner with your city or municipality to cover the up-front cost of your new renewable-energy system, which you pay back to the city as an add-on to your property taxes. You spread your payments over 20 years. The savings from lower electricity bills will probably more than cover your higher property tax.

    Not only are you more self-sufficient in your energy generation, but also your city spurs development of new green-energy jobs. And all benefit from shifting away from fossil fuels.

    Sound like a good idea to you? It did to the city council in Berkeley, Calif., which set up exactly such a pilot program to finance individual renewable-energy systems and energy-efficiency retrofits in 2008. And 22 other states that have approved programs based on this model for local governments over the past two years. What’s more, the White House set aside $150 million in stimulus money to help support such programs nationwide. Widely known as PACE (Property-Assessed Clean Energy) programs, these innovative financing plans seemed ready to flourish across the country, until very recently.

    Then, in May, giant mortgage lenders Fannie Mae and Freddie Mac weighed in with a refusal to finance mortgages associated with a PACE lien, braking the PACE programs’ momentum. At issue is who gets paid first if a borrower defaults on a mortgage with a PACE lien attached to it. The way that PACE programs are structured, the lien gets paid first; Fannie and Freddie say the mortgage must be paid first, no exceptions.

    What’s most puzzling about the objections is that the PACE programs make good financial sense for homeowners. Solar-energy systems and energy-efficiency retrofits pay for themselves over time, making borrowers more financially secure rather than less. However, the size and leverage of these two agencies means that their worries have brought nationwide PACE programs to a standstill.

    For example, Bay Area solar companies have postponed or downsized planned expansions due to business lost when Fannie and Freddie stepped in. “We lost almost a quarter of a million dollars’ worth of projects overnight,” Recurve retrofitting company President Matt Golden told The New York Times.

    Though PACE programs are similar to thousands of other lien programs used by municipalities to fund infrastructure improvements, Fannie and Freddie stated in their letter of objection that PACE programs “do not have traditional community benefits associated with taxing initiatives.”

    Lawmakers and other elected officials disagree. California Atty. Gen. Jerry Brown filed a lawsuit on July 14 against Fannie Mae, Freddie Mac, the Federal Housing Finance Agency (FHFA) and other municipalities with now-struggling PACE programs have been threatening the same.”Fannie Mae and Freddie Mac received enormous federal bailouts,” said Brown, “but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy, and boosts clean energy.”

    Similarly, the House and Senate have each proposed legislation that would prevent Fannie and Freddie from blocking local PACE initiatives.” In many cases, the biggest barrier for homeowners and small businesses who want to make energy efficiency improvements is financing those projects,” said Sen. Mark Begich (D.-Ark.), a sponsor of the Senate bill. “This bill removes a bureaucratic roadblock and allows local communities to assist homeowners and businesses if they want to.”

    Resolving this conundrum shouldn’t require a lawsuit or legislation. Fannie and Freddie promised “guidance” on the issue in their original letter of objection back in May. They should offer their solution now, so local communities can negotiate their differences with the giant lenders and get PACE programs back up and running sooner rather than later.

    Andrew Korfhage is an editor at Green America (

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