FHFA PACE Rulemaking Strategy
August 6, 2012
Agenda
• Overview of FHFA proposed rule
• Coalition Response Strategy:
– Outline of potential coalition response
comments
– Grassroots strategy
– DOE/White House engagement
– Media strategy
FHFA Proposed Rule
Fannie Mae, Freddie Mac shall:
• Take actions necessary to preserve their right
to make mortgages subject to PACE liens
immediately due (including amending the
Uniform Security Instruments).
• Not purchase any mortgage subject to a firstlien PACE obligation.
• Not consent to the imposition of a first-lien
PACE obligation on any mortgage.
FHFA’s Alternative # 1: Guarantee/Insurance
Fannie Mae, Freddie Mac shall:
• Take actions necessary to preserve their right to make mortgages
subject to PACE liens immediately due.
• Not purchase any mortgage subject to a first-lien PACE obligation or
consent to a first-lien PACE obligation, except if:
– PACE lien is recorded; and
• Repayment in the event of foreclosure or similar default is
irrevocably guaranteed by a qualified insurer; or
• Qualified insurer insures Fannie and Freddie against 100% of
any net loss attributable to the PACE obligation in the event of
foreclosure or similar default; or
• PACE program provides sufficient reserve fund for mortgage
holders which would cover 100% of any net loss attributable to
the PACE obligation in the event of foreclosure or similar
default.
FHFA’s Alternative # 2:
FHFA’s Underwriting Standards
Fannie Mae, Freddie Mac shall:
• Take actions necessary to preserve their right to make
mortgages subject to PACE liens immediately due.
• Not purchase any mortgage subject to a first-lien PACE
obligation or consent to a first-lien PACE obligation,
except if:
– PACE obligation ≤ $25,000 or 10% of fair market value,
whichever is lower;
– Loan-to-Value Ratio ≤ 65%;
– Debt-to-Income Ratio ≤ 35%;
– FICO ≥ 720; and
– PACE lien is recorded.
FHFA’s Alternative # 3:
H.R. 2599 Underwriting Standards
Fannie Mae, Freddie Mac shall:
• Take actions necessary to preserve their right to make
mortgages subject to PACE liens immediately due.
• Not purchase any mortgage subject to a first-lien PACE
obligation or consent to a first-lien PACE obligation,
except if:
– PACE lien is recorded; and
– H.R. 2599 underwriting standards are satisfied.
PACE Proponents Proposed Response
• fundamentally disagree with FHFA’s position that PACE poses
significant safety and soundness concerns;
• challenge the legal right of the FHFA to determine how and
under what circumstances state and local governments can
make valid special assessments that meet public purposes;
• Recommend adopting a REVISED Rule permitting Fannie &
Freddie to purchase and consent to mortgages with PACE liens
if an appropriately constructed Alternative # 1 (insurance/loan
loss reserve) or Alternative # 3 (H.R. 2599 standards) are
satisfied; and,
• Provide additional evidence on the record supporting PACE
and alternatives # 1 and # 3.
Next Steps on Joint Comment Letter
• Email Ramona Willis ([email protected]) if your
organization is tentatively interested in signing on to joint
proponents comments by August 15th.
•
If you are interested in contributing to the substance of the
comments, gathering additional research and facts for the
record, please contact Sheridan Pauker
([email protected]) as soon as possible.
• Deadline for submitting comments: September 13th
– Coalition Coordination
• Weekly calls until comments are due?
– Grassroots strategy
• Action alerts (timing, and goal)
• Letter template (volunteers to draft this?)
– DOE/White House/Congress engagement
• Assignments for calls/visits
– Media strategy
• Media talking points
• Joint press release
• Op-eds
Thank you for
participating.
Contact: Annie Lappé
[email protected]