Why? Because they regard these loans as subordinate to the Fannie/Freddie loans held on the houses in question:
“The purpose of this industry letter is to remind seller/servicers that an energy-related lien may not be senior to any mortgage delivered to Freddie Mac,” wrote Patricia J. McClung, a Freddie Mac executive.
So, no more loans beyond the loans the taxpayers are already losing money on!
And this is yet another example of why energy efficiency schemes make no sense unless they’re economically competitive.
Re-fitting a house for solar may be a wonderful idea in the long run, but in the short run it’s far too expensive and must be subsidized.
It’s difficult to understand why piling on more debt in aid of alternative energy is a rational approach in a nation where 1 in 4 borrowers is already underwater.
Better courses of action, namely raising the tax on fossil fuels to a point where alternative energy schemes are viable, funding energy programs directly, and allowing bankruptcy courts to reduce principal on underwater mortgages, have absolutely no chance of getting passed by this or any other Congress.
So, it’s extend and pretend, from housing to the green economy…
Gorilla says: “Fannie and Freddie understand red, thus they’re not quite ready to go green!”
