Federal Lenders Threaten National PACE Loans. But is their logic sound?

It was a topic of discussion at last week's OC Renewables meeting that lenders Freddie Mac & Fannie Mae could jeopardize national Property Assessed Clean Energy loan programs (PACE loans). PACE loans allow private property owners to pay for energy efficiency upgrades (such as solar installation) through their monthly property tax bills, thus avoiding the steep up-front expense and keeping the fees associated with the house rather than the individual making the upgrades. PACE programs have been successful in towns across the country. But Freddie & Fannie may put an end to PACE:
"...[T]he two government-chartered agencies that buy and resell most home mortgages are threatening to derail the effort by warning that they might not accept loans for homes that take advantage of the special financing." -- NY Times: "Loan Giants Threaten Energy-Efficiency Programs"
The logic is that if the property owner takes advantage of a PACE program, but later defaults on their mortgage and the house remains unsold and must be federally "bailed out", taxpayers could be left holding the bill. (For more on the local credit crisis, check out our neighbors at Irvine Housing Blog.)

But Grist reports that property owners who have taken advantage of PACE programs are actually 11% LESS likely to default on their homes than the national average.

Grist also reports that successful PACE participants are taking action. The Long Island town of Babylon is suing Fannie and Freddie over this threat to PACE loans, because their Long Island Green Homes program has enabled 300 homeowners to invest more than $3M in energy-efficiency retrofits.

What can we do? WRITE TO YOUR CONGRESSIONAL REPRESENTATIVES.

Says Grist:
Long Island Rep. Steve Israel (D) and other members of Congress are considering introducing legislation to resolve the dispute, but there's no guarantee a bill would pass through Congress's busy schedule any time soon (or ever).