According to the New York Times, the Obama administration has set aside $150 million in stimulus money towards programs that fund energy-saving home improvements. The way this works is through local government lending the money to homeowners to cover upfront costs of solar paneling, sustainable lighting and other energy improvements. Then the homeowner has 20 years to repay the loan through a special assessment on their property tax bills, which stays with the house even if it is sold.
But Fannie Mae and Freddie Mac, two government-chartered agencies that buy and sell most of the mortgages in this country, are worried that people will prioritize their energy improvement loans over their mortgages. If someone were to foreclose on his or her home, property taxes (which would be increased with this program) must be paid first, before other liens. To that end, Fannie and Freddie are refusing to approve home loans until the energy assessment is paid off first.
The unfortunate affect of this is that homeowners have shied away from the Department of Energy’s home improvement program, fearing that it would violate the terms of their loans. State and local officials, including Gov. Schwarzenegger of California, Mayor Mike Bloomberg of New York, and some members of Congress are taking on this conflict. They are urging the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to clarify its financing program policies.
We’d all like to see more people involved in the home improvement program. Everyone should be able to invest in thermal insulation, LED lighting, solar paneling and whatever energy saving retrofitting they want, separate from their mortgages. Read the Times article to learn how this move can affect your home, and contact your local representative to get behind the effort to make financing easier for those of us who want to live more sustainably.