A federal appeals court in San Francisco has dismissed a lawsuit against the Federal Housing Finance Agency (FHFA) for its refusal to allow the government-sponsored enterprises to buy loans involved in the Property Assessed Clean Energy (PACE) program.
Under the PACE program, property owners repay loans from the government through property assessments secured by a lien that takes priority over any mortgage. The FHFA initially ruled against purchasing mortgages on properties within the PACE program, stating they were too risky, and its actions were challenged in court by a coalition of California municipal, county and state government agencies and the Sierra Club.
Courthouse News reports that the ruling by the 9th Circuit Court vacates an injunction issued in August 2012 by a U.S. district court that the FHFA to complete formal ‘notice-and-comment rulemaking’ on the issue. Judge Mary Murguia wrote the court's decision for a three-judge panel and defended the FHFA's authority.
‘The enterprises' business is to purchase and securitize mortgages, and FHFA carries on that business when it weighs the relative risks and benefits of purchasing classes of mortgages for investment,’ Murguia wrote. ‘When FHFA decides not to purchase a class of mortgages that it believes pose excessive risk, it is attempting to preserve and conserve the enterprises' assets and property. Indeed, careful management of its mortgage purchase decisions appears to be the only way FHFA can avoid the financial problems which precipitated the enterprises' conservatorship.’
(Photo courtesy Adam Sandey)