8/9/2019 Fannie Mae Letter 052710-1
1/2
ffiGreenOakqryg FUNDING.LcMay 27 zOtOMar ianne .Sul l ivanSenior
icePresidentSingle amilyChiefRiskOff icerFannieMaeViaemail o
resource [email protected] PACE enderLetterDatedMay 5,
2010DearMs.Sul l ivan:This etter s n responseo the LenderLetter
eferenced bove.First et me say hat Icompletely nderstandhat l ienpr
ior i ty s a cornerston e f the secondary ortgagemarket,and hat
this san essent ial ointwhichal lows ompet it ive ndrelat ivelyow
mortgage ates ohomeowners.t isalso n part hispointwhich esultsn a
very ow delinquencyateof propertytaxes, ince verdue roperty axes an
esult n a l ienbeing i ledon the property, hichtriggers
defaultunder he terms of the mortgage. hus, he requirementhat a
first mortgagein fact be "prime" has esulted n a very efficient
econdarymortgagemarket or homemortgages.At the same ime,PACEenders
lsowant hat pr imacy f l ienso hat they oo canofferaf
fordablenterest ates o part ic ipantsndmeet he publicpol icy bject
ives f al lowingpropertyowner o match he costsand benefits f
energyefficient mprovementshroughf inancing.GreenOaksuggestshat
FannieMae maywant o considerhe fol lowing osit iono balancethese
ery mportant et apparent ly ompet ingnterests:
t . TheFannieMae/Freddie acUniformSecur itynstruments i l l cont
inue o prohibitloans hat havea senior ienstatus o a mortgage.2.
PACE ssessmentshichmeetcertain r i ter iawil l not runafoulof
Point#1.Thesecr i ter ia houldbe n state,not ocal aw,sinceFannieMae
cannotmonitor heprovisionsnd egal osit ions f an nf ini tenumberof
PACE rograms.3. States hichwish o havePACE rograms hichwil l not
nter ferewith the abi l i ty fresident ial or tgageenderso part ic
ipaten the secondary ortgagemarketshould othe fol lowing:
a. Remove eferenceo senior iens n their energy istr icts
nd/orspecialassessmentistr icts.
b. Providehat PACE rograms hallhave he same egal tatus
spropertytaxes n termsof collection . he esult f thisshouldbe hat
in he eventofnonpayment,he local overnmentmay i lea l ienon the
property,n which
22 FreeStree t ,Suite 00 Por-t land, aineCl4l0 l ph :
2A7.772.7557| fx: 2A7.772.6433. ww.greenoal
8/9/2019 Fannie Mae Letter 052710-1
2/2
case not ice ssent o the lender f record, nd he property wnerwil
l berequired o cure he default o avoid riggering defaultunder ts
mortgagec. In he eventof default, nly he pastduepayments ndany
nterest ndpenalt ies re requiredo cure he default ,ustaswith an
overdue ropertytax. notherwords,no accelerat ionsal lowed.d. Addit
ional ly,tate aws houldprovideor certain estr ict ionsn PACEfunding
o provideor certainminimalprotect ionsor the consumer nd
hesecondarymortgagema ket:
a. Non-accelerat ionn the eventof default see bove).b.
PACEinancingmay no t exceedLO% f the assessedalueof theproperty.c.
PACEinancing existingmortgage ebt mayno t exceed heassessedalueof
the property equity equirement) .d. An energy udit s requiredor
PACEinancing.e. A third partyanalysishowinghat he projected nergy
avings
from the improvements ustbe equal o or greater han he
annualcostof the special ssessment.f. Exist ingendersmustbe advised
f the special ssessmento hatany escrow or property axescanbe
adjusted o cover he costofthe special ssessment.g. Theproperty wner
mustbe advisedhat non-payment f PACEfunding ould esult n a l ien,
ustaswith a property ax,and hiscould esult n a
defaultunderanymortgage n the property.The esultof the above hould
esult n a standardizationf PACEawsacrosshe country, ut nthe inter
imFannieMaecancont inueo accept nto he secondary ortgagemarketsoans
n astateby statebasis sstate awscome nto conformance ith the
aboveguidelines.An aff irmat ive tatement hat he
aboveparametersorsimilar sseen i t by FannieMae)wouldremove he
cloud rom the development f the nascent ACEnit iat ive, swell
asprovidingorthe cont inuedienpr ior i ty or resident ial or
tgages.I wouldbe happy o discusshe abovewith you.Thank ou or giving
er ious onsiderat ionothe above.
Ann C. GbgginPresidentGreenOakFunding, LCCc: GlenBrand
GreenOakFunding LCrovides onsultingerviceso stoteand
ocalgovernmentsfor settingupand mplementing
ACErogromsGreenOakdoesnot provideegoladvice.J2 FreeStreet.Suite300
Portland--Harns04i0l,:*.1::2OZJZlZ55"L.):x:2rJ-Jl)-S$a-.*$M!v"gEe!roakfurrding.col
