Some Say No to Solar Money Grants

Two government-chartered mortgage finance companies are unlikely to accept loans on homes that are part of a special program that lets homeowners repay the cost of energy improvements through a surcharge on their property tax bills, according to Energy Department officials.The Obama administration has allocated $150 million in stimulus money to support the financing technique, called Property Assessed Clean Energy, or PACE, and 22 states have authorized such programs. In a separate stimulus effort, President Obama on Saturday announced nearly $2 billion in loan guarantees for solar energy production.

Through the PACE program, loans to install solar panels and make other energy improvements would be repaid through 20-year special assessments on property tax bills and secured through a lien.

On May 5, Fannie Mae and Freddie Mac, which buy and resell most home mortgages, notified lenders that such liens could not take priority over a mortgage but did not offer guidance on how to handle such loans. The uncertainty has frozen many PACE programs and led some energy companies to furlough workers.

On Friday, Cathy Zoi, an assistant secretary at the Energy Department, called officials in Boulder County, Colo., to inform them that the administration had been unable to persuade the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to accept mortgages with PACE liens.

The liens, like other property tax assessments, would be paid first if a homeowner defaults.

“She said in light of the circumstances we should look at other ways of financing energy efficiency with the stimulus money,” said Ben Pearlman, a commissioner in Boulder County.

“We’re very concerned,” Mr. Pearlman said. “It’s a powerful program and a powerful idea. We need to find an easy way for people to make those investments.”

Those homeowners who already carry energy liens on their property may find it difficult to refinance their mortgages. In Sonoma County, Calif., some lenders have declined to issue new loans for homes with such liens unless the assessment is paid off.

Ms. Zoi also called Cisco DeVries, president of Renewable Funding, a company in Oakland, Calif., that devises and administers PACE programs for local governments. “She indicated that the agencies had decided not to accept the liens and the administration needed to begin contingency planning on what to do with stimulus funding allocated for PACE,” Mr. DeVries said.

Dan Leistikow, the Energy Department’s director for public affairs, confirmed the calls. “We expect to get more written guidance from the regulators this week,” he said on Saturday.

A spokeswoman for the Federal Housing Finance Agency said it would address the issue soon.

The Energy Department’s action, which was first reported by Grist, an online magazine, comes as Congressional leaders and state officials have been pressing the mortgage agencies to allow PACE programs to proceed.

On Friday, Representatives Henry A. Waxman and Barney Frank sent a letter to top administration officials urging them to act quickly on the issue.

“The response among the cities is something close to outrage,” Mr. DeVries said. “There may need to be a legislative solution, maybe litigation.”

While one energy effort appeared to fizzle over the weekend, the president announced nearly $2 billion in Energy Department loan guarantees for two solar power companies.

Mr. Obama made the announcement on Saturday in his weekly address, a day after an unemployment report showed weak job growth in June and stoked concerns that the nation’s recovery was weakening. He said the companies’ projects would create more than 5,000 jobs, part of a wider push on clean energy.

“That’s one of the reasons why we’re accelerating the transition to a clean energy economy and doubling our use of renewable energy sources like wind and solar power — steps that have the potential to create whole new industries and hundreds of thousands of new jobs,” he said.

Abengoa Solar, a unit of a Spanish company, will receive a $1.45 billion loan guarantee to build a solar plant in Arizona. And Abound Solar of Loveland, Colo., was awarded a $400 million guarantee to expand a solar-panel factory in Longmont, Colo., and to open a factory in Tipton, Ind.