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Obama Boosts Clean Energy Lending That Critics Say Poses Risks

  • PACE helps homeowners pay for solar panels, other improvements
  • Changes could help firm with ties to ex-White House officials

President Barack Obama is moving to help homeowners finance clean energy improvements under a program widely touted by environmental advocates but criticized for putting borrowers and taxpayers at risk.

The changes, announced by the White House on Tuesday, could give a boost to Property Assessed Clean Energy lending, a nascent green-financing industry currently dominated by a company whose advisers include Obama’s former National Economic Council Director Gene Sperling.

PACE loans, which use local tax assessments to finance improvements such as solar panels or energy-efficient air conditioning units, generally have been barred by federal mortgage programs because the assessments get repaid first when a borrower defaults. If a home is worth less than the amount owed, taxpayers could recover less in a foreclosure.

The White House said the Federal Housing Administration and Department of Veterans Affairs will allow PACE loans on homes with FHA or VA mortgages.

“We are committed to ensuring that American families have options and have the ability to choose clean energy,” White House senior adviser Brian Deese said on a call with reporters.

Foreclosure Sales

Under the new rules, the portion of the PACE loan that’s in arrears will get paid before the FHA or VA mortgage in a foreclosure. The rest of the loan will get passed on to the next homeowner after the home is sold in a foreclosure sale.

The new rules should stimulate interest in a program widely sought by states...