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San Diego Officials Support Brown In Lawsuit Against Mortgage Giants
Wednesday, July 14, 2010
California Attorney General Jerry Brown is suing mortgage companies Fannie Mae and Freddie Mac. Brown was in San Diego today to talk about the effort to end a freeze on funding to homeowners for energy upgrades.
SAN DIEGO California Attorney General Jerry Brown is suing mortgage companies Fannie Mae and Freddie Mac. Brown was in San Diego today to talk about the effort to end a freeze on funding to homeowners for energy upgrades.
The attorney general said Fannie Mae and Freddie Mac are blocking California’s Property Assessed Clean Energy program.
The program lets cities and counties lend homeowners money for energy efficiency, renewable energy or water conservation upgrades. The money is repaid through fees on the homeowner’s property tax bill. Repayment can last 20 years. The responsibility to repay transfers between property owners when a home is sold.
Fannie Mae and Freddie Mac have stopped buying and selling mortgages linked to the program. They say the mortgages are less valuable to investors because the loans must be repaid first if there is a foreclosure.
San Diego Mayor Jerry Sanders supports the lawsuit. With about 1,000 San Diegans signed up for the program, he said he is ready to see it move forward.
“We understand they’re burned by their own risky practices in the mortgage crisis. But, to turn around and halt these incredibly beneficial programs with no sound basis in fact is exactly the wrong response," Sanders said.
Brown said the clean energy program is like other California tax assessments and does not pose a risk to mortgage lenders.
County Supervisor Pam Slater-Price joined Brown outside the California Center for Sustainable Energy to support the lawsuit. She said the program, known as PACE, has the potential to grow San Diego’s economy by creating jobs and providing savings to homeowners.
“PACE assessments are not loans. They are property tax assessments that stay with the property in the event of a sale just like assessments for fire districts, hospitals and underground utilities,” said Slater-Price.
The Federal Housing Finance Agency supported Fannie Mae and Freddie Mac's decision in a statement last week. They said the loans do not operate like other tax assessments, which usually support projects that benefit the entire community and are repaid more quickly.
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