Brown Fights to Preserve Job-Creating Clean Energy Program

Wednesday, July 14, 2010
Contact: (916) 210-6000,

SAN DIEGO – Attorney General Edmund G. Brown Jr. today filed a lawsuit against mortgage giants Fannie Mae and Freddie Mac for blocking an innovative California clean energy program that was designed to create tens of thousands of jobs, promote energy independence and lower utility bills.

“As the nation struggles through the worst recession in modern times, California is taking action in federal court to stop the regulatory strangulation of the state’s grass-roots program that is spreading across the country,” said Brown.

The PACE (Property Assessed Clean Energy) program stimulates the economy and promotes energy independence by assisting homeowners and small businesses in securing funding to make their properties more energy efficient. Property owners repay the costs of energy improvements through assessments spread out over a decade or more. Under California law, these costs are classified as tax assessments.

Ignoring California law, Fannie Mae and Freddie Mac have effectively shut down the program by wrongly characterizing PACE assessments as loans that must be subordinate to their own mortgages. The Federal Housing Finance Agency affirmed Fannie and Freddie’s decision on July 6 over the objections of Attorney General Brown and congressional leaders.

For California, the stakes are high. Almost half the counties in California have developed PACE programs or plan to start one. The mortgage giants’ actions have stopped these programs dead in their tracks, destroying job creation, stifling energy independence and hampering California’s economic recovery. Clean energy companies have had to lay off workers, and California risks losing more than $100 million in federal stimulus money.

“Fannie Mae and Freddie Mac received enormous federal bailouts,” Brown said, “but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy.”

One example of the effects of this: San Diego planned to launch a PACE program this summer but it has now been suspended indefinitely, leaving more than 100 people trained in energy retrofits without jobs.

“I believe that the PACE program is critical to stimulating our local and statewide economy,” said San Diego Mayor Jerry Sanders. “I’m glad to see this lawsuit filed so that this novel program can continue.”

In his lawsuit, Brown asks the court to apply California law, require Fannie Mae and Freddie Mac to recognize PACE assessments for what they are, and allow PACE to move California’s economy forward.

The lawsuit is attached to this release. A letter from Attorney General Brown to President Obama is also attached. For a copy of the Attorney General’s letter sent to federal housing regulators in May, please see

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PDF icon PACE Complaint2.61 MB
PDF icon Letter to President Obama88.09 KB