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The Real Story has been talking with Cliff Staton from Renewable Funding about the untimely end to PACE (Property Assessment Clean Energy) programs throughout the country. What happened? Fannie Mae and Freddie Mac have determined that PACE assessments are actually loans that make their position in the mortgage-lending food chain risky.

The latest development in the saga is the lawsuit that California Attorney General Jerry Brown has filed again the Federal Housing Financing Agency, which oversees the quasi-independent Fannie Mae and Freddie Mac. The AG’s contention is that this is a case of over-reach—the Federal government is stopping a program that is within the jurisdiction of local governments.

At the same time, Congressman Mike Thompson of Sonoma County, has drafted the PACE Assessment Protection Act of 2010, asking for and end to discrimination against homeowners who want to take on the assessments and communities who want to provide PACE programs. Inasmuch as PACE is not considered a partisan issue, this piece of legislation should pass—IF it gets voted on in this session of Congress.

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It would seem clear that if the administration is backing clean tech and alternative energy sources, that all of the various government agencies and departments would follow the leader, and plan their strategies accordingly. The only problem, says Cliff Staton of Renewable Funding, is that not everything that looks like a federal agency or department actually is one.

Case in point: Fannie Mae and Freddie Mac. Although they are currently overseen by the federal government, they are actually quasi-independent entities, responsible for half of the country’s home mortgages.

So even though the administration is clearly in support of reducing the carbon footprint of homes, and the Department of Energy has government stimulus money to award for PACE (Property Assessment Clean Energy) Programs, homeowners will NOT be able to fund their retrofits in solar, energy and water if they have a home loan that is under the Fannie Mae or Freddie Mac guidelines. For all intents and purposes, the PACE program is dead for now.

Some time in the next eight weeks, while Congress is still in session, there is an opportunity for a piece of legislation to save PACE programs to pass. Called the PACE Assessment Protection ACT of 2010, it has been written specifically to get the Fannie Mae/Freddie Mac roadblock lifted, so that this program can get moving again, all over the country.

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PACE, at face value, sounds like a sound financial move: a homeowner applies for funding to improve his home’s energy performance, provide solar power, or increase water efficiency. PACE (Property Assessed Clean Energy) funds would be released from his local government, and an assessment would be paid off over the next twenty years. The cost of improving energy and water efficiency is alleviated, its cost applied to home property taxes.

Cliff Staton of locally-owned Renewable Funding, a firm that has worked to provide administrative and financing services all over the country, tells The Real Story that PACE has been remarkably well-supported, adopted by hundreds of cities and counties in 22 states and the District of Columbia, and has helped thousands of Americans reduce their energy and water consumption by retrofitting.

So what’s the problem? Fannie Mae and Freddie Mac, the quasi-public mortgage agencies that insure about half of the home loans in the country, are looking at PACE as a loan—instead of an assessment—on the property. In case of a default, they want to be first in line to collect, and they consider the addition of a PACE assessment “a risk” to the mortgage. Since the Federal Housing Financing Agency regulates Fannie Mae and Freddie Mac, how is this shutdown of PACE not a federal issue? And isn’t this action in direct opposition to the government’s stated support of reducing carbon emissions?

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Since 1978, with the passage of Title 24, California homes have been designed and built with a specific standard of energy efficiency in mind, with double pane windows, mandated R-ratings for insulation and set-back thermostats. Today, with the mass availability of solar photovoltaic roof tiles and panel systems, energy efficiency at the household level is again a major topic of conversation in the building of new homes and the retrofitting of existing homes.

Jon Port, president of PermaCity Solar, met with The Real Story during last week’s InterSolar conference in San Francisco. According to Jon, one of the benefits of solar is the good it can do in a low-income neighborhood. It is the housing stock in the oldest neighborhoods that leaks heat in the winter and absorbs the summer heat, with the result that residents in some of California’s poorest neighborhoods pay some of the state’s highest utility bills.

Jon has seen a wave of interest in retrofitting the older neighborhoods by community redevelopment agencies. That business has, in its turn, created a new interest in training for solar installation work as well as full-house energy audits and repairs.

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The Real Story attended the InterSolar Conference at Moscone Center last week, and met with Jon Port, president/CEO of PermaCity Solar to talk about getting solar on more rooftops throughout the state.

Jon says that even with lending for second mortgages tight, homeowners with good banking relationships (meaning: still making payments on their home loans) have been applying and receiving home loans with interest rates that make monthly payments—as compared to utility bills—look good.

But what happened at the Federal level, with Fannie Mae and Freddie Mac refusing to fund homes with PACE (Property Assessed Clean Energy) loans? PACE, geared to attach a loan to the property tax base, has run afoul of the Federal government-run Fannie Mae and Freddie Mac—a big run in, when one considers how much of the mortgage market is controlled by the two entities.

Surprisingly, Jon isn’t too troubled by the contradictions apparent in this recent action. He says the administration will be looking into it, and he expects some good news upon further study of the situation. Stay tuned.

The cost of extending the grid is $20,000 a mile. Given this cold, hard fact, it’s no wonder that there are so many energy-poor areas around the globe. The most cost-effective way to bring reliable energy to areas beyond the grid is solar, a solution that was celebrated yesterday at the InterSolar Conference in San Francisco.

At the conference, SolarWorld, America’s largest manufacturer of solar panels, donated 100 kilowatts of panels to SELF (Solar Electric Light Fund), a nonprofit that brings solar electricity to rural and developing areas. These panels will be used specifically to power five medical clinics in Haiti though a partnership with Partners in Health.

“Many areas of Haiti have never been on the grid and are not likely to be,” commented Robert A. Freling, SELF executive director. “We’ve found that solar works well because it makes power at the point of use, so there’s no need for the expensive transmission infrastructure.”

Freling anticipates solar electric systems at all 10 Haitian Partners in Health Clinics to fulfill short-term needs in terms of the relief effort. In the long-term, SELF believes solar energy can serve as a foundation for a sustainable healthcare infrastructure, and also spark interest to integrate solar into residential, educational, commercial and civic reconstruction efforts.