Error: No default engine was specified and no extension was provided

The res.render stuff will throw an error if you’re not using a view engine.
If you just want to serve json replace the res.render(‘error’, { error: err }); lines in your code with:
res.json({ error: err })

PS: People usually also have message in the returned object:
res.status(err.status || 500);
res.json({
message: err.message,
error: err
});

You are missing the view engine, for example use jade:
change your
app.set(‘view engine’, ‘html’);

with
app.set(‘view engine’, ‘jade’);

If you want use a html friendly syntax use instead ejs
app.engine(‘html’, require(‘ejs’).renderFile);
app.set(‘view engine’, ‘html’);

EDIT
As you can read from view.js Express View Module
module.exports = View;

/**
* Initialize a new `View` with the given `name`.
*
* Options:
*
* – `defaultEngine` the default template engine name
* – `engines` template engine require() cache
* – `root` root path for view lookup
*
* @param {String} name
* @param {Object} options
* @api private
*/

function View(name, options) {
options = options || {};
this.name = name;
this.root = options.root;
var engines = options.engines;
this.defaultEngine = options.defaultEngine;
var ext = this.ext = extname(name);
if (!ext && !this.defaultEngine) throw new Error(‘No default engine was specified and no extension was provided.’);
if (!ext) name += (ext = this.ext = (‘.’ != this.defaultEngine[0] ? ‘.’ : ”) + this.defaultEngine);
this.engine = engines[ext] || (engines[ext] = require(ext.slice(1)).__express);
this.path = this.lookup(name);
}

You must have installed a default engine
Express search default layout view by program.template as you can read below:
mkdir(path + ‘/views’, function(){
switch (program.template) {
case ‘ejs’:
write(path + ‘/views/index.ejs’, ejsIndex);
break;
case ‘jade’:
write(path + ‘/views/layout.jade’, jadeLayout);
write(path + ‘/views/index.jade’, jadeIndex);
break;
case ‘jshtml’:
write(path + ‘/views/layout.jshtml’, jshtmlLayout);
write(path + ‘/views/index.jshtml’, jshtmlIndex);
break;
case ‘hjs’:
write(path + ‘/views/index.hjs’, hoganIndex);
break;

}
});

and as you can read below:
program.template = ‘jade’;
if (program.ejs) program.template = ‘ejs’;
if (program.jshtml) program.template = ‘jshtml’;
if (program.hogan) program.template = ‘hjs’;

the default view engine is jade