Legislators from California and New York this week introduced legislation on Capitol Hill that could breath new life into residential PACE financing nationwide.

PACE got off to a running start in 2008 and was rapidly adopted by a number of states throughout the country in the hopes of jump-starting installations of energy efficiency, water efficiency and renewable energy generation projects. However, the Federal Housing Finance Agency (which oversees residential mortgage giants Fannie Mae and Freddie Mac) buried the program when it took issue with a component that prioritizes PACE assessments over an existing mortgage in the case of foreclosure. In July 2010, the FHFA issued a letter stating that PACE financing could be a violation of mortgage terms and therefore grounds for foreclosure on participating households.

Enter the PACE Protection Act of 2011 (HR 2599), the text of which can be found here. The bill – sponsored by Representatives Thompson (D-CA), Lungren (D-CA), and Hayworth (R-NY) – seeks “to prevent Fannie Mae, Freddie Mac, and other federal residential and commercial mortgage lending regulators from adopting policies that contravene established state and local PACE laws.” In enabling PACE projects to move forward, the bill’s sponsors hope to build on the $150 million of economic activity generated by the roughly 2,500 PACE projects implemented before the FHFA killed the program.

If you’d like to get involved in the effort to save PACE financing, visit Vote Solar to email your representative directly. Or find additional information at PACENow.org.