California Sues Feds Over Green Loans For Homes

The San Francisco Chronicle reports:

State Attorney General Jerry Brown sued the federal government Wednesday, claiming that publicly regulated mortgage companies are breaking California laws by interfering with city programs that allow homeowners to finance energy retrofits through property taxes.

Last week, the Federal Housing Finance Agency issued a statement that effectively killed the pioneering programs that originated in Berkeley and were adopted by California and 21 other states - many of which were just getting started.

The problem, according to the agency, is that the funds borrowed for the retrofits attach to the properties as liens if they are not paid off. Those liens originated as property taxes and therefore trump banks for who is repaid first from proceeds of a foreclosed home. As a result, the programs are a risk to lenders and mortgage investors and contravene lending guidelines, the FHFA said.

Brown sued the FHFA, which oversees the nation's largest mortgage buyers, Fannie Mae and Freddie Mac. The federal lawsuit filed in Oakland claims that the FHFA and the mortgage giants have intentionally mischaracterized the local programs as risky loans in order to block them, engaged in unfair business practices and failed to follow environmental laws.

The "new" green economy can't be bothered with traditional underwriting standard!